Enough to Go Around: Wedding Food, Resource Adequacy, and a Conversation with Jim Robb (CEO, NERC)

No one really goes to a wedding for the food. The real draws are the love, drinks, awkward toasts, cake, and dancing (if that’s your thing…). But even if the chicken is dry and the rolls are cold, wedding guests expect there to be enough food. Have you ever been to a wedding where the hosts ran out of food before all guests are served? It’s one of the biggest wedding faux pas there are.

The consequences of running out of food are pretty minimal – at worst, somebody writes a blog article about it as a tenuous analogy to one of the most critical issues facing the power industry today: resource adequacy. Just like a well-catered wedding accounts for surprise guests, picky eaters, and second helpings, a resource-adequate grid ensures there’s enough electricity for everyone—even when things don’t go as planned. Whether it’s extreme weather, unexpected demand, or equipment failures, the grid needs to be ready. Just last week, over 100 million Americans were under severe heat advisories. Thanks to careful planning, utilities were able to keep the power flowing—even while asking customers to conserve energy. Imagine the consequences if the grid were unable to match supply with demand the next time around.

Behind-the-scenes resource planning is what this article explores. If we want the grid to reliably meet tomorrow’s electricity needs, we need to start making changes today.

Following a recent FERC conference on this very topic, we sat down (virtually) with one of the leading voices in grid reliability, Jim Robb, President and CEO of the North American Electric Reliability Corporation (NERC), to get his expert opinion on what it will take to keep the lights on—and the metaphorical buffet stocked—for years to come.

David Bromberg, VP of Power & Renewables, Co-founder of Pearl Street Technologies: Thank you so much for agreeing to talk to us about resource adequacy, why it matters, and how to avoid a future resource adequacy crisis.

First off, can you start by explaining the purpose of the North American Electric Reliability Corporation (NERC) for those who may not be familiar?

Jim Robb, CEO and President, NERC: NERC was originally formed in 1968 but underwent a significant transformation in response to the 2003 Northeast Blackout when Congress gave NERC Statutory Authority to develop and enforce compliance with mandatory reliability standards that govern the planning, operations, and security requirements for the bulk power system. In addition, NERC conducts regular reliability assessments of the grid (both seasonal and longer term). It also operates the Electricity Information Sharing and Analysis Center, a key security function to cascade actionable mitigations to security vulnerabilities from the intelligence community to the industry.

NERC is an independent nonprofit corporation, funded through FERC-approved ratepayer assessments (approximately 23 cents/year for a typical residential customer). While overseen by FERC, it is a truly independent organization which means its work is done in the best interest of grid reliability and security, not any individual industry segment or company nor to achieve any particular policy objective.

David Bromberg, VP of Power & Renewables, Co-founder of Pearl Street Technologies: Thanks for that overview. How would you define resource adequacy for folks who are not necessarily power systems engineers? We tried to analogize it to a well-catered wedding but know there’s a lot more that goes into resource planning than meets the eye.

Jim Robb, CEO and President, NERC: Resource adequacy basically is the ability of the electric grid to supply customers with energy over a range of environmental conditions. A resource adequate system will be able to reliably serve customers’ energy needs and only experience a supply related disruption once every 10 years.

David Bromberg, VP of Power & Renewables, Co-founder of Pearl Street Technologies: The wedding I went to that ran out of food was about a year ago. I’m going to make a mental note to see if it happens again within the next 9 years.

So, as simply as you can frame it, how do NERC and other entities determine and quantify resource adequacy? When are we in the danger zone?

Jim Robb, CEO and President, NERC: Historically, resource adequacy was determined by a capacity “reserve margin”; essentially building to ensure that we had enough power generation to meet “peak load” (typically a hot afternoon in August) and have enough capacity “in reserve” to accommodate random equipment failures which might occur. A typical planning reserve margin has historically been 12-15%.

However, with the changes that are occurring to the electric grid (retirements of older coal, nuclear, and natural gas and oil plants coupled with the rapid expansion of wind and solar), the ability to meet to the “peak” hour doesn’t tell you so much about any other hour of the year as fuel supply has become much more uncertain. In addition, the math doesn’t work — new additions are not fully replacing the capacity (and reliability characteristics) of the generation that is retiring AND we are at the front end of a “once in a generation” period of load growth driven by data center demand to serve Artificial Intelligence and other technology needs as well as electrification policies impacting building and transportation demand. In addition, weather systems are becoming more extreme (colder in winter/hotter in summer), covering broader areas of the continent, and lasting longer. And now weather not only impacts demand, but it also impacts our ability to generate power given the growth of wind and solar.

So, as we assess risk, we show more and more of the country at elevated or high risk of energy shortfalls, driven by retirements of traditional generation, growing fuel risk (wind and solar plus winter natural gas), slower rate of new resource additions, and rapid demand growth.

David Bromberg, VP of Power & Renewables, Co-founder of Pearl Street Technologies: It seems like we’re currently at a point where serious people in the electric power industry are raising alarm bells around resource adequacy, including executives at grid operators, Commissioners at the Federal Energy Regulatory Commission, and NERC itself. How concerned should the average person be about this subject in the years ahead? How might their daily lives change if this issue is not addressed?

Jim Robb, CEO and President, NERC: This is a huge national security risk for the country. Electricity is fundamental to society’s operations. I like to quote Tom Fanning, the former CEO of the Southern Company, who observed that “electricity is about 4-5 % of the economy, but it’s the FIRST 4-5%”. Without power, nothing else works.

Plus, serving data center load is viewed as key to winning the race for Artificial Intelligence and is analogous to the space race, though with more consequence than national pride. No one wants any of our global adversaries to gain a leg up in the technology race to Artificial Intelligence.

David Bromberg, VP of Power & Renewables, Co-founder of Pearl Street Technologies: Great quote, I’ll be stealing that for future conversations. And it’s spot-on. It’s hard to imagine what society would look like if the grid couldn’t consistently and reliably “power” our day-to-day lives.

Even though resource adequacy studies have been performed for decades, it wasn’t until recently that we started seeing red flags being raised in the community. You already touched on some of the reasons earlier regarding plant retirements and demand growth, but do you have anything else to add as to why resource adequacy is thornier now than it used to be?

Jim Robb, CEO and President, NERC: You are right, our reliability assessments (up until 7 years ago) were great data compendiums, but everything looked fine. However, in 2018 our Long-Term Reliability Assessment (LTRA) we showed a measurable risk of expected unserved energy for the first time. And unfortunately, in 2020, that occurred in California during an August heatwave when the California ISO had to shed about 800,000 customers two days in a row because they couldn’t import enough power to serve load.

Since 2018, we have seen that risk grow, impacting more and more of the continent.

David Bromberg, VP of Power & Renewables, Co-founder of Pearl Street Technologies: Looking forward, what do you think are the greatest levers we have available to address resource adequacy challenges?

Jim Robb, CEO and President, NERC: We should find ways to slow the retirements of traditional generation until we can replace both their energy production as well as their reliability contributions. That will be hard to do but we have tools that could be used to slow their exit from the system by granting them waivers to environmental requirements in the short run, for example.

Next, we need to speed up the rate at which new resources are added to the grid. Part of the challenge will be to work on supply chain issues and address the interconnection queues. The processes used to add resources to the grid were perfectly designed when we added a handful of large power plants every year — now we are adding large numbers of very small plants every year. This is a great opportunity for Artificial Intelligence to speed up the studies to determine if a resource can safely interconnect.

Third, we need to build grid infrastructure like transmission to develop resilience and enable better resource sharing. That means we need to tackle siting, permitting, and cost allocation. Transmission can take 15-20 years to develop — that time needs to be significantly reduced.

Fourth, we are going to need more gas infrastructure for balancing resources. We need to figure out how to site and build and importantly, how to provide the financial security gas operators will require to build major multi-state pipelines and/or underground storage.

Lastly, we should make some (smart) bets on nuclear technology. We need an Apollo moonshot mentality though… how do we build hundreds of small modular reactors over the next 10-15 years and create a supply chain, develop a workforce, and resolve issues around spent fuel management? Science projects won’t get us there… we need a determined program. Similarly, a long duration electricity storage technology that can be rapidly scaled would be a gamechanger.

David Bromberg, VP of Power & Renewables, Co-founder of Pearl Street Technologies: Jim, thank you for sharing your time and insights. From accelerating the integration of new resources to modernizing our grid infrastructure, the path forward is clear: we must act decisively to ensure a reliable, resilient, and future-ready power system. Because when the grid falls short, the consequences are far greater than just a missed meal.