How did the power grid perform during the recent cold snap?

The first week of the year brought record low temperatures to 28 major cities across the Eastern United States and was named the coldest first week of January on the books. This had analysts and business owners alike wondering how it might impact energy prices and our energy infrastructure, especially compared to previous winters.

A Look Back at the Polar Vortex of 2014

You might recall that during the Polar Vortex of January 2014, the most recent similar event that brought record low temperatures and heavy snow falls, our power infrastructure was extremely challenged. PJM, the nation’s largest power pool, experienced generator outages of almost 24 percent of available generation at that time.

Power system operators were scrambling from Washington, DC to Maine as customer’s demand for power spiked.

During the Polar Vortex a large nuclear plant tripped offline and could not generate power in theMid-Atlantic.  Several dual-fuel generation plants in New England, that should have been able to switch from burning natural gas to oil, could not make the switch.  This was because they either didn’t have sufficient supply of their back-up fuel, or had not sufficiently tested their equipment to confidently run.

Power Prices Spike to Record Highs

All of this resulted in a situation where power prices spiked to record highs. Prices during the peak eight day stretch of polar vortex averaged $327 MWh in New England, $404 MWh in New York City and $344 MWh at the PJM Hub. The grid operators were calling for voluntary reductions of load through their demand response programs to balance system needs, had numerous days where they were operating under emergency conditions and many have reflected that rolling brownouts were very close to being a reality. 

The nation’s grid operators went to work after those events and sought to implement several changes. Those changes included:

• How generators get compensated for performance
• How generators get dispatched during extreme weather events
• Ensuring adequate back-up fuel supplies are procured ahead of winter season
• Revisions on protocols planned for maintenance on key transmission lines

We’ve also seen the addition of new efficient generation over the past three years, while older less efficient and less reliable units have retired.  

So How Did We Fair During This Most Recent Cold Snap?

For context, PJM and the other eastern Regional Transmission Organizations experienced some of their coldest consecutive winter days since the Polar Vortex in January 2014. That cold was accompanied by snowfall and high winds as a new term entered our lexicon, “the bomb cyclone”.

 It was interesting to see frozen lakes in Georgia, the first snowfall in Florida in a decade and recorded wind chills in New England of minus 25 degrees.

It is comforting to know that our energy infrastructure performed much better this time around, and while we can’t say there were no problems, it does appear that we came out of this week with little major news to report.

PJM did not need to utilize any emergency measures, such as calling for emergency demand response or issuing a maximum generation alert, which requires all generation be prepared to run. 

Forced outage rates of generation were down significantly from the Polar Vortex. For context, during the Polar Vortex there were approximately 40,000 MWs compared to 22,906 MWs the past week or so. 

In New England, the grid operator reported no reliability issues. The winter reliability program the grid operator put in place following the Polar Vortex, which compensates generators to have fuel oil on hand, was significant as almost 35 percent of the power generated on some days was being fueled by oil.

The New York system operator also reported no reliability issues, with adequate supply of generation to meet the regions demand and no forced outages of the high voltage transmission system.

To be certain, power prices spiked much higher during the first eight days of January 2018. Power prices for day ahead delivery averaged:

• $149 MWh at the PJM Hub,
• $204 MWh in New York city and
• $196 MWh in New England during the on peak hours.

These reflect a 5 to 10 times increase from prices preceding the cold event. But these price increases should be expected during periods of extreme demand and are a signal that the competitive wholesale electric market is working.

All in all, I would say that the market responded in a manner that reflected the situation and that the grid performed the way we would want it to. The industry just passed our first major post-Polar Vortex test.

Note: Next week, we will look at how the cold event impacted the natural gas markets and infrastructure.