The PJM Interconnection system is not becoming too reliant on natural gas and renewable resources, even as more baseload coal-fired facilities continue to retire, according to an analysis of the system's reliability released on Thursday by the grid operator.
In fact, the analysis identified no limit to the amount of natural gas-fired generation that could be added to the system before it affected reliability. "From a reliability perspective, it's not that diversity is not important, but there's not a linear relationship between diversity and reliability," said PJM's Mike Bryson, vice president of operations, during a call with reporters to discuss the study.
The analysis found that a system composed of up to 86% gas-fired resources maintained operational reliability, essentially meaning it did not identify a limit for natural gas. Additional risks, however, such as deliverability during a polar vortex-type event and uncertainties associated with economics and public policy were not "fully captured" in the analysis. The study, PJM said, highlights the potential increased dependency on fuel infrastructure and the need for PJM to further explore grid resilience.
The analysis didn't explore the economics of any particular resource, the growing trends that find states wanting to subsidize certain power sources, environmental policies or the impact subsidies can have on wholesale power markets.
The study topic is part of a series of issues PJM has explored in white papers in recent years to improve the nation’s largest grid. PJM serves one-fifth of the U.S. population, or 61 million people in parts or all of 13 states, including shale-rich Ohio, Pennsylvania and West Virginia, along with the District of Columbia.
The analysis reflects the changing resource mix in the PJM market given environmental regulations, an abundance of low-cost natural gas and the increasing penetration of renewable resources that have all combined for more coal-fired retirements and the prospect of more nuclear retirements as well. The study responds to PJM stakeholders and others that have raised concerns about the system's ability to absorb more diverse power sources as it loses traditional ones.
"This analysis underscores our responsibility to continue to operate the system reliably and explore the role of resilience, the ability to tolerate unforeseen shocks and continue to deliver electricity," CEO Andy Ott said. "Different resources provide different reliability attributes, though new technology or regulations have the ability to improve those capabilities."
The report analyzed the availability of plant operating characteristics essential to the normal operation of the grid and during times of system stress. It explored voltage control, the ability of plants to ramp-up and fuel assurance, among other things. PJM created an index to assess operational reliability during four possible states that included normal peak conditions, light load, extremely hot weather and extremely cold weather.
The analysis found a marked decrease in operational reliability with significantly increased amounts of wind and solar capacity. Portfolios with a combined solar and wind capacity of 20% were found to have limited performance.
"We didn't see operating issues from a reliability perspective with a high penetration of gas," Bryson said. "In our mind, it sets up different issues in terms of some of the contingencies we're looking at or some of the resilience issues. We did see that limit with renewables." But an adequate level of diverse resources, PJM said, helps ensure flexibility in reducing the risks associated with equipment failure, fuel price volatility, supply disruptions and extreme weather.
In 2005, coal and nuclear resources generated 91% of the electricity on the PJM system. But over time, the mix has become more evenly balanced. From 2010 to 2016, PJM's system was made up of 33% coal, 33% natural gas, 18% nuclear and 6% renewables, including hydro. It has more room for both natural gas and renewables, which also continue to gain a larger share of the nation's generation stack.
The Energy Information Administration said last month that the U.S. power grid added more than 27 GW of electric generating capacity in 2016, the largest amount added since 2012. The gains were driven by natural gas and renewables. Wind added 8.7 GW, while solar added 7.7 GW. Natural gas added 9 GW.
From 2010 to 2016, coal-fired units made up 79% of the megawatts retired in the PJM footprint. Natural gas and renewables made up 87% of capacity additions.
A gas-fired building boom of sorts is under way in PJM, with one of the greatest pushes under way in Ohio and Pennsylvania, which are flooded with low-cost supplies. There are more than 50 gas-fired projects listed under construction in the PJM queue and more than 80 wind, solar and hydro projects under way as well.
A recent NGI special report, “Pipelines & Power: How New Infrastructure Could Uncork the Marcellus-Utica Bottleneck,”explores the region’s shifting power market and what more gas-fired electricity could mean for demand going forward.
The issues covered in PJM’s analysis as well as the questions it raises will now be taken to stakeholders for further discussion, Bryson said. The grid operator will host stakeholders in Philadelphia next month to begin talks about fuel mix diversity.