What are the energy challenges ahead?
Given the current “energy crunch” being felt across many jurisdictions, as winter begins to approach in this paper, GridBeyond, the leader in intelligent energy technology, takes a look at what grid operators in some key markets have said about resilience for the season ahead.
Weather plays a fundamental role in impacting the energy market. Cold temperatures increase heating demand and can add stress to power infrastructure. Meanwhile, some weather conditions can impact the level of renewables generation. This winter a weather phenomenon that typically delivers harsher winters to many countries across the globe is on the way.
Winter 2020-21 was particularly challenging for some regions of the US, in particular, the extreme, prolonged cold in February 2021, which had significant impacts on natural gas and electric markets, leading to power outages and record high natural gas and electric prices and loss of life. During the severe weather event 1,045 individual generating units (with a combined 192,818MW of nameplate capacity) in Texas and the South-Central US experienced 4,124 outages, derates or failures to start. To provide perspective on how significant the outages were, including generation already on planned or unplanned outages, ERCOT averaged 34,000MW of generation unavailable (based on expected capacity) for over two consecutive days, equivalent to nearly half of its all-time winter peak electric load of 69,871MW. The result was a combined 23,418MW of manual firm load shed – the largest controlled firm load shed event in US history.
While FERC is anticipating that reserve margins for the winter months will be sufficient for all markets and regions, the most severe scenario considered by ERCOT (very high demand for power, extensive natural gas and other fossil fuel outages, and excessively low renewable power production) still does not capture the amount of power lost during winter storm Uri in 2021.
In other markets, the grid operators in the UK, Ireland and Japan have also warned of a challenging winter ahead.
In Ireland EirGrid and SONI have identified potential capacity shortfalls of 260MW for the year 2022-23, rising to 1050MW in 2023-24 and 1850MW in 2024-25. In the absence of any action, this clearly poses a significant risk to Ireland’s security of electricity supply. In the Winter Outlook Report, EirGrid noted that the Loss of Load Expectation (LOLE) in Ireland for the five months of the winter period was 17.4 hours. This is outside the 8-hours per year standard meaning the system will operate at a higher level of risk than is set by the Commission for Energy Regulation. In a statement accompanying its report, Eirgrid warned that “system alerts” are expected to be a feature of Ireland’s power system over the coming winters. The GB system operator, National Grid, has also warned of tight margins this year’s winter period, with significant price spikes in the Balancing Mechanism.
GridBeyond VP for North America, Wayne Muncaster said:
“GridBeyond expects prices for all fuels to be higher than in recent winters. Rising wholesale commodity prices for natural gas, oil, and petroleum products are already being passed through to retail prices. And, as winter approaches, it is increasingly likely that large industrial energy users may be required to cease operating to protect priority end-users in some markets. Services, such as those provided by GridBeyond, which support businesses in gaining financial payments to businesses who agree to reduce energy in response to grid signals, will play a crucial role in keeping the lights on this winter and provide an alternative to ramping up fossil-fuelled generation to accommodate spikes in demand.”
We are hosting a webinar on 7 December at 1pm CT / 2pm ET, GridBeyond VP for North America, Wayne Muncaster and Business Development Manager (North America) Alden Phinney will examine the issues covered in this paper, with a focus on US markets, in more detail. You can register for the webinar here.