TOPIC #3
Winter Storm Elliott: The Reviews Continue
An early winter deep freeze tests the grid.
Reliability in Focus After Forced Outages and Rolling Blackouts
- In late December 2022, a powerful cold front (or polar vortex) developed in the United States and Canada. After strengthening over the Northern Plains, it descended and covered much of the eastern two-thirds of the United States from December 23 to December 25, bringing dangerous cold, high winds, and blizzard conditions to many areas.
- More than 100,000 MWs of coal- and gas-fired generation were unable to start or knocked offline, and as many as 1.6 million customers were without power at the peak of the extreme weather event.
- PJM Interconnection (PJM) saw nearly 46,000 MW of forced outages, roughly 25% of the region’s installed capacity.
- The Midcontinent ISO’s outages peaked at 50,000 MW.
- Tennessee Valley Authority (TVA) and Duke Energy were forced to institute their first-ever rolling blackouts.
- On December 28, the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation (NERC), and NERC’s regional entities announced a joint inquiry into the operations of the wholesale power system during the event, since named Winter Storm Elliott. Recently, NERC indicated that it would release initial findings in late summer or early fall 2023.
- In the words of NERC CEO Jim Robb: “This storm underscores the increasing frequency of significant extreme weather events (the fifth major winter event in the last 11 years)and underscores the need for the electric sector to change its planning scenarios and preparations for extreme events.”
- Since December, affected system operators have been conducting reviews to determine root causes and potential changes in planning, processes, and communication. While storms such as Elliott are unusual, they are not rare.
- Notably, a second brief but powerful polar vortex lasting from February 3 to February 4 drove extremely low temperatures and bitter wind chills from New England through the Mid-Atlantic and upper Midwest.
- At one point, Mount Washington in New Hampshire was purportedly colder than Mars with a temperature of -47° F, wind gusts of 127 miles per hour, and a wind chill below -100° F.
- As such, with growing electrification and a changing resource mix, grid operators will need to adapt their approaches to cold weather stresses on the grid.
The Bills Come Due
- PJM has estimated that nonperformance penalties could total up to $2 billion, as it lost about 23% of generating capacity during the Elliott event.
- Some assessments are significant and financially consequential:
- NRG, for example, estimated an $80 million impact on earnings, in part from performance penalties as some of its large units had long startup times.
- Lincoln Power, a Carlyle Group subsidiary that operates more than 900 MWs in PJM, declared Chapter 11 bankruptcy after being levied $39 million in penalties by PJM, which also requested $7 million in collateral against those obligations.
- Some generators are challenging the penalties, seeking recalculations and refunds.
- One group asserts that PJM’s load underestimation (discussed later) led to inadequate day-ahead market commitments and that its declaration of a maximum generation event came too late for units that required emergency dispatch to procure natural gas.
- Generators also assert that PJM should not have called upon their units because transmission constraints prevented their deliverability into PJM’s eastern footprint and that it should have stopped all non-firm exports before instituting emergency procedures.
- FERC, meanwhile, approved on April 3 a PJM plan to invoice the nonperformance penalties (and delay related overperformance bonuses) over nine months to reduce generator financial stress and potential defaults. One can expect more litigation over these issues.
KEY TAKEAWAYS
While much attention has been paid to summer reliability, the grid remains vulnerable to extreme cold snaps. Winter Storm Elliott illustrated this, as unexpected weekend holiday demand coupled with poor weather-related generator performance pushed some regional grids to the edge.
Emergency measures, particularly through demand reduction, helped avoid more significant and extended disruption.
The utility industry has known for more than a decade that gas and power were interdependent, but progress has been halting; the industry must look more closely at where continued improvement in planning and processes is needed.
Looking ahead, increased electrification will amplify this challenge.
While much attention has been paid to summer reliability, the grid remains vulnerable to extreme cold snaps. Winter Storm Elliott illustrated this, as unexpected weekend holiday demand coupled with poor weather-related generator performance pushed some regional grids to the edge.
Emergency measures, particularly through demand reduction, helped avoid more significant and extended disruption.
The utility industry has known for more than a decade that gas and power were interdependent, but progress has been halting; the industry must look more closely at where continued improvement in planning and processes is needed.
Looking ahead, increased electrification will amplify this challenge.
Early Observations Indicate Myriad Challenges
- While Winter Storm Elliott caused significant struggles, utility actions appear to have averted a worst-case scenario.
- Duke Energy officials noted in a North Carolina Utilities Commission hearing that had they not instituted rolling outages, grid instability could have knocked out the Eastern Interconnection.
- Additionally, despite their own generation struggles, exports from MISO and PJM provided valuable assistance to neighboring regions, including those of TVA and Southern Company.
- Imports from Canada also played a major role in keeping the lights on. During the height of the storm, MISO imported a combined 2.9 GW from Ontario and Manitoba.
- As mentioned above, generally reliable fossil resources were a major source of generation outages during the storm. In addition to generation, fuel supply systems also faced complications. At the peak of outages in PJM, more than 10,000 MW of fossil generation were forced offline due to fuel supply problems. Similarly, other regions cited low pressure in gas pipelines as a reason for decreased performance of certain gas generators.
- Conversely, wind generation outperformed expectations during the storm; however, a lack of transmission capacity led to significant curtailments, wasting valuable power. At some points during the storm, the Southwest Power Pool had more than 3 GW of wind power curtailments due to the lack of transmission capacity.
- A major source of unpreparedness arose due to incorrect load forecasts. Forecasted load was understated by around 10% for Duke Energy Carolinas and was 8,000 MW short in PJM. Due to forecast inaccuracy, utilities were not nearly as prepared as they were expected to be. This compounded the fact that natural gas generators were unable to provide adequate reserve generation or, in some cases, procure fuel over the holiday weekend.
Figure 3.2: Wind Power During Winter Storm Elliott (GW)
Note: All times are in Central Standard Time. TVA's periods of rolling blackouts are in red, while Duke Energy's outage period is in yellow (orange indicates overlap).
Source: Rocky Mountain Institute
Figure 3.3: Wind Curtailments by ISO during Winter Storm Elliott (GW)
Note: All times are in Central Standard Time. SPP reports the amount of wind curtailed in its footprint, while MISO and PJM do not explicitly do so. To estimate the amount of wind curtailed in MISO and PJM, the 2021 annual average curtailment rate from LBNL's "Land-Based Wind Market Report: 2022 Edition" was applied to the reported hourly wind generation profile in the two regions. TVA's periods of rolling blackouts are in red, while Duke Energy's outage period is in yellow (orange indicates overlap).
Source: Rocky Mountain Institute
FERC Actions on 2021's Winter Storm Uri Arrive After Elliott
- On February 16, 2023, FERC approved the implementation of two new extreme cold weather reliability standards derived from the findings of a joint inquiry of FERC and NERC into 2021’s Winter Storm Uri. The standards will implement:
- Along with the approval of the measures, FERC directed NERC to modify the standards in any way they think will address concerns related to applicability, ambiguity, a lack of objective measures and deadlines, and prolonged, indefinite compliance periods. FERC also directed NERC to collect data in order to monitor and assess the implementation of the new requirements.
- Generator freeze protection measures
- Enhanced cold weather preparedness plans
- Identification of freeze-sensitive equipment in generators
- Annual training for generator maintenance and operations personnel
- Procedures to improve the coordination of load reduction measures during a grid emergency
- Along with the approval of the measures, FERC directed NERC to modify the standards in any way it thinks will address concerns related to applicability, ambiguity, a lack of objective measures and deadlines, and prolonged, indefinite compliance periods. FERC also directed NERC to collect data in order to monitor and assess the implementation of the new requirements.
IMPLICATIONS
While Winter Storm Elliott caused significant outages in some regions, utilities were able to mitigate most of the damages, avoiding a catastrophe similar to Winter Storm Uri in 2021. That being said, there are still significant lessons to be learned from this event.
Fossil generation proved to be less reliable than expected and demand forecasts in some regions proved to be entirely inadequate. Additionally, increased transmission capacity could have negated some of the problems by reducing curtailments and increasing import capacity.
In the short term, utilities will have to respond to regulators’ inquiries into system shortcomings. Planning and
resource adequacy may need to be adapted to prepare for future extreme weather events.
The post-mortem analyses by both grid operators and FERC and NERC should be monitored and lessons learned as these issues can and will impact all systems.
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