ERO Reliability Risk Priorities Report

ERO Reliability Risk Priorities ReportPeter Brandien, RISC ChairMember Representatives Committee MeetingNovember 1, 2016

RELIABILITY | ACCOUNTABILITY2

• Changing Resource Mix• Bulk Power System Planning• Resource Adequacy and Performance• Asset Management and Maintenance• Human Performance and Skilled Workforce• Loss of Situational Awareness• Extreme Natural Events• Physical Security Vulnerabilities• Cybersecurity Vulnerabilities

RISC’s Proposed 2016 Risk Profiles


• Key Inputs Committee’s Subject Matter Expertise Pulse Point Interviews FERC Technical Conference MRC Policy Input

• Assessment of Risk Profiles High Moderate Low

Risk Evaluation


• Three risk priorities developed: High risks are evolving, with impact and mitigation less clear, requiring the

most attention on industry focus to understand and mitigate Moderate risks represent a large potential impacts, with industry

consensus on necessary mitigations. Low risks do not mean impact is small, rather the profiles are understood

with clearly identifiable mitigation steps, and the risk trend is stable or decreasing.

• Industry must remain vigilant in addressing Moderate and Low risks to prevent these profiles from being escalated higher

Risk Priority Process


• High Risk Profiles Cybersecurity Vulnerabilities Changing Resource Mix Bulk Power System Planning Resource Adequacy

• Moderate Risk Profiles Loss of Situational Awareness Physical Security Vulnerabilities Extreme Natural Events

• Low Risk Profiles Asset Management and Maintenance Human Performance and Skilled Workforce

Risk Priorities


RISC’s Proposed 2016 Risk Profiles


2017–2020 ERO Enterprise Strategic Plan and MetricsMark Lauby, Senior Vice President and Chief Reliability OfficerMember Representatives Committee MeetingNovember 1, 2016


• Adjustments since August: ERO Enterprise vision, mission, core values, and principles refined Contributing activities aligned with Reliability Issues Steering Committee

(RISC) risk profile recommendations Longer-term strategic planning captured in the risk profiles Reliability metrics enhanced Initial draft of NERC performance metrics developed

• Policy input requested for November

Background


• ERO Enterprise Goals and Contributing Activities• ERO Enterprise Reliability Metrics• NERC Performance Metrics

Key Components


• Five ERO Enterprise goals with activities for the next three years: Goal 1: Risk-responsive Reliability Standards Goal 2: Objective and Risk-informed Compliance Monitoring, Enforcement,

and Organization Certification and Registration Goal 3: Identification and Mitigation of Significant Risks to Reliability Goal 4: Identification and Assessment of Emerging Risks to Reliability Goal 5: Effective and Efficient ERO Enterprise Operations

ERO Enterprise Goals


• Six enduring ERO Enterprise reliability metrics with measures of success, thresholds, and targets adjusted annually as needed: Metric 1: Fewer, less severe events Metric 2: No gaps in Reliability Standards and compliance monitoring Metric 3: Resource deficiencies are foreseen Metric 4: No unauthorized physical or cyber security access resulting in

disruption to Bulk Electric System facilities Metric 5: Reduced reliability risk from noncompliance Metric 6: Reduced risks in targeted areas

ERO Enterprise Reliability Metrics


• Events caused by unit forced outages due to cold weather• Annual Misoperations rate of performance• Number of: Automatic AC transmission outages caused by human error Transmission outages due to AC substation equipment failures Transmission line forced outages due to vegetation

Metric 6: Reduced Risks in Targeted Areas


• Four metrics for improving ERO effectiveness and efficiency: Implementation of action plans in response to ERO Enterprise

Effectiveness Survey results Implementation of ERO Enterprise technology solutions Implementation of Regional Entity oversight plans and adherence to the

Rules of Procedure Execution of Business Plan and Budget (BP&B)

NERC Performance Metrics


• Remove year designation (e.g., 2018–2021) and move to every-other-year review cycle

• Annual BP&B development always based on latest strategic plan• Creates “on years” and “off years” for risk prioritization and

strategic planning

Strategic Planning Moving Forward


• On year (starts 2017, then every-other year): March – RISC Reliability Leadership Summit August – RISC Reliability Priorities Report (RISC Report) accepted November – ERO Enterprise Strategic Plan and Metrics approved; includes

measures/thresholds/targets for the following year

• Off year (starts 2018, then every-other-year): August – RISC affirms risk profileso If there are unexpected emerging risks, RISC Report will be revised and accepted

November – Measures/thresholds/targets for the following year approvedo If there are revisions to the risk profiles in August, the ERO Enterprise Strategic

Plan and Metrics may be revised and approved

Strategic Planning Moving Forward


2016 Long-Term Reliability AssessmentPreliminary Overview

John Moura, Director, Reliability Assessment and System AnalysisMembers Representatives CommitteeNovember 1, 2016


NERC Reliability Assessments

• 10-year Outlook• Peak demand forecasts• Resource adequacy• Transmission adequacy• Key issues - emerging trends Technical challenges Evolving market practices System elements/dynamics Potential legislation/regulation

• Regional self-assessment• Ad-hoc special Assessments


#1: Resource Adequacy - Reserve Margins in all assessment areas appear sufficient in the short term; three areas fall under in the long-term

2021 (Year 5)

2026 (Year 10)

Long-Term Reliability Assessment2016 Reliability Issues in Focus


#1: Resource Adequacy - Unconfirmed retirement sensitivity applied to the reserve margin assessment

• Organization of MISO States’ 2016 Survey• Regional Haze ruling and CPP in ERCOT

MISO ERCOT



Non-Coincident Peak Demand Projections

10-Year Compound Annual Growth Rate – Peak Demand

Energy (MWh) projections follow same trend, annual growth changes from 0.8 percent in 2015 to 0.4 percent for 2016


Projected Generation Mix

Planned Capacity Additions by Generation Type and Tier, 2017 - 2026


Capacity Contributions from Variable Resources

Wind Credit:Average between10 – 20 percent

Solar Credit:Region-Specific,high-end between 50 and 85 percent



#2: Single Fuel Dependency – Natural Gas-Fired generation continues to increase capacity projections and rate of growth

2016 NERC-Wide Natural Gas Capacity Projections Compared to Prior Projections



#2: Single Fuel Dependency – Natural Gas-Fired generation continues to increase capacity projections and rate of growth

Areas with High Penetration of Natural Gas

Assessment Area

5-year Increase in Gas Capacity (%)

2021 Share of Gas Capacity (%)

FRCC 11.3 69.0

WECC-CAMX* 5.6 68.2

TRE-ERCOT** 13.1 63.3

NPCC-New England 13.8 52.3

*WECC-CAMX has ability (limited) to increase imports from interconnection if gas units are forced out of service.

**Meshed pipeline grid provides some resilience and mitigation options should a pipeline contingency occur



#3: Nuclear Uncertainty •High cost of operation/installations/commissions•Aging units• Environmental regulation impacts (direct/indirect)• State programs/initiatives• Local reliability impacted when plants retire



#4: Essentially Reliability Services: System requirements need to be studied, planned, and communicated with policy makers•Voltage, Frequency, and Ramping capability•CAISO experiences their projected duck curve 4 years earlier than

forecasted•Areas with largely increasing VER (particularly solar PV) foresee

ramping challenges quicker than expected



#5: Distributed Energy Resources•Quickly increasing installations•Observability challenges creates difficulty in measuring impacts•Higher penetration of DER results in changes to planning and

operational considerations to maintain BPS reliabilityUS, Actual and Forecast Distributed Solar PV Installations (converted to GW-AC)

Source: GTM research


Probability-Based Resource Assessment

•Probability analysis allows NERC and the industry to assess the likelihood of rare events (such as a capacity deficiency)

•Variable resources increase Reserve Margin “confidence bands”


Additional Emerging Issues Highlighted

•Demand-Side Management•Clean Power Plan implementation•Maintaining system strength• State of modeling challenges and improvement initiatives• System restoration with high penetration of asynchronous

resources• Increased need for reactive power devices•2017 and 2024 solar eclipse


LTRA Timeline

Date Milestone

Week of October 24 Sent to Planning Committee (PC) and MRC for review

November 9 – 16 PC email vote to accept LTRA

November 30 Send to NERC Board and MRC for review

December 14 Board conference call for approval

December 15 LTRA released


2016-17 Winter Reliability AssessmentJohn Moura, Director, Reliability Assessment and System AnalysisMember Representatives Committee MeetingNovember 1, 2016


Reserve Margins are Sufficient for Each Assessment Area


• Fuel Supply – Adequate fuel supply anticipated Natural gas continues to be predominant fuel for most areas in winter

• Transmission System Reliability – Adequate for upcoming winter Aliso Canyon and its impacts

• Total Internal Demand – For most areas it has remained flat or decreased

Key Findings


Assessment Area Example


2016/17 WRA Timeline

Date Milestone

October 24 – 27 PC email vote to accept WRA

November 7 Send to NERC Board and MRC for information

November 15 WRA released


Special Assessment: Single Point of Disruption on Natural Gas Infrastructure

John Moura, Director, Reliability Assessment and System AnalysisMember Representatives Committee MeetingNovember 1, 2016


• Aliso Canyon storage leak underscored potential reliability issues accentuating the need for Special Assessment

• Evaluate impacts to bulk power system reliability as a result of potential disruptions and the loss of major natural gas infrastructure facilities

• Target audience: Provide awareness for system planners and operators as well as policy makers and federal, state and provincial regulators

Background and Assessment Scope


• Generation impacted by fuel supply interruption • 10-15 Natural Gas Storage facilities identified for closer

evaluation

Trends

-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%

- 2 4 6 8

10 12

GWNatural Gas Capacity Growth (Year 5)

Capacity Growth Percentage Growth


I• Identify key

natural gas infrastructure facilities

• Determine the amount of generation capacity impacted

Development Approach

II• Evaluate the

resource adequacy impacts

• Consider contribution of dual-fuel generation

III• Conduct an

assessment leveraging available power system studies

IV• Provide

actionable recommendations

• Currently – Finalizing scope with the technical advisory group• MRC review – May 2017


• Approximately 30 members participating on the advisory group • Various sectors represented: National Laboratories US and Canadian Natural Gas Associations Regional and FERC Staff Power pools, and utilities Independent System Operators and Regional Transmission Organizations

Advisory GroupComposition


Recent FERC ActivityDavid Ortiz

Deputy Director, Office of Electric ReliabilityFederal Energy Regulatory Commission

November 1, 2016

Order No. 830 Approves TPL-007-1 and Directs Changes

• Modify the benchmark GMD event definition used in the required GMD Vulnerability Assessments and transformer thermal impact assessments so that the reference peak geoelectric field amplitude component is not based solely on spatially-averaged data.

• Require entities to collect GIC monitoring and magnetometer data to enable model validation and situational awareness

• Provide deadlines for Corrective Action Plans:– One year for Corrective Action Plans– Two years for non-hardware solutions in plans– Four years for completion of hardware solutions in plans

• NERC must submit within 18 months of final rule

2

Order No. 830 Directs NERC to Develop a GMD Research Plan

• Topics include– Area of which spatial averaging should be calculated– Earth conductivity models– Latitude-scaling factors– Aspects of the required thermal impact assessments– Any other areas that may impact the development of new or

modified GMD Reliability Standards

• Must make data available publicly• NERC must submit the research work plan by May

29, 2017 3

FERC Proposes in NOPR to Approve BAL-005-1 and FAC-001-2

• Issued NOPR on September 22, 2016 and comments due by November 28, 2016

• Proposed standards clarify and consolidate– Existing requirements for frequency control– More accurate calculation of Reporting Area Control Error (ACE)

• NOPR proposes to approve the retirement of Reliability Standard BAL-006-2—Inadvertent Interchange

• FERC requests additional information regarding proposed retirement of Requirement R15 of BAL-005-0.2b, requiring responsible entities to maintain and periodically test backup power supplies at primary control centers and other critical locations 4

FERC Approves Two Standards on Real-time Reliability Monitoring

• Order, issued September 22, 2016, approves two Reliability Standards – IRO-018-1—Reliability Coordinator Real-time Reliability

Monitoring and Analysis Capabilities– TOP-010-1—Real-time Reliability Monitoring and Analysis

Capabilities• Standards address real-time reliability monitoring and analysis

capabilities of reliability coordinators, balancing authorities and transmission operators

• FERC directed NERC to submit a compliance filing by November 21, 2016 to modify violation risk factor designations

– Requirement R1 of IRO-018-1 to “high” – Requirements R1 and R2 of TOP-010-1 to “high.” 5

Documents

ERO Reliability Risk Priorities Report