Amidst Dreams of Green Energy, Regulators and Industry Warn of Summer Blackouts

The regulatory body that oversees the nation's power grid cast a bit of a chill over the coming warm months when, in mid-May, it cautioned that the country might not generate enough electric power to meet demand. Coming after multiple warnings from regulators, grid operators, and industry experts that enthusiasm for retiring old-school "dirty" generating capacity is outstripping the ability of renewable sources to fill the gap, the announcement is a heads-up to Americans that they may want to make back-up plans for a power grid growing increasingly unreliable. It's also a reminder that green ideology is no substitute for the ability to flip a switch and have the lights come on.

Unreliable Energy

"NERC's 2023 Summer Reliability Assessment warns that two-thirds of North America is at risk of energy shortfalls this summer during periods of extreme demand," the North American Electric Reliability Corporation, a nominally non-governmental organization with statutory regulatory powers, noted May 17. "'Increased, rapid deployment of wind, solar and batteries have made a positive impact,' said Mark Olson, NERC's manager of Reliability Assessments. 'However, generator retirements continue to increase the risks associated with extreme summer temperatures, which factors into potential supply shortages in the western two-thirds of North America if summer temperatures spike."

This is not the first time we're hearing that the power grid isn't up to meeting demand for electricity. Nor is it the first time we're told that renewable sources such as wind and solar are coming online more slowly than power-generation capacity based on fossil fuels is being retired.

Dwindling Power Plants

"The United States is heading for a reliability crisis," Commissioner Mark C. Christie of the Federal Energy Regulatory Commission (FERC) told the Senate Committee on Energy & Natural Resources during a May 4 hearing. "I do not use the term 'crisis' for melodrama, but because it is an accurate description of what we are facing. I think anyone would regard an increasing threat of system-wide, extensive power outages as a crisis. In summary, the core problem is this: Dispatchable generating resources are retiring far too quickly and in quantities that threaten our ability to keep the lights on. The problem generally is not the addition of intermittent resources, primarily wind and solar, but the far too rapid subtraction of dispatchable resources, especially coal and gas."

The federal Energy Information Administration foresees almost a quarter of coal generating capacity being retired by the end of the decade—a process already in progress. Just this month it announced "the United States will generate less electricity from coal this year than in any year this century." Non-hydropower renewables are the only generating capacity sources really seen growing in the short-term.

In February of this year, PJM Interconnection, which manages grid operations in much of the eastern United States, warned of "increasing reliability risks…due to a potential timing mismatch between resource retirements, load growth and the pace of new generation entry."

"The amount of generation retirements appears to be more certain than the timely arrival of replacement generation resources and demand response, given that the quantity of retirements is codified in various policy objectives, while the impacts to the pace of new entry of the Inflation Reduction Act, post-pandemic supply chain issues, and other externalities are still not fully understood," the grid operator added.

"Historically, thermal resources have provided the majority of the reliability services in PJM," the company noted, referring to traditional reliance on fossil fuels like natural gas and coal. "Today, a confluence of conditions, including state and federal policy requirements, industry and corporate goals requiring clean energy, reduced costs and/or subsidies for clean resources, stringent environmental standards, age-related maintenance costs, and diminished energy revenues are hastening the decline in thermal resources."

Perverse Policy

That's a point emphasized by FERC commissioner James P. Danly at the May 4 Senate hearing. He cautioned that "FERC has distorted price signals and warped incentives in the markets, interfering with price formation and jeopardizing resource adequacy. Most of these market-distorting forces originate with subsidies—both state and federal—and from public policies that are otherwise designed to promote the deployment of non-dispatchable wind and solar assets or to drive fossil-fuel generators out of business as quickly as possible."

FERC Commissioner Allison Clements also pointed out that, when investors do build new capacity, regulatory barriers delay getting it into operation: "Wait times have increased significantly—the typical project built in 2022 took five years from the interconnection request to achieve commercial operation, compared to three years in 2015 and less than two years in 2008."

Basically, the U.S. government is emphasizing the replacement of energy generation by burning fossil-fuels with renewables, especially solar and wind power. But renewables, including the storage capacity necessary to make intermittent power generation available when the sun isn't shining and the wind isn't blowing, aren't being introduced fast enough to offset the retirement of disfavored, but reliable, fossil fuel plants. Green ideology and bureaucracy are being prioritized before the needs of a civilization built on the availability of electricity.

Following Germany's Stumbling Footsteps

The U.S. isn't the only country on this path. Germany has long been committed to Energiewende (energy transition), with a national goal of relying on "clean" renewables instead of fossil fuels or even nuclear power. Despite warnings about the unreliability of solar and wind, the current government recently closed the country's last nuclear plants. It is now considering targeted energy price caps to keep manufacturers from fleeing to other markets. The move comes as support slumps amidst rising costs for the Green Party, a junior coalition partner strongly associated with the country's clean energy policies.

With that example, Americans might want to keep on Germany's progress down its clean-energy path for a glimpse of their own future. It's a future that may be coming fast, given that the Environmental Protection Agency just unveiled stringent new rules on greenhouse-gas emissions by power plants.

"The clean energy future is still the future, and the technologies that EPA wants to mandate don't exist," warns The Wall Street Journal editorial board. "Forcing fossil-fuel plants to shut down prematurely will endanger grid reliability."

Well, forcing power plants to shut down will further endanger grid reliability; regulators and industry insiders say that it's already pretty rickety. That situation is unlikely to improve until politicians stop putting what they want ahead of what's feasible. Until then, it might be a good time for the rest of us to shop for generators.