In November, the North American Electric Reliability Corporation (NERC) released a report outlining its 2024/2025 Winter Reliability Assessment.
In the report, Southwest Power Pool (SPP), NIPCO’s regional grid operator, is noted to have sufficient electric generation capacity to meet expected demand under normal winter operating conditions.
Electric utilities nationwide are members of one of nine regional transmission organizations (RTOs) and independent system operators (ISOs), also called power pools. These entities are federally regulated by FERC (Federal Energy Regulatory Commission) and work on a regional scale to coordinate, control, and monitor supply and demand on the electric grid. RTOs do not own the power grid, but they work as “air-traffic controllers” of the grid to ensure reliable power supplies, adequate transmission infrastructure, and “day-ahead” electric market coordination of wholesale electricity prices on behalf of their members.
While SPP is not listing reliability as being at a high-risk level for the upcoming winter season, our industry continues to navigate significant long-term challenges in maintaining a resilient and reliable electric grid.
“The immediate outlook is stable, but we’re seeing unprecedented changes in how electricity is generated and consumed across our region,” said NIPCO’s Executive Vice President and General Manager Matt Washburn. “As our society becomes increasingly electrified and we see rapid growth in sectors like data centers, electricity demand continues to grow at a historic pace.”
The changing energy landscape presents both opportunities and challenges. While the SPP region has made substantial progress in bolstering its transmission infrastructure and adding renewable energy resources like wind and solar, the variable and weather-dependent nature of these resources requires careful planning to maintain reliability. Additionally, SPP has approved an increase in its required Planning Reserve Margin.
What’s a planning reserve margin?
SPP and NIPCO’s power providers must plan for times of extreme power use, calling on what is referred to as ‘reserve margins.’ Reserves are resources that are held back, standing by to provide additional energy when needed. Reserve margins are the amount of unused available generating capability of an electric power system (during peak demand for a utility system) as a percentage of the total capability needed to meet peak demand. These margins are shrinking in SPP and across the country. Tighter reserve margins mean there’s less room for error when we experience unexpected events or emergencies, increasing the risk of forced outages.
“We need a diverse mix of power resources to keep the lights on 24/7,” Washburn explained. “That includes having dispatchable generation, like coal, natural gas, and nuclear, available when renewable resources aren’t producing at full capacity. However, many of our traditional generating facilities are being targeted by federal legislation aimed to curb emissions by implementing unproven or unavailable technologies, forcing them to retire before their end of life if they cannot comply with emissions standards.”
Proactive Steps to Ensure Reliability
NIPCO and its power providers are taking decisive action to maintain grid reliability for our Class A members through several key initiatives:
Advocating for Reliability and Affordability: Cooperatives work together to educate lawmakers and advocate on behalf of our members to ensure that reliable power is also competitively priced.
Resource Diversification: Nationally, there is increasing reliance on renewable energy sources, and at the same time, we’re seeing fossil fuel plants taken offline, often ahead of schedule. Additionally, we’re seeing more pressure on the electric grid due to the ever-present severe weather events and historic rising demand as we electrify more sectors of our economy, such as electric vehicles, data storage, and cryptocurrency. NIPCO believes and advocates for an all-of-the-above energy approach. The “all-of-the-above” approach promotes the idea that the United States relies on a reliable and sustainable fuel supply. There is great value in maintaining a diverse mix of fuel sources–fossil fuels and renewables to ensure reliability and resiliency and meet the growing demand for electricity.
Grid Infrastructure: NIPCO continues to invest in technology, security, and infrastructure to deliver reliable and cost-effective power to our member systems. Our operations are dedicated to strengthening our electric infrastructure through targeted upgrades and new construction projects, which will enhance regional connectivity and resilience.
Emergency Preparedness: We work closely with SPP and neighboring utilities to safeguard against energy shortages and price spikes associated with purchasing more power when demand is elevated. By having detailed response plans in place, we can take steps to reduce electric demand during critical periods – helping avoid the need to purchase expensive power from the market when prices are at their highest.
Regional Coordination: NIPCO actively participates in SPP’s reliability initiatives and maintains close coordination with neighboring utilities to support regional grid stability. By working to prepare for and respond to energy shortfalls, we can follow protocols to reduce electric demand.
NIPCO works closely with SPP and other regional partners to address these long-term challenges while maintaining reliable and affordable electric service for our Class A Members. As we dedicate ourselves to power delivery throughout the winter season, we are committed to doing everything we can to maintain the trust of our membership and find solutions to maintain reliable power and rate stability.
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