The North American Electric Reliability Corp. has released its 2024 Reliability Assessment report, which shows that over half of North America, including New Jersey, is at elevated risk of energy shortages.
The report calls the risks “pervasive and escalating.”
The organization’s report says that in many areas of North America, including much of the United States, “resource additions are not keeping up with generation retirements and demand growth.” The report, which takes a 10-year look at supply and demand, now and projected to 2034, details the retirement of electricity generation facilities, especially those using fossil fuels, which it says is happening at a rate that presents “mounting resource adequacy challenges.”
The report also states that the performance of replacement resources is “more variable and weather-dependent than the generators they are replacing.” In short, it says the planned reliance on renewable electricity generation sources is not able to keep up with the loss of capacity caused by the more rapid retirement of generation capacity dependent on fossil fuels, including coal.
Over the next decade, the report sees problems “in almost every assessment area,” again including New Jersey, “signaling an accelerated need for more resources.” Capacity stretched to try and meet increasing demand can also mean higher costs for consumers: The recent increases in electricity bills may not end any time soon.
The report says of the PJM Interconnection, which manages transmission and delivery of electricity for a 13-state area that includes New Jersey’s four distribution utilities, that its “projections for generator additions in 2025 and 2026 are scaled back dramatically from the 2023 long-term reliability assessment.”
It goes on to say, “The trends in demand growth and resource additions create resource adequacy and system planning challenges for PJM.” The report does not say why the PJM area’s planned replacement generation capacity has been so significantly scaled back, but it is probable that the decreasing likelihood of meeting original planned dates for offshore wind capacity in the region were a factor. The state’s goal remains to generate 50% of its energy from renewable sources by 2030.
The concern about loss of fossil fuel generation capacity, rapidly growing demand and slower than expected replacement capacity is a message that has been given public voice time and again in recent months.
At the end of July, the results of PJM’s wholesale electricity capacity auction produced prices that were more than 800% higher than the previous auction. That result sent shock waves through the region PJM serves.
The report cites three major factors driving soaring demand in the PJM area – the growth of data centers making use of artificial intelligence software, the ongoing transition of the transportation sector to use of electric vehicles, and the government-led move to transition the housing sector to electric heating options.
All of this while allowing, and at times encouraging, the retirement of certain generation capacity because of its relationship to carbon emissions and the much slower than expected addition of new renewable sources of capacity.
New Jersey has the problem of being an energy-deficit state in that it does not generate all of the electricity that it consumes. This builds into the Garden State’s future a reliance on imported electricity. The report suggests that it is not obvious where this excess capacity will come from.
An additional issue outlined in the report is the need for investment in transmission capacity, a grid able to move the high levels of electricity that will be in demand.
The report states that part of what is driving the reliability concerns are government policies that are not always aligned with generation capacity and grid capability. It states, “The findings presented here are vitally important to understanding the reliability risks to the North American BPS [basic power supply] as it is currently planned and being influenced by government policies, regulations, consumer preferences, and economic factors.”
Among the many recommendations in the report is one that urges dealing with “the risk of grid vulnerabilities from interconnection practices and IBR [inverter-based resources] performance issues which are growing.” In simple terms: The grid is not benefiting fast enough from renewable sources of generation even when that capacity exists.
This is easiest to see, the report says, in the amount of solar capacity that is not currently connected to the grid and that is taking a long time to get into the grid for a variety of reasons, many of which have to do with grid capability.
The report paints a picture of a highly decentralized system of generation and distribution of electricity that is caught up in a massive transformation, where the various parts are moving at different rates of speed and responding to different elements of policy and regulation.
Through it all the largest of the utilities involved are investor-owned, which complicates matters further as they attempt to produce acceptable financial results for their shareholders.
John Moura, director of reliability assessments for the North American Electric Reliability Corp., said to “Utility Dive,” a utility newsletter: “Simply put, our infrastructure is not being built fast enough to keep up with the rising demand.”
Contact the author, Vince Conti, at vconti@cmcherald.com.
