Part II: Northeast blackout of ’03 in the rearview, industry looks to address the next generation of reliability challenges

The precipitating factors of the 2003 Northeast blackout – the three Ts, or trees, training and tools – have been largely remediated, industry sources say. Though the electric grid is unlikely to see a major cascading outage caused by these factors, it is far from being the robust and reliable machine that the demands of the 21st century require.

On Aug. 14, 2003, contact between a tree and a conductor triggered a massive blackout that stretched across the Midwest and Northeast U.S. and into Ontario, Canada. The blackout, which tripped 62 GW of generation, lasted for days and caused a financial impact of up to $10bn, according to some estimates.

In response to a report conducted by the U.S. and Canadian governments and released in 2004, utilities and regional transmission organizations across the country revved up their training programs for system operators, developed better vegetation management programs and adopted technologies that significantly enhanced the ability to see how the grid is operating.

But a different set of challenges has emerged in the last decade. While reliance on electricity for powering our many gadgets has grown, new threats have materialized – severe weather events, which are projected to be the norm going forward; cybersecurity concerns; terrorist attacks; a shifting generation mix; and the urgency for investment in an aging infrastructure. Two of the biggest issues today are the retirement of coal-fired generation to meet EPA requirements, and the interdependence of the electric and natural gas systems. 

The 2004 outage report found that what helped cause the blackout was increasing native load relative to the limited amount of reactive power available in the Cleveland-Akron area, where the outage originated, which caused the depletion of reactive power reserves and declining voltages.

“The issue with the lack of reactive power is power plants were down due to forced outages, and that’s where a majority of reactive power comes from,” Scott Moore, vice president of transmission engineering and project services for American Electric Power (NYSE:AEP), told TransmissionHub. “On that particular day, there were some forced outages, so the reactive power wasn’t available and then the load exceeded the import capability of the transmission system, without a local source of generation.”

He noted that reactive power can be improved with the use of capacitor banks, static VAR compensators and synchronous condensers, but the best source of reactive power is spinning generators. Going forward, that will come from natural gas-fired power plants.

“That’s one of the concerns I have, and one of the stresses we’re going to see on the system in the next few years is, as we retire a lot of coal-fired generation, you can retire it faster than you can build new transmission and put in reactive sources to replace that retiring generation,” Moore said. “That’s going to be something we’re going to have to watch very carefully. We’re working as fast and as hard as we can, but you’ve seen the number of megawatts people have announced to be retired over a short period of time.”

Analyst reports have predicted that the total could exceed 60 GW by 2020. PJM and the Midcontinent ISO (MISO) will bear the brunt of the retirements. 

“PJM has been scrambling and for the last couple years and has been telling state regulators, ‘Hey, we’re going to need your help in terms of the transmission world, we’re going to need these things in a hurry just to maintain reliability based on which coal plants are shutting down in a very tight timeframe,’” Moeller said. “They’ve been on that mantra for a couple of years but I think everybody’s scrambling to get them done in time. And the really interesting thing is, what if they don’t get them done in time, by April 2016? Then what is EPA going to do if we’ve got some serious reliability issues pending?”

Mike Bryson, executive director of system operations for PJM Interconnection, said that while the RTO’s reserve margin has been affected by the retirements, the reserve margin in the 2015-2016 timeframe will exceed reserve requirements.

“Even out into the years when all this generation we know about has retired, we’re still in good shape from a reserve perspective,” he said.

The reserve requirement is just under 16%. PJM has 22% installed and 29%, including resources outside of PJM, Bryson said.

Natural gas/electric interface

The coal retirements affect another dynamic playing out between the electric and natural gas systems. As generation retires, natural gas will be more depended upon to fill the generation gap; but natural gas is also increasingly depended upon to meet electric needs.

That this represents a paradigm shift has gained universal acceptance in the last two years, Moeller said. The electric industry is going from relying on a resource that has a supply chain of up to three months to one that is “just in time” fuel delivery off of a pipeline, he said.

“That has pretty profound implications,” Moeller said. “And that is a reliability issue. It’s not insurmountable and it’s not a bad thing. It’s improved our emissions profile, and the price of natural gas is low so consumers have benefited from that; but it’s a very different mindset to go from a reliable system of perhaps a three-month supply of fuel to being dependent on [instantaneous fuel] for your usage.”

The implications stretch from short-term concerns about reliability during the next cold winter, to medium-term concerns about market structures, to long-term concerns about the availability of financing.

“They’re shutting down, retrofitting and in some cases repowering coal with gas in such a tight timeframe that they’re scrambling – and I think they’re doing a good job of it, but they’re scrambling to figure out their dependency on all the pipes that serve the Midwest and whether that perhaps will create some reliability challenges for them based on which plants in which locations may not have enough gas,” Moeller said.

The natural gas/electric system coordination has more immediate implications for ISO-New England, a region that relies heavily on natural gas, but other regions are paying close attention to developments. “While we currently don’t have as high a dependency on gas as other systems, we recognize as the generation fleet changes and there’s less coal, natural gas is playing a bigger role in our generation, that there may be some time out in the future where gas coordination will become more critical,” Bryson said. “We’ve taken steps in a couple of areas to work with the gas industry, DOE and coordinators to look at the next couple years where we see gas issues developing.”

Hoffman said the DOE will look at releasing a quadrennial energy review to ensure as the industry invests in infrastructure that it is evaluating those interdependencies.

“One of the things we’re trying to do is make sure we take a holistic [view] of the gird as we look at reliability, as we continue to deploy natural gas generation,” she said. “The interdependency of natural gas infrastructure and the electric infrastructure is really important.”

Other threats loom

Asked whether another blackout on the scale of the 2003 blackout could occur as a result of similar catalysts, the consensus among sources was that it was unlikely, though the grid could stand to see some investment.

“I still think the grid is in need of improvements,” Jon Jipping, ITC Holdings‘ (NYSE:ITC) COO, told TransmissionHub. “We see that in terms of congestion, the impacts that fairly medium-sized storms can [have on] the system. That weighs on me in terms of the fact that there’s still work to be done to make the grid perform at the level customers want.”  
The DOE and the President’s Council of Economic Advisors on Aug. 12 released a report saying that severe weather is the leading cause of power outages in the United States, costing the economy between $18bn and $33bn per year on average.

“The risks from natural disasters has got to be the biggest thing that looms out there,” Bryson said.

But the industry is at least, if slowly, taking the right steps, even if the investment being made isn’t on the scale of what needs to be made.

“I think we’re headed in the right direction to improve the capabilities of the system; one can never assure 100% security,” Hoffman said. “But when I look at what we’re doing to the system, and also the opportunity for energy storage, we’re improving capabilities of the system to be able to manage and minimize any sort of events that may occur.”

Click here to read Part I on the industry’s progress in the last 10 years.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.