Viewpoint: Nuclear, the auctions and the grid

09 December 2021

US electricity grids, especially deregulated grids with auctions, have become fragile and unreliable due to over-dependence on intermittent renewables and just-in-time delivery of natural gas, together with a reliance on imports, writes Meredith Angwin. Nuclear energy, she says, could break the trifecta and prevent rolling blackouts.

I have been a nuclear supporter for many years, ever since I moved from the renewable group at Electric Power Research Institute to the nuclear group. When I moved to Vermont in semi-retirement, I noticed that Vermont Yankee was constantly attacked in the press and with demonstrations. Some friends and I began to defend Vermont Yankee with letters to the editor and counter-demonstrations. I also started a blog: Yes Vermont Yankee. My blog covered many electricity issues in New England, such as Vermont utility contracts for Hydro-Quebec power.

While blogging, I realised I was out of my depth about the grid. Sometimes, I couldn’t even understand announcements about grid decisions that affected the nuclear plant - for instance, what did "not allowed to delist from forward capacity auction" even mean? I began my studies of the grid, in order to write reasonable blog posts.

Since I was covering the grid, one blog reader suggested that I join the Consumer Liaison Group of our grid operator, ISO-NE. I did, and it was a revelation. I knew that power plants bid into an auction. In the Consumer Liaison Group, I was able understand the auction rules, and to see how different groups succeed in changing the rules.

Our New England grid has two main auctions: energy and capacity. The energy auctions are auctions for kWh, and they run every five minutes. In this auction, low-priced units get chosen first, but all the units get paid the “clearing price,” that is, the kWh price of the highest-priced unit chosen. Reliability is not valued in these auctions, and that is putting the matter mildly.

In a capacity auction, the plant is paid for its “capacity,” that is, for being available if the grid needs its output. However, receiving capacity payments does not mean that the plant is available, because it does not guarantee that the plant can get fuel. In cold weather, gas-fired plants are often not available, because homes are using more gas, and the power plants can’t get fuel.

Our local grid operator set up the Winter Reliability programme, which provided oil for some plants which could burn either oil or gas. Thirty percent of the electricity on our grid was provided by this oil during the 2017-2018 winter holiday cold snap. Fuel stored on site is valuable! However, the US Federal Energy Regulatory Commission shut down the Winter Reliability programme as not being market-based and giving an advantage to one fuel: oil.

Basically, I came to the conclusion that grid after grid, especially "deregulated" grids with auctions, are going down the path to the fatal trifecta. With auctions, it is easier and quicker to go down this path: overdependence on 1) renewables, 2) just-in-time natural gas, and 3) imports from your neighbours.

It works this way. First, renewables that get subsidy payments can "outcompete" other plants, because of the subsidies. Wind especially can bid into the energy auctions at zero cents or below, and it will usually be chosen first, as the least expensive set of plants. Meanwhile, the wind turbines get their subsidy payments, so they are profitable. Consequently, many wind turbines are built.

However, wind and solar are intermittent, and they need to be backed up by "fast acting resources". This is not about load following, which tends to be a rather smooth process. This is about "fast acting when the wind dies down or the sun sets". Gas-fired plants can provide this service and they do.

So far in this story, the grid has become dependent on intermittent renewables and just-in-time delivery of natural gas. Just-in-time gas delivery failed in bad weather in Texas and in New England. It is now in trouble in Europe. Two legs of the fatal trifecta are in place. In the final part of the trifecta, the grid operator says: we can always get electricity from neighbouring grids (import electricity). But the neighbours are having the same weather you are having. In bad weather, the neighbouring grids are not going to export power when they need it themselves.

The outcome of this process is a fragile, unreliable grid, deep in the fatal trifecta, and subject to rolling blackouts.

To break this scenario, we need to take grid reliability seriously, including by planning. Before the auction systems were implemented, Integrated Resource Planning was important. It is still done in many areas, but it is almost irrelevant if the area has the auctions. Also, fuel stored on site should be encouraged and subsidised by the grid operator. Since wind turbines can be subsidised, on-site fuel could also be encouraged. On-site fuel includes the nuclear fuel that can keep a plant going for 18 months without refuelling, but it would also include oil to be stored at dual-fired gas plants.

Unfortunately, many areas of the USA and Europe are pushing toward 100% renewables. They are launching themselves at the fatal trifecta, and basically doing everything to encourage it. This path will not end well, and we can see the beginning of the end already.

Grid reliability is absolutely key to people's health and prosperity. In many areas of the world, people have forgotten that, and instead are putting their faith in renewables and supposed markets. When all is said and done, I consider my book - Shorting the Grid, the Hidden Fragility of Our Electric Grid - to be an exposé of what is actually happening on the grids.

It is hard for ordinary people to find out what is happening on the real grids. In contrast, it is easy to find out about the grids we "could" have. Many popular articles and academic papers describe what I call the "Could Grid". In the Could Grid, we have huge batteries available, plus carbon capture, plus green hydrogen. And so forth. Not many articles describe the grids we have, or the way the auctions work, or the path of the fatal trifecta.

Supporting nuclear energy could break the trifecta and prevent rolling blackouts. Nuclear supplies steady, reliable energy. Claiming that reliability doesn't matter and all we need is flexibility - that assumes that we keep building more and more intermittent renewables, and therefore must build "flexible" gas plants to back them up.

If our aim is low-emission power, nuclear will provide that. If our aim is steady power, nuclear can provide that without overbuilding gas-fired plants to back up the overbuilding of renewables. If our aim is reliable power in cold weather, nuclear has fuel on site, without forcing the grid operator to set up complex Winter Reliability programmes. However, for nuclear to survive in auction areas, some of the auction rules must change to value steady power that is available when needed. Payment for reliable power is currently undercut by intermittent plants that receive so many subsidies that they don’t actually need to be paid for kWh. Encouraging nuclear will take some changes to grid auction rules, but that is not impossible.

The first step is knowing about the auctions, and how they work. The second step is changing some aspects of the auctions. In my opinion, all citizens need to know about the real grids, not just the Could Grid. We need to work to keep our real grids reliable.

Meredith Angwin is a physical chemist and a former project manager at the Electric Power Research Institute. Her most recent book is Shorting the Grid: The Hidden Fragility of Our Electric Grid.