The United States is Facing an Impending Energy Reliability Crisis
There are approximately 10,000 energy projects waiting for permits from federal and state agencies to connect to electric grids across the United States. These projects are designed to produce more than 2,000 gigawatts (GW) of collective power, which is nearly twice the collective electricity output of the 1,250 GW now being produced by all the nation’s power plants. The problem is that more power is trying to squeeze into an inadequate grid, and coal-fired plants are being retired faster than new plants using renewable energy sources such as wind and solar are being built to replace them.
The Warning Signs
Federal Energy Regulatory Commission (FERC) Commissioner Mark Christie warned on May 4 in a hearing before the Senate Energy & Natural Resources Committee that the United States is heading for a reliability crisis. “I think anyone would regard an increasing threat of system-wide, extensive power outages as a crisis,” he said. Committee chair Sen. Joe Manchin (D-W.V.) and ranking Republican Sen. John Barrasso (R-Wyo.) agreed, with both identifying the same culprit in an “impending, but avoidable, reliability crisis” that confronts the nation’s electricity grid.
The Cause of the Crisis
The “premature fossil retirements” amid increasing demand for power are a result of President Joe Biden’s green energy initiatives in 2021’s Bipartisan Infrastructure Law (BIL) and 2022’s Inflation Reduction Act (IRA) that incentivize investments in renewable energy. The incentives have proven effective in inducing investor interest—maybe too successful with projects being proposed and approved sooner than expected and faster than the grid’s transmission capacity is expanding.
While the shift to renewable energy is necessary to address climate change, the transition is happening too fast, according to Manchin. He and House Republicans have filed bills that address transmission, and he hopes that they can sit down and negotiate in good faith and put politics aside. Barrasso blasted the Biden administration for contributing to the pending energy transmission bottleneck by discouraging natural gas pipeline development. Without restoring “balance” in the nation’s energy equation that includes coal, natural gas, and oil, “energy prices will skyrocket, grid reliability will degrade, and families all across the country will suffer,” Barrasso said.
The FERC’s Role
Under the Federal Power Act, Natural Gas Act, and Interstate Commerce Act, among other legislative and administrative actions, FERC is responsible for managing the nation’s electrical grid. FERC is also responsible for permitting and regulating energy infrastructure—plants and transmission lines—and that includes “interstate natural gas pipelines” and “facilities for exporting or importing Liquified Natural Gas.”
The FERC’s Priorities
FERC’s interim Chair Willie Phillips has three priorities: reliability, electric transmission, and environmental justice. Reliability “is—and always must be—job number one” for the commission when the nation faces “unprecedented challenges to the grid’s reliability,” Phillips said. Transmission “is, in itself, a reliability imperative,” Phillips said, calling transmission “the key that can unlock the potential of so many of the energy security measures” in the BIL and IRA. Phillips said his third priority as FERC chair is environmental justice.
The Bottom Line
The United States is facing an impending energy reliability crisis due to the premature retirement of fossil fuel plants and the rapid shift to renewable energy. The Biden administration’s green energy initiatives have incentivized investments in renewable energy, but the transition is happening too fast for the grid’s transmission capacity to keep up. The FERC is responsible for managing the nation’s electrical grid and has three priorities: reliability, electric transmission, and environmental justice. While the shift to renewable energy is necessary to address climate change, it must be balanced with the need for reliable energy and affordable energy prices.
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