NERC Releases 2008 Long-Term Reliability Assessment



The North American Electric Reliability Corporation (NERC) has released its 2008 Long-Term Reliability Assessment (LTRA) covering the 2008-2017 timeframe. This report presents NERC's assessment of the reliability and adequacy of the bulk power system in North America for the coming ten years. NERC's Assessment identifies areas they believe to be of concern in regard to the North American bulk power system and presents their recommendations for remedy.

The reader should note NERC's statement regarding this assessment and the current world financial situation:

"The potential long-term impacts of the recent unprecedented events in global financial markets could have a significant effect on future electricity supply and demand projections that are not reflected in this special report. NERC will monitor these impacts and reflect them in its future assessments."


Key Findings for 2008-2017
§ Capacity Margins Improved, Though Resources Still Require

Lower load forecasts for the coming ten years and new market mechanisms have contributed to generally improved capacity margins for most of North America (+4.2% over the 2007 LTRA). More resources will be required to meet target capacity margins in the Desert Southwest and Western Canada over the next two years, however.

§ Wind Capacity Projected to Significantly Increase; 750% Growth in Proposed Wind Generation Projected by 2017

145,000 MW of nameplate new wind resources are planned or proposed over the next ten years. Though the bulk of these additions are categorized as proposed resources raising the possibility that a number of these projects may be cancelled or reduced as developers make their final decisions, this projection still represents a dramatic increase in wind energy resources when compared to data received last year.

As state and provincial environmental regulations begin to come into effect, certain regions of North America, such as Texas, the Midwest, the Mid-Atlantic, and the Western states and provinces, are projecting large additions of wind capacity over the next ten years. Though only approximately 23,000 MW of the total 145,000 MW is projected to be available on peak, these proposed additions, if developed, would help to diversify the fuel mix in those areas and provide needed new energy resources. While progress has been made on methods to integrate these new resources into the electric grid, more work and transmission resources will be necessary to ensure reliability is maintained as these resources come online.

§ Demand Response Increasingly Used to Meet Resource Adequacy Requirements; Projected to Offset Nearly 80% of U.S. Peak Demand Growth in 2016; Significant Growth in Energy Efficiency Projected

Nearly 34,000 MW of demand response and 11,000 MW of energy efficiency are projected to be in place across North America by 2016, reducing total demand by 3.3%. Several regions, including Florida and the Midwest, are reporting peak demand reductions of more than six percent. These resources are providing critical reliability services, increasing the operational flexibility of the grid and complementing the addition of new variable generation resources such as wind and solar energy. Significant increases in demand response programs over the next ten years are projected to reduce growth in demand and provide ancillary services across North America. The total NERC-wide Capacity Demand Response for summer peak demand reduction grows from 29,000 MW in the summer of 2008 to 32,500 MW in the summer of 2017. The total NERC-wide demand response used for Ancillary Demand Response during the summer peak remains roughly constant at 4,400 MW.

§ More Transmission Needed to Maintain Bulk System Reliability and Integrate New Generation

While the total miles of transmission additions have increased slightly over the 2007 LTRA, generation additions are projected to significantly outpace new transmission development. The total number of transmission miles is projected to increase by 9.5 percent (15,700 circuit- miles) in the U.S. over the next ten years. This represents 1,700 more circuit miles projected to be added in the U.S. over the coming ten-year period when compared to projections in last year's report.

More resources and investment will be needed, however, to maintain reliability and integrate new resources as aging infrastructure is replaced and changes are needed to the transmission system topology. New generation supply is projected to outpace transmission development by nearly two times - with Total Potential Resources projected to grow by 21 percent. Many new supply resources are likely to be located remote from demand centers (i.e. wind generation) and location-constrained to those areas. The amount of transmission required to integrate these resources is significant.

Lagging investment in transmission resources has been an ongoing concern for a number of years. More investment is required, as each peak season puts more and more strain on the transmission system, especially in constrained areas such as California and Desert Southwest of the U.S.

The process to site new transmission continues to be difficult, time consuming and expensive due to local opposition and environmental concerns especially when lines are planned to cross state borders. Negotiations still delay and, in some cases, stop needed projects from being built. As a result, transmission permitting, siting, and construction can take significantly longer (i.e. 7-10 years) than permitting, siting, and construction of generation.

§ Protection System Misoperations Identified as a Leading Cause of Bulk Power System Outages in North America

Protection system performance has caused or exacerbated a growing percentage of bulk power system outages over the past several years, contributing to over 40% of these outages in 2007. This developing trend has made this issue a primary reliability concern for the coming years. NERC has begun to expand current efforts to address this issue through its standards and technical analyses.


Emerging Issues
NERC has also identified the following emerging issues considered in need of "risk assessment":

§ Potential environmental regulation could impact resource adequacy

§ Fuel storage and transportation

§ Rising global demand for energy and equipment, increased off-shore manufacturing of raw and finished Materials

§ Increased adoption of demand-side and distributed generation resources

§ Replacing, upgrading and adding transmission infrastructure for the 21st century

§ The potential reliability benefits of "Smart Grid" technologies on bulk power systems require more study

§ Enhance cyber security protections

§ Water availability and use



Group Contact Information
For information regarding other industry data or information, please contact:

§ Chris Eisenbrey, Manager, Business Information Group, 202-508-5574, ceisenbrey@eei.org

§ Steve Frauenheim, Senior Analyst, 202-508-5580, sfrauenheim@eei.org

§ Peggy Suggs, Analyst, 202-508-5572, psuggs@eei.org

This service was prepared by EEI's Business Information Group.