Defining Reliability for a New Grid: Maintaining Reliability and Resilience through Competitive Markets
Prepared for the American Petroleum Institute (API)
The past decade has seen significant changes in the composition of electricity generating capacity. The biggest changes have been a significant increase in renewables – primarily wind and solar, which provide fluctuating amount of energy and thereby designated variable energy resources (“VERs”) – and a significant increase in natural gas generation. At the same time, coal and nuclear generating capacity is shrinking, with retirements driven by environmental policy (for coal plants in the first half of this decade) and persistent low wholesale market price conditions. These shifts have raised concerns regarding maintaining the reliability and resilience of electricity supply, and promoted debate over the best way to achieve those important objectives. This paper addresses concerns that increased use of natural gas could potentially have a negative impact on reliability and resilience. Drawing from market and policy reforms designed to preserve reliability while integrating larger contributions from VERs, this study articulates principles that should guide the development of electric market rules to address reliability and resilience concerns arising from increased dependence on natural gas generation.
