Natural gas has supplanted coal as the dominant fuel source for the region's electric grid, and even if gas continues to grow in importance, the power system can remain reliable, the regional grid operator says.

PJM Interconnection Inc., in a study released Thursday, said the massive market shift to natural gas for electricity production does not diminish the reliability of the power system, though it said too much reliance on a single energy source could create new "resilience risks."

Fuel Sources for the Local Electricity Grid

In the last decade, coal and natural gas have reversed roles as fuel sources for electric power produced in the PJM Interconnection, the regional grid that includes Pennsylvania and New Jersey. Coal is expected to decline from 42 percent in 2007 to 27 percent in 2020, while the share for natural gas is expected to increase from 33 percent to 43 percent over the same period. PJM says that the electric grid can remain reliable even if the role of gas grows dramatically.
Capacity by electric fuel source, in megawatts
Staff Graphic

The potential concentration of a single fuel source might make the electrical system more susceptible to a "low-probability, high-impact event" such as a gas  pipeline failure that could disrupt the system, said Michael Bryson, PJM's vice president for operations, who led the study.

The shift to natural gas, caused by the emergence of new sources of shale gas and the retirement of a large number of coal-fired power plants in the last decade, has triggered concerns among some energy experts and renewable-power advocates that the power-generation system may be at risk of dominance by a single fuel source.

The report, "PJM's Evolving Resource Mix and System Reliability," challenged long-held assumptions that greater fuel diversity equals greater reliability. PJM's current resource profile includes natural gas, coal, nuclear, and renewable power, along with "demand response," or the ability of customers to curb or shift consumption in response to market incentives.

The report found that even if gas produced more than 80 percent of the region's electrical power – its share is now about 36 percent – the system would still be reliable.  That was "kind of a surprise," Bryson said during a conference call.

Conversely, the report found that reliability was impaired under some scenarios that included large amounts of renewable-power generation. Under a scenario in which 20 percent of the installed capacity is derived from solar power — it is currently less than 1 percent — the system was at risk on cloudy days or during high-demand winter days with low sunlight.

PJM — which coordinates power generation and transmission in 13 states and the District of Columbia — defined reliability as the system's ability to respond quickly to shifts in voltage, frequency, and demand. Some types of power generation can be dispatched more nimbly, such as gas-combustion turbines and hydroelectric plants. Others, such as wind and solar, are intermittent producers that would require large investments in energy-storage technology, like batteries, to improve their reliability.

PJM emphasized that the report examined only the reliability of the power system – the grid operator's primary responsibility – and did not weigh other politically charged factors that affect fuel choices.

"We stay away from policy issues, like environmental and jobs and things like that," Bryson said. Nor did PJM examine the economic or market impacts of fuel diversity.

Also not directly addressed by the report:  the Clean Power Plan, the Obama administration's now-dead proposal to reduce carbon emissions, renounced this week by President Trump.

Bryson said the latest report is consistent with PJM's previous research on the Clean Power Plan, which concluded that the market force of low natural-gas prices was just as likely to force coal-fired power plants into retirement as new emissions regulations would.

"Our analysis really indicated that the regulatory piece of the CPP didn't have as much impact as essentially the price of natural gas," he said.

Power generators shifted to natural gas in the last decade after stricter emissions regulations, called the Mercury and Air Toxics Standards, went into effect in 2011, inducing large numbers of noncompliant coal-fired power plants to retire. Natural gas emits fewer toxins and about half the carbon of coal generation.

Coal plants, and also some nuclear plants, continue to struggle to compete against the low price of natural gas, which is being produced in record volumes because of the emergence of new domestic gas fields such as the Marcellus Shale in Pennsylvania. The state is now the nation's second-largest gas producer.

Bryson said that PJM's current mix of power-generation sources is reliable, and that the report did not raise the need to address any immediate operational issues on the grid.

But the study could provoke a deeper look into resilience issues, especially whether the pipeline infrastructure system could accommodate an even greater shift to gas plants. Unlike other power plants, which can store energy on site, a gas plant needs to maintain uninterrupted fuel supply through a pipeline.

Bryson said he hoped the report would initiate a broader policy discussion, and invited outside experts to examine the report's data and assumptions.

"We're fine with that," he said. "We want to have the conversations."

The topic will be the focus of an April 19 PJM conference on grid reliance to be held in Philadelphia.