Minnesota at high risk of electricity shortages for the next five years, warns grid monitor

Grid monitors warn that the electricity system that serves Minnesota and 14 other states, the Midcontinent Independent Systems Operator (MISO), is at a high risk of blackouts, and this threat will get worse over the next five years because coal, nuclear, and natural gas generation exit the system faster than replacement resources are connecting.

These reliability concerns should be top of mind for liberal lawmakers seeking to pass new energy mandates requiring that 100 percent of Minnesota’s electricity come from carbon-free sources by 2040 because American Experiment’s research found wind and solar mandates would leave the grid vulnerable to electricity shortages.

The warning

The warning was issued in the recently released Long Term Reliability Assessment (LTRA) published by North American Electric Reliability Corporation (NERC), a not-for-profit regulatory authority whose mission is to reduce risks to the reliability and security of the grid.

MISO joins California in the high-risk category, which means that the risk of rolling blackouts is higher on these systems than on any other systems in the country.

Missing megawatts in MISO

NERC warns MISO is facing resource shortfalls across this entire assessment period stretching from 2023 through 2027.

This is unsurprising because MISO had a 1,200-megawatt (MW) capacity shortfall in 2022, and NERC expects this to grow to 1,300 MW for the summer of 2023. We will know more about the actual size of the capacity shortfall this spring after MISO holds its capacity auction, but the shortfalls are expected to grow moving forward as more coal and natural gas plants are retired. By 2031, the reserve margin is anticipated to be negative.

The problem

NERC states that capacity deficits, where they are projected, are primarily the result of generator retirements that have yet to be replaced. This means reliable coal, nuclear, and natural gas power plants are being retired without adequate replacements.

Green group blackouts

But why hasn’t there been enough replacement capacity built to shore up the grid as coal plants are retired?

In some instances, the lack of replacement capacity is the result of legal actions from groups like the Sierra Club, Minnesota Center for Environmental Advocacy (MCEA), and the Union of Concerned Scientists, who are trying to stop the construction of a new natural gas plant in Superior, Wisconsin, that would be needed for grid reliability if the coal-fired Boswell Energy Center is (unwisely) retired.

In other instances, wind and solar advocacy groups like MCEA, Fresh Energy, and the Minnesota Citizens Utility Board have pressured electric companies like Xcel Energy to abandon their plans to build an 800 MW combined-cycle natural gas plant to help offset the loss of the 2,238 MW Sherburne County (Sherco) coal-fired power plant in Becker, Minnesota by intervening at the Minnesota Public Utilities Commission (PUC).

Xcel Energy caved to the pressure and abandoned the gas plant in Becker. Now, the company only says it will add a mystery “firm peaking” resource sometime in the late 2020s while still planning to shut down Sherco 2 (680 MW) in 2023, Sherco 1 (680 MW) in 2026, and Sherco 3 (878 MW), leaving Minnesotans increasingly vulnerable to blackouts.

This same phenomenon is likely playing out in utility commission proceedings throughout the MISO footprint.

NERC’s recommendations look like American Experiment’s

NERC’s recommendations to prevent rolling blackouts look very similar to those issued by American Experiment in our report detailing how the 100 percent carbon-free mandate could lead to electricity shortages. NERC stated:

Energy risks emerge when weather-dependent generation is impacted by abnormal atmospheric conditions or when extreme conditions disrupt fuel supplies. In areas with a high dependence on VERs and natural-gas-fired generation, Prospective Reserve Margins (PRM) are not sufficient for measuring resource adequacy:

Industry and regulators should conduct all-hours energy availability analyses for evaluating and establishing resource adequacy and include extreme condition criteria in integrated resource planning and wholesale market designs. 

State and provincial regulators and independent system operators (ISO)/regional transmission operators (RTO) should have mechanisms they can employ to prevent the retirement of generators that they determine are needed for reliability, including the management of energy shortfall risks. 

Regulatory and policy-setting organizations should use their full suite of tools to manage the pace of retirements and ensure that replacement infrastructure can be timely developed and placed in service. If needed, the Department of Energy should use its 202(c) authority as called upon by electric system operators.

Resource planners and policymakers must pay careful attention to the pace of change in the resource mix as well as update capacity and energy risk studies (including all-hours probabilistic analysis) with accurate resource projections.

The most relevant recommendation issued by NERC is to prevent the retirement of generators that are needed for reliability and to pay careful attention to the pace of change in the resource mix.

Liberal lawmakers may be eager to pass legislation to reduce carbon dioxide emissions, but they would be wise to heed the warnings issued by NERC. If they don’t, the negative consequences of rolling blackouts will be on their hands.