The Coal Fleet and Grid Resilience
June 6, 2017
Recently, PJM released a report ― PJM’s Evolving Resource Mix and System Reliability[i] ― that analyzed 360 different mixes (“portfolios”) of electricity resources and the effect of each of those portfolios on electric reliability in the 13-state PJM region. Each portfolio represented a different combination of coal, natural gas, nuclear, wind, solar, and other resources.[ii]
PJM determined that slightly more than one-fourth of these portfolios were “desirable” because they showed high levels of reliability.[iii] The chart below is taken from the PJM report and shows the relative percentage (vertical axis) of resources for each of the 98 desirable portfolios (horizontal axis). Coal is purple.
Almost half of the desirable portfolios were comprised of more than 30% coal-fired capacity.[iv] For comparison, coal comprised 34% of PJM’s capacity mix last year.[v] However, the retirement of more coal-fired capacity is expected, and low capacity prices are threatening to reduce the size of the PJM coal fleet even further.[vi]
The chart above shows that portfolios comprised of significant gas-fired generating capacity also were desirable. However, PJM expressed concerns about “operational risks” associated with natural gas that were not considered in the analysis. These operational risks could result from “infrastructure, economics, policy, and resilience.”[vii]
Because of these concerns, PJM also analyzed the effects of a polar vortex ― only one of several possible “high impact, low frequency” (HILF) events[viii] that could threaten electric grid resilience.[ix] Under assumed polar vortex conditions, only one-third of the desirable portfolios (34 out of 98) were resilient.
The maximum percentage of gas-fired generating capacity in these polar vortex portfolios decreased due to “higher unavailability rates of natural gas under a polar vortex event.” On the other hand, the number of polar vortex scenarios with a high percentage of coal-fired generating capacity remained roughly the same, with coal-fired capacity exceeding 30% in slightly more than half of the resilient portfolios.[x]
We think the results of the PJM analysis demonstrate several important points. The most obvious point is that all grid operators should evaluate HILF events, like PJM has begun doing. The second point is that PJM needs significant coal-fired generating capacity to ensure the grid is resilient against at least one of many possible HILF events. Last, grid operators should find a way to properly value the resilience benefits of baseload coal-fired electric generating capacity.
[i] PJM Interconnection, PJM’s Evolving Resource Mix and System Reliability, March 30, 2017. (“PJM Report”)
[ii] Other resources are fixed amounts of demand response, hydroelectric power, and oil-fired generating capacity.
[iii] PJM determined that 98 portfolios were desirable because they showed high levels of reliability under four operational scenarios: normal peak conditions, light load, extremely hot weather, and extremely cold weather.
[iv] Sixty-three desirable portfolios were comprised of at least 20% coal-fired generating capacity, and 43 portfolios were comprised of at least 30% coal-fired capacity.
[v] PJM RTO, “Capacity by Fuel Type,” 2016. Gas comprised 34% of the region’s generating capacity and nuclear 19%.
[vi] Over the period 2010 – 2016, 23,652 MW of coal-fired generating capacity within the PJM region had retired. An additional 8,633 MW have announced plans to retire.
[vii] PJM Report page 32.
[viii] PJM Report page 34. Such events include risks associated with cybersecurity, other extreme weather events, and increasing dependence on natural gas pipelines. Other experts have identified and analyzed additional potential risks such as extreme solar weather, pandemics, and detonation of a high-altitude nuclear device resulting in an electromagnetic pulse. However, these analyses were conducted before substantial coal retirements had begun and reliance on natural gas had increased significantly.
[ix] PJM report, page 5, footnote 16, states that “[r]esilience, in the context of the bulk electric system, relates to preparing for, operating through and recovering from a high-impact, low-frequency event. Resilience is remaining reliable even during these events.” Other organizations have defined resilience in a similar manner. For example, NARUC defines resilience as “the robustness and recovery characteristics of utility infrastructure and operations, which avoid or minimize interruptions of service during an extraordinary and hazardous event.”
[x] Nineteen of 34 resilient polar vortex portfolios were comprised of at least 30% coal-fired generating capacity.