Many parts of North America are at risk of experiencing blackouts this summer, the North American Electric Reliability Corp. (NERC) warned in a new report.
There could be widespread summer blackouts amid shuttered power plants, supply chain snafus, and intense heat, according to the nonprofit organization’s “Summer Reliability Assessment” report (pdf). The group, which promotes grid stability and security, cautions that power supplies in a large swath of the United States and Canada, extending from the Great Lakes to the Midwest, will be overstretched because of growing demand.
NERC added that electricity sources will be notably tighter because of older plants being phased out or other facilities struggling to find enough fuel. The report also notes that power grids could be the target of cyberattacks in the coming months.
“The electricity and other critical infrastructure sectors face cyber security threats from Russia and other potential actors amid heightened geopolitical tensions in addition to ongoing cyber risks,” the report states. “Russian attackers may be planning or attempting malicious cyber activity to gain access and disrupt the electric grid in North America in retaliation for support to Ukraine.”
The early retirement of fossil fuel plants has been a critical issue throughout the energy landscape, while natural gas and coal entities are running at maximum capacity.
Drought conditions currently in multiple areas of North America already have limited production from hydroelectric dams. In addition, wildfires could darken skies with smoke that could threaten rooftop solar panels, prompting households to depend on the power grid again, adding more strain to the overall system.
NERC stated that a growing number of “solar developers are indicating to utilities that they will not be able to meet expected commission dates,” including projects scheduled for completion this summer.
From the province of Manitoba to the state of Louisiana, study authors warn that the capacity shortfall could trigger “energy emergencies” at the height of sizzling summer conditions.
California has already warned residents that it’s at risk of blackouts for the next three summers as it transitions to green energy. The Golden State is weighing keeping a nuclear power plant open to offset the potential loss of hydropower.
Texas, which is one of the world’s largest energy producers, could also face issues over the next several months as a “combination of extreme peak demand, low wind, and high outage rates from thermal generators could require system operators to use emergency procedures, up to and including temporary manual load shedding.”
Texas residents are being asked to conserve power in the heat to avoid summertime blackouts. Experts recommend that households keep their thermostats at 78, wait until 8 p.m. to run large appliances, and have an emergency plan in the event of a power outage. Meanwhile, the Electric Reliability Council of Texas says the state maintains enough power to satisfy all-time-high demand this summer.
North America could get a glimpse of summer 2022 by what is currently happening in Asia.
The continent is going through a heatwave that has led to daily blackouts in India, Nepal, Pakistan, and Sri Lanka. The conditions have put more than 1 billion people at risk. China and Japan could also face tight power supplies in coming months.
Industry officials in Beijing cautioned that the energy situation will be challenging to navigate, although the government has pledged that the country will keep the lights on. Tokyo is taking a proactive approach, urging residents to conserve energy and change their habits over the next several weeks.
Summer Headaches Creating Winter Woes?
Natural gas is currently the chief power-plant fuel in the United States. Inventories are coming into question as output and stocks have failed to keep up with soaring demand in the global post-pandemic economy. Moreover, with the United States expected to ship more liquefied natural gas (LNG) to Europe this year as the eurozone reduces its dependence on Russian energy, market analysts are concerned that the United States will struggle to satisfy domestic and foreign demand.
That’s why industry observers have been paying extra attention to the Energy Information Administration’s (EIA) weekly storage report.
In the week ending May 20, total supplies stood at 1.812 trillion cubic feet, 387 billion cubic feet less than the year-earlier period. That’s also 327 billion cubic feet below the five-year average of 2.139 trillion cubic feet. The United States has reported seven consecutive weeks of supply builds, but the gap between current and historical inventory levels continues to widen amid warmer temperatures.
“Inventories have been whittled down by strong demand for liquefied natural gas among European buyers replacing Russian gas and domestic drillers who have been slow to increase production despite the highest prices in years,” wrote Phil Flynn, author of “The Energy Report.”
But while the focus is currently on summer demand, the energy sector is already eyeing potential winter shortages, with Rystad Energy in a statement calling it “a perfect and unavoidable storm.”
This year, global LNG demand is projected to touch 436 million tons, topping the available supply of 410 million tons, the independent energy research company forecast.
“A perfect winter storm may be forming for Europe as the continent seeks to limit Russian gas flows,” Kaushal Ramesh, an LNG senior analyst at Rystad, wrote in a research note. “The supply imbalance and high prices will set the scene for the most bullish environment for LNG projects in more than a decade, although supply from these projects will only arrive and provide relief after 2024.”
Some argue that the energy situation might depend on China. Should Beijing move on from its zero-COVID strategy, allowing the economy to operate at full capacity, industrial LNG demand could strengthen in the second half of 2022.
The price of natural gas has soared more than 160 percent year-to-date, topping $9 per million British thermal units. That’s the highest level since 2008, as investors price in soaring demand and inadequate supply volumes over the coming years.