Two Key Power Industry Trends for 2023

If an elderly but distinguished scientist says that something is possible, he is almost certainly right, but if he says that it is impossible, he is very probably wrong." ~ Arthur C. Clarke

It is abundantly clear that 2023 will embody the continued deployment of anticipated technologies decades in the making. It is also clear that 2023 will require a focus on threats to grid reliability that are not new, but dramatically increasing. Two key areas are the ongoing integration of invertor based resources (IBRs) into reliable system operations, and the aspects of physical security in both severe weather preparedness and deliberate attacks to system components.

The industry continues to refine modeling requirements for IBRs through both the North American Electric Reliability Corp. (NERC) standards and interconnection studies and requirements. The practice of rating IBRs at 74.9 MVA to avoid registration with NERC as a Generator Owner/Operator will start to wane. Too much value is being left on the table to limit a generation facility when compliance with the NERC requirements is becoming increasingly standardized and opportunities for outsourcing compliance management are plentiful. Also, it is likely that the bright line threshold of 75 MVA will come down as a greater percentage of generation falls below that level.

From an investment perspective for generators, we see an increasing appreciation for added protections, both physical and cyber, mandated by the NERC standards. With less risk of non-compliance in the sense of standardized procedures and programs, the implicit value of assets embracing measures deigned to ensure their availability and cyber security will increase.

Until recently, IBRs have been considered by some as outliers due to their intermittency and lack of dispatchability. Now, that is about to change. Battery storage, either stand alone or coupled to solar or wind generation, may well be the Rosetta stone that translates traditional system operation, matching load into a dynamic degree of near infinite modes of load and generation. This translation is the beginning of all types of renewables being absorbed into the holistic landscape of system operations.

With new optimization measures in their toolbox, generator and transmission operators will have the ability not to just to follow load but to determine it. Batteries and electric vehicle charging schemes can change from load to generation in seconds. Excess power from wind facilities will have increased value in traditional off peak times as batteries can be recharged. One example is highlighted by Jason Atwood, Director, Business Development at Anchor Power Solutions.

“Renewable energy will continue to surge especially with the Inflation Reduction Act and the offer of Investment and Production Tax Credits. My hope is that we focus more on using nodal studies to site generation at optimal locations and avoid compounding the existing transmission congestion across the nation.

Battery Storage Systems will become even more important in meeting energy and ancillary service needs, but the traditional peak hours use of batteries will change. Look for batteries to shift run time from 2:00pm to 6:00pm to 8:00pm to midnight. As solar generation decreases around 8:00 pm and wind generation has not yet ramped up, we will see a void of generation accompanied with energy and ancillary service price spikes. Batteries can fill that gap between 8:00pm and midnight.”

The [TR1] [JS2] 2021 NERC Long-Term Reliability Assessment projects a rapid growth of IBRs—mostly wind, solar photovoltaic (PV), battery energy storage systems, and hybrid plants—with projections of nameplate capacity for solar PV projects in all development stages exceeding 500 GW over the next 10 years. At the same time, wind projects are projected to total 360 GW of nameplate capacity.[1]

We also anticipate NERC Critical Infrastructure Protection (CIP) standards will continue to be revised to put more expectations and requirements on what have historically been classified as Low Impact facilities. Again, the increasing percentage of the generation and transmission/
distribution infrastructure falling into a Low Impact group will become too great a risk to the system if only minimal requirements are applied.

Work also continues on severe weather preparedness in the revisions of the NERC standards EOP-011 Emergency Operations, and EOP-012 Extreme Cold Weather Preparedness and Operations.[2] Issues of concern include the coordinated actions of Reliability Coordinators, Balancing Authorities and Transmission Operators, and for Generator Owners and Operators in the areas of cold weather start-up times, cold weather critical components, implementation of freeze protection measures, and documented training. While the implementation timeline for the full set of requirements is 36 to 48 months, we can expect initial measures to be implemented as soon as winter 2023. For some entities, this implementation represents new activities for which procedures will be developed and training designed and delivered. For others, who already have robust programs for winterization and storm preparedness, it will be a review of current practices and verification that evidence is archived where it needs to be.

Another major risk factor to system reliability lies in the astonishing vulnerability of critical infrastructure to deliberate attacks. The NERC CIP-014 Physical Security standard begins to address this vulnerability through a series of studies to identify crucial substations and control centers through a weighted voltage value per line and subsequent risk assessments. From there, site specific physical security plans are developed with a timeline for plan execution. We anticipate further refinements to these requirements as the need to protect these assets escalates proportionally to the incidents.

Finally, we see an exponential increase in the need for training, for operations personnel but also for support personnel, managers, and developers. Traditional risks of a retiring work force, the introduction of less experienced resources, rapidly changing risks and mitigation strategies, and the promotion of a nimble and proactive workforce will continue. Added to that, the larger seat at the table for renewables by virtue of their growing influence and value gives them a stronger voice in strategy development and enables more influence on decision points that directly affect their organizations. Organizations that know the story of how the interconnected high voltage grid became what it is, understand the current challenges, and have the ability to contribute to solutions will determine their success in 2023 and beyond.