The organization tasked with monitoring electric reliability in the North American bulk power system warned Dec. 17 of growing energy shortfalls over the next decade as utilities bring nearly 570,000 MW of renewables and energy storage capacity online.

The North American Electric Reliability Corp., or NERC, in its annual risk assessment called for policies ensuring that natural gas remains a part of the power generation mix while stressing that flexible energy resources will become more important as extreme weather events increasingly threaten the nation's electric grid.

"Recognition of the challenges that the system faces during this transition requires action on key matters," the report said. "Natural gas is the reliability 'fuel that keeps the lights on,' and natural gas policy must reflect this reality."

Regulatory agencies, utilities and policymakers also need to rethink energy reserve margins by considering power demand and energy availability throughout the day instead of focusing only on peak hours and capacity, the grid reliability authority said.

"California last August and Texas this past February are only two of the most recent example of systems planning and operations not keeping up with the reality of the environment in which they operate," John Moura, NERC's director of reliability assessments and performance analysis, said in a webinar presenting the report. "Their challenges serve as a wake-up call for the rest of the country."

The California heat wave in August 2020 forced the state to impose rolling blackouts and declare a stage-three electric emergency. In Texas in early 2021, millions of customers were left without critical power and heat for days during widespread power outages caused by an unusual cold snap. More than 100 people died because of those outages.

While all regions face challenges over the next decade, NERC singled out the Midcontinent ISO region and the California-Mexico grid as especially vulnerable.

NERC now foresees MISO facing energy shortfalls by 2024, moved up by a year from earlier projections, if plans to retire more than 13 GW of generation are carried out over the next three years. In California, the retirement of the 2,200-MW Diablo Canyon nuclear plant will contribute to declining reserve margins starting in 2026, although the report noted that the state is already seeing shortages during extreme heatwaves.

The Northwest and Southwest also face growing risks as renewable resources continue to replace flexible coal- and natural gas-fired power plants that can be dispatched when the sun goes down and wind turbines do not spin, NERC noted.

"This is not an argument against the [energy] transition," the report said, "but a recognition that without a collective focus, system reliability faces risk that is inconsistent with electric power's essentiality to the continent's economy as well as the health and safety of its population."

NERC identified five risk areas in this year's assessment: inadequate planning of reserve margins, energy shortages, extreme weather, frequency response and changes in utilities' resource mix.

To address those risks, regulators and policymakers should ensure that enough flexible generation, such as that fueled by natural gas, remains online and should look for possible shortfalls of energy production in addition to capacity. Citing the catastrophic outages in Texas in February, the NERC officials said regulators must make sure "there's energy behind the capacity."

Historically, too much focus has been placed on capacity growth and not enough on how extreme weather events can render power plants inoperable, the NERC officials said. They also called on decision-makers to consider long-duration extreme weather events in a warming climate.

The power industry and the agencies that regulate them, including the Federal Energy Regulatory Commission, should "manage the grid transformation" by identifying and committing flexible generation as renewables grow, the report said.

"I think we are making a strong case about the importance of having a balancing resource, and natural gas is kind of a fuel of choice in many areas for a number of reasons," said Mark Olson, manager of reliability assessments at NERC. " Are we maintaining enough flexible generation as the new variable resources come on the system?"