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A Crisis Is Looming For The US Energy Grid

Tyler Durden's Photo
by Tyler Durden
Thursday, Dec 22, 2022 - 06:04 PM

Authored by Felicity Bradstock via OilPrice.com,

  • The U.S.’ aging energy infrastructure is already under strain, but the combination of more renewable power sources and higher demand could cause shortages for years to come.

  • The major concern for the energy grid is severe weather events, such as the Texas freeze in February 2021 when the state had to carry out rotating power outages.

  • The Midwest and South-Central U.S. are at the highest risk of electricity shortages, but the entire country needs to modernize its electricity grid to avoid shortages in the future.

As U.S. energy infrastructure continues to go largely neglected and city populations keep rising, certain regions of America are under threat of electricity shortages for several years to come. In addition to inadequate energy infrastructure, the rise of renewable power sources and the growing countrywide energy demand are putting pressure on the grid like never before.  The Midwest and South-Central U.S. appear to be most at risk of electricity shortages according to a recent analysis. These regions fall into the “high risk” and “elevated risk” categories. The shortages are most likely to be seen during peak energy usage times, according to the North American Electric Reliability Corporation(NERC). There is a multitude of reasons for the shortages, largely centered around America’s aging energy infrastructure. 

At present, across the Midwest, a larger quantity of power generation is going offline than new electricity being brought online. This has meant shortages in the region since 2018. In contrast, California uses a wide mix of electricity sources, including renewable energy options such as solar power, which is not consistent. In addition, the demand varies throughout the day, with peak times failing to coincide with high-solar power output times. The energy issues have also been spurred by a general global shortage of LNG following the Russian invasion of Ukraine and subsequent sanctions on Russian energy. 

Concerns around shortages are mostly based on elevated peak demand, which means both higher summer and winter demand, peak hour usage, and the surge in demand during severe weather events when people are more likely to use their air conditioners and heating systems. There are worries that shortages will hit hard in the winter months, as power demand in Texas rises by a projected 7 percent over last winter. Last year, the state’s grid operator carried out rotating power outages due to shortages caused by the Texas freeze of February 2021. 

Meanwhile, the Midcontinent Independent System Operator (MISO) has seen reserve margins decline by 5 percent from last winter. NERC stated: “Energy emergencies [in the region] are likely in extreme conditions.” And in New England, the level of oil stored at power generators was at around 40 percent capacity, with NERC suggesting that generators should fill up tanks to prepare. Following the winter shortages, a greater burden on the grid will likely be seen again in summer 2023 as demand once again increases in the warm weather. 

Several utilities are responding to national and international pressures to shift away from fossil fuels to greener alternatives. However, with solar and wind power being the most common renewable energy sources in the U.S., and the development of battery storage facilities in the early stages, the variable energy supply and demand make it difficult to ensure consistent electricity delivery. In addition, much of the U.S. energy infrastructure requires a major overhaul to make it fit for use as populations grow and different technologies are used to produce energy. 

John Moura, the director of reliability assessment at NERC, stated “We are living in extraordinary times from an electric industry perspective.” He explained, “Managing the pace of our generation retirement and our resource mix changes to ensure we have enough energy and essential services are an absolute necessity,” and added, “We need to work with the entire ecosystem to make sure we’re managing that base and to be very clear that we’re not retiring generation prematurely — that is done in an orderly fashion and especially in areas that are right on the edge.”

There have long been concerns about America’s aging energy infrastructure not being up to scratch, a worry that has heightened in recent years due to more frequent extreme weather events across several states. This was an issue when the U.S. relied predominantly on easily transportable fossil fuels, but now that the energy mix is becoming more diversified, the energy infrastructure must evolve alongside it. This means new transmission lines, which can take between seven and 15 years to build. The U.S. must also increase its battery storage capacity by incorporating battery storage in renewable energy operations to ensure a consistent energy supply. 

NERC also highlights the growing amount of electricity being used to mine cryptocurrency, suggesting the need for greater regulations on crypto mining and energy use. The U.S. is home to around a third of global crypto-asset operations, which requires between 0.9% to 1.7% of the country’s total electricity usage to mine, at present. This is equivalent to the usage of all electricity home computers or residential lighting in the U.S. 

A combination of factors, from aging energy infrastructure to high demand, more frequent extreme weather events, and LNG shortages, are putting increasing pressure on the U.S. grid. While investments are made in modernizing the grid and boosting battery storage alongside renewable energy operations, certain regions of the U.S. are likely to see electricity shortages in peak seasons for several years to come.

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