• The Outlook for Resilience in Electricity Generation and Distribution

    Puerto Rico’s continuing struggle to recover from Hurricane Maria provides a sober reminder of the importance of a resilient and strong electric grid.

    Just a month before Hurricane Maria devastated Puerto Rico, the US Department of Energy (DOE) released its Staff Report to the Secretary on Electricity Markets and Reliability. The report was intended to answer some critical questions about the complex transitions underway in the US electric industry: What is driving change in the mix of technologies we use to generate power? Are these changes making the US power supply any more or less reliable?  

    Among other findings, the report noted that the nation’s electric system is now more diverse than in the past, but that power systems require more flexible resources to maintain reliability. The study found that no single type of generating technology provides all of the country’s essential reliability services, and that each technology provides some. 

    The importance of diversity and many of the DOE staff’s other observations align with the findings in Analysis Group’s 2017 study, Electricity Markets, Reliability and the Evolving U.S. Power System. In the report, we find that, overall, the US electric system has become cheaper, cleaner, more reliable, and more diverse. (See figure.) These changes are principally the result of market forces, with declining natural gas prices and the addition of significant renewable capacity becoming the key drivers of financial pressure on existing power plants. We come to the conclusion that plant retirements occurring due to these factors are generally consistent with the outcome of competitive market forces. 

    We also maintain that the concept of “baseload” generators (as applied to coal-fired and nuclear plants that run on a near-continuous basis around the clock) is outdated. The increasing use of economical and flexible gas-fired power, together with changes in wind and solar technologies, are capable of providing power efficiently, economically, and reliably. 

    Critically important grid-resilience issues still remain to be addressed by the DOE, the Federal Energy Regulatory Commission (FERC), states, and the electric and natural gas industries. To continue our forward momentum, however, energy markets will need to properly value new technologies; additional transmission lines and better planning and coordination will be needed to make our grid more resilient; and research should be undertaken on additional ways to lower the cost of energy storage, more smoothly integrate renewables, and maintain an efficient and reliable power grid. ■ 


    Paul Hibbard, Principal
    Susan F. Tierney, Senior Advisor