Should EEA-1 Require “All Available Generation Resources in Use”?
An Introduction to EEA
An Energy Emergency Alert, or EEA, is an emergency procedure established by North American Electric Reliability Corporation (NERC) to communicate energy emergencies among Balancing Authorities (BAs) and Reliability Coordinators (RCs). The alert also serves as a public notice, warning the public that their power grid is under stress. The EEA system has three levels, with EEA-1 being the lowest, indicating tight energy supplies and a potential forthcoming resource deficiency, and EEA-3 being the highest, suggesting firm load interruptions are around the corner.
The EEA system was developed by NERC in 2005 as part of the emergency operations standard EOP-011 when energy storage was less significant in the grid. Eighteen years later, things have changed quite a bit in 2023 — stand-alone energy storage and resources with storage as a component are playing an increasingly crucial role in the grid. These resources, compared to traditional power plants, are use-limited, meaning the more they are generating now, the less they can generate later in an energy cycle due to physical or contractual limits. Unlike hydro storage, for which the cycle is measured by month or longer, battery storage’s energy cycle is much shorter, typically measured by day or even hour. The short energy cycle is more challenging to handle in real-time operations and requires thoughtful operations strategies, especially during an energy emergency. To better prepare for a grid with more use-limited resources, the conditions of each EEA should be carefully reevaluated and justified. This article will focus on EEA-1.
EEA-1 in A Use-Limited Resource Dominated Grid
Energy storage resources have more operation constraints than many people realize today. For example, these resources typically have a daily cycling limit of 1 to 2 to meet the battery manufacturer’s warranty conditions. The average battery charging percentage needs to be maintained around 50% every 24–48 hours. Furthermore, there is an 85–90% AC round-trip efficiency for every battery, meaning the electricity generated from the battery is always 10–15% less than the electricity used to charge it. In addition, if the battery is part of a hybrid resource, there will be a six-year Investment Tax Credit (ITC) period, during which the battery cannot be charged from anywhere in the grid, but the solar or wind from the same plant per the old IRA rule and most existing Power Purchase Agreement (PPA) contracts today. The good news is that the original “75% cliff” rule was lifted for energy storage in the Inflation Reduction Act, effective in August 2022. While moving forward, grid charging will be less of a concern, the change in the rule doesn’t alter the fact that energy storage is not a resource on its own — it must be charged from other resources before supplying energy to the grid.
According to EOP-011–1, to be in EEA-1, a BA needs to experience “conditions where all available generation resources are committed to meet firm Load, firm transactions, and reserve commitments, and is concerned about sustaining its required Contingency Reserves.” The requirement of committing all available generation resources makes sense if doing so would not jeopardize the portfolio’s generating capacity later. However, imagine the grid has the majority of its resources use-limited: once they are dispatched to qualify the BA for an EEA-1, there will be less left for later when the day peak hits. In this case, is it still wise to require all available generations in use to declare an EEA-1? Maybe not.
With the current EEA-1 requirement, grid operators can consider two approaches when a BA is concerned about maintaining its required contingency reserves. The grid operator can commit all available generation resources and declares an EEA-1. This approach qualifies the BA for an EEA-1, but potentially at the cost of the grid’s reliability later during peak time when the net load is higher (higher native load with solar ramping down). This is because instead of saving the used-limited energy storage resources for peak hours (higher value), they were (prematurely) discharged just to qualify the BA for an EEA-1, when there is no “real issue” yet (lower value). If the storage cannot be recharged in time (because of limits on battery, insufficient solar/wind, etc.), actual energy deficiency could occur later and the BA will have to declare an EEA-2 or even EEA-3. These higher EEAs, however, could have been avoided had “all resources in use” not been required by EEA-1. In other words, the opportunity cost of committing all available generation resources for EEA-1 can be very high!
Because there is no requirement to declare EEAs in order, the second approach is to skip EEA-1 and declare a higher EEA level when necessary. This approach will avoid the use-limited resource dilemma discussed above but suffers from two issues: First, this approach makes EEA-1 essentially valueless. Second, one reason for having an EEA-1 is to give customers and neighboring entities a heads-up that the BA could expect some energy hardship so that the surrounding entities can hopefully offer some energy assistance to the BA in EEA and reevaluate their own energy schedules in case the problem becomes more severe. Declaring higher EEAs levels directly often leads to surprises and a lack of preparation, both from an energy buyer’s or seller’s perspective. Doing so may add additional burdens to the neighboring BAs and RC’s already busy emergency operations.
The Solution
The solution is straightforward. I propose two options below.
- Option 1: simply remove “all available generation resources are committed” from the requirement of the EEA-1 declaration. In this way, the grid operator wouldn’t worry about weighing the opportunity cost of using a resource now versus later and can declare an EEA-1 using their best judgment based on the supply and demand outlook and the expected grid condition.
- Option 2: rephrase the requirement as “all available non-use-limited generation resources are committed.” This option eliminates the possibility for BAs to game the system by prematurely declaring an EEA-1 and still avoid an increasing opportunity cost as there would be in the original definition.
Final Thoughts
As non-traditional generation resources transition from grid decorations to the backbone of energy supplies that serves firm Load, it is crucial and necessary to review many concepts, definitions, best practices, and industry norms that have been used in the power industry for decades! It is not too late to start yet. Actually, there is no better time than now to start.
