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(Houston, TX) – Federal Energy Regulatory Commission (FERC) Chairman Mark Christie on Thursday opened his remarks at CERAWeek by invoking former President Franklin Roosevelt’s quote that America has a “rendezvous with destiny.”
Nearly 90 years after that 1936 speech, Christie remarked that when it comes to the reliability of the electric grid, we have a “rendezvous with reality.”
The reality is, electricity demand is outpacing supply. U.S. electricity demand could rise 128 GW over the next five years, driven by data centers and manufacturing growth, according to a recent report from Grid Strategies.
“We’re seeing load forecasts that, in my experience as a state regulator, are mind boggling,” said Christie.
Renewable energy resources, while growing quickly, are weather-dependent and can’t be relied upon all the time.
“It’s not enough to have enough power supply on average from your different resources over the course of the year,” said Christie. “We have to have sufficient power supplies at peak times.”
Citing the example of PJM Interconnection, the largest grid operator in the U.S., which hit an all-time winter peak demand in January, Christie noted that 88% of the power generation during that peak came from dispatchable resources. This included 44% from natural gas, 22% from nuclear and 22% from coal. Meanwhile, wind contributed only 2.4%, and solar was largely ineffective due to the pre-dawn peak.
The challenge of skyrocketing demand is further compounded by the retirement of aging dispatchable units, primarily coal, in PJM and other regions.
One of the fundamentals of the energy industry is each form of generation has its trade-offs.
Coal, while it provides baseload generation, continues to be phased out in the U.S. for environmental reasons. It’s been more than a decade since the last new coal plant came online in the U.S., and there are no plans for new coal generation.
Nuclear power, consistent and reliable once built, has extraordinarily expensive CAPEX and takes a long time to build. Smaller, more modular units, with the promise of a faster and cheaper build, are still years away and far from a sure bet.
Simple cycle gas turbines, commonly used in peaking power plants because of their rapid startup capabilities and ability to quickly respond to fluctuating demand, will continue to be built.
But Christie says it’s combined cycle units that are the hero of this story, at least for now, due to their high efficiency and use as baseload power resources.
“When you run a roll call, it doesn’t take long to get to combined cycle gas as a baseload generating resource of choice,” he said.
The FERC Chairman noted there are challenges, of course. Building more natural gas combined cycle (NGCC) plants will require more gas pipelines, which FERC approves.
Recent history can tell us pipelines will continue to face opposition from different stakeholder groups.
“Every single pipeline for a natural gas asset that FERC approves, even down to a compressor station, is going to be litigated,” said Christie. “We have to make sure that every one of our orders is legally durable and is going to stand up in court.”
Christie emphasized that FERC’s role is not to permit generation facilities—that responsibility lies with individual states. He urged states to accelerate the development of combined-cycle gas plants, invoking the current stark realities and threat of potential severe supply shortages.
He also referenced NextEra CEO John Ketchum’s comments from a prior CERAWeek session. Ketchum had said while the U.S. is going to need an “all-of-the-above” energy strategy, he also warned against scorning renewables, which can come online quickly relative to other forms of generation.
“Saying that it takes seven years to build combined cycle natural gas is not an argument not to do it, we have to do it,” Christie retorted Thursday.
