US power agency looks at risk as gas burn grows

OREANDA-NEWS. May 27, 2016. The US power-grid watchdog said problems stemming from the virtual shutdown of the Aliso Canyon natural gas storage site in California after a four-month gas leak underscore the risk of relying on gas as a dominant fuel for electric generation.

Despite progress to better coordinate operational timing of the US gas and electric markets, potential mismatches between the availability of gas to meet electric demand exist and more industry collaboration is needed, the North American Electric Reliability Corporation (NERC) said in a short-term assessment released this week.

The US Energy Information Administration expects gas to become the top US power-plant fuel this year, surpassing coal for the first time.

NERC has routinely increased its forecast for additional gas-fired generation as stricter air emission standards and abundant, low-priced gas have accelerated the pace of coal-plant retirements. NERC's latest projection calls for gas-fired generation to reach 460GW in 2018, up 10pc from 2015.

The NERC report looked at four US power regions that are highly dependent on gas-fired capacity: New England, New York, Texas and California.

Of the four regions, NERC found that southern California had the largest short-term risk for electric reliability problems under extreme peak load and gas-related outage scenarios. It praised the New England region for addressing problems related to the region's limited pipeline access.

For all regions, NERC said that as gas demand from the power sector grows, pipeline transportation constraints, storage limitation and gas infrastructure disruption will have a greater impact on the electric grid.

Extreme weather events like 2014's extended cold winter served as early indicators of the impact to the bulk power system as more gas-fired units "continue to rely solely on just-in-time and non-firm fuel sources," NERC said.

In areas where gas fuels a large percentage of the generation fleet, power planners need to examine system reliability needs to determine if firm fuel contracts or dual-fuel capabilities are needed, NERC said. Fuel availability and deliverability should be included in electric resource adequacy planning.

The US Federal Energy Regulatory Commission has already ordered action to better align daily gas and power procurement schedules so that gas plants operators know if they need fuel for the next day in time to reserve pipeline capacity.

"While gas-electric supply and transportation issues are especially important during the winter season, the summer season presents a separate set of potential reliability concerns that also require ongoing attention," the NERC report said.

At Aliso Canyon near Los Angeles, state-imposed restrictions on SoCal Gas' largest storage site represent "the most recent demonstration of how bulk power system reliability is affected by the increasing interdependency between the electric and natural gas industries," NERC said. The California situation represents a series of risks that have been layered into the system over the past decade, NERC said.

They include the "significant dependency on a single and just-in-time delivery fuel source, specifically for ramping capability" needed to match electric load and fluctuations in solar and wind generation, the loss of baseload power from two damaged nuclear reactors in southern California, increased renewable and distributed generation and a "lack of clear understanding" of how gas operations affect the power grid, NERC said.

Aliso Canyon supplies gas to up to 9,800MW, or 95pc, of Los Angeles basin generation, reinforcing the need for power plants to have dual-fuel capability and for the grid operator to develop contingency plans to address a major fuel supply chain interruption.

But only 3pc of the gas-fired plants in southern California have dual-fuel capability because of the state's strict air emission standards, according to the report. That compares to New England where 69pc of the gas plants can switch to an alternate fuel when the gas supply is strained.