Power System Reliability

Extreme weather events, including major hurricanes along the eastern and Gulf coasts, freezing weather in the Northeast, and uncontrollable wildfires in the West continue to reveal the potential risks to power system reliability. In addition to mitigating these potential risks, electric power system operators face the ongoing challenge of ensuring the current grid system has adequate infrastructure to keep pace with the increasing penetration of renewable energy resources, including wind and solar photovoltaics. A UGA agricultural and applied economist compiled data from two annual surveys administered by the U.S. Energy Information Administration to study the problem. Based on his findings, he forecast the near-term future costs associated with potential disruptions for states across the U.S. with current renewable support policies in place. Results suggest that as the net capacity supplied by wind and solar increases, the total cost of sustained power system interruptions ranges from $1.5 million to $2.5 trillion. The cost per unserved kilowatt-hour of electricity ranges from $29 to $160. This study is important because the grid system is still in its infancy regarding the shift towards non-centralized generation. Yet next to natural gas, newly installed electric capacity is projected to come primarily from wind and solar. The full costs of increasing the capacity of renewable power sources in the grid, which vary across states and regions, need to be accounted for when assessing the benefits and costs of state and local public policies aimed at increasing power generation from wind and solar. Failure to account for these costs can lead to inefficient policy and management decisions by private utilities, government agencies, and elected officials. Recognition and quantification of these costs may also help utilities discover new means for improving the grid’s ability to absorb additional renewable capacity, thereby reducing interruption costs. Reducing interruptions costs is a win-win-win for the “triple bottom line” as it will help the profitability of utilities, help to improve the environment, and improve overall social well-being.