A major winter storm is straining U.S. power grids, leading to price volatility and increased reliance on oil-fired generation. The storm highlights the vulnerability of the grid due to its heavy dependence on natural gas, which faces supply challenges during extreme weather. Experts are raising concerns about the lack of sufficient gas storage and real-time delivery capacity.
As a massive winter storm barrels across the U.S., power grid operators are taking extraordinary steps to keep the lights on and avoid rolling blackouts.The storm, stretching more than 2,300 miles, has triggered sharp price volatility in electricity markets and forced some regions to temporarily lean on oil-fired generation to meet demand, Reuters reported.
PJM Interconnection, the nation’s largest regional power grid serving 67 million people across the East and Mid-Atlantic, saw wholesale electricity prices briefly surge above $3,000 per megawatt-hour early Saturday, up from under $200 earlier in the day, Reuters reported.In New England, fuel oil generation has ramped up to help the region conserve natural gas, its primary fuel source, according to Reuters.At the center of the strain is the nation’s heavy dependence on natural gas delivery, according to Didi Caldwell, founder and CEO of site-selection firm Global Location Strategies.Natural gas now fuels roughly 40% of U.S. electricity generation, up from about 12% in 1990, making uninterrupted supply critical during extreme weather, Caldwell said."What we lack is sufficient capacity to store and deliver gas in real time," Caldwell told FOX Business, noting that the U.S. has abundant reserves.Unlike coal plants, which have historically stockpiled months of fuel on site, most natural gas plants rely on just-in-time delivery. Any disruption to pipelines or infrastructure can quickly threaten power generation, according to Caldwell."If anything happens to disrupt the supply of gas to the generating stations, they have little to no practical backup," she said.Winter storms amplify the risk. Gas demand spikes as households crank up heat, while electricity demand surges at the same time, much of it fueled by natural gas."Every region is exposed, but for different reasons," Caldwell said. "In the southeast, the lack of storage and limited transport capacity means that, during cold snaps, natural gas is competing with itself."One of the most vulnerable areas is Transcontinental Gas Pipe Line Co. Zone 5, which runs through Georgia, South Carolina, North Carolina and Virginia, according to Caldwell."Limited storage and pipeline capacity mean that during major winter events, atypical for this region like the one predicted for this weekend, prices for gas and the transport capacity — basically the reserved volume on the pipeline — skyrocket," she said. The vulnerabilities of this system were laid bare during Texas’ deadly Winter Storm Uri in 2021, when frozen gas infrastructure triggered widespread power outages. While upgrades followed, the current storm is among the first major tests of those improvements, Caldwell said.A similar near-failure occurred in 2022, when gas systems in the Southeast and Mid-Atlantic were pushed to their limits during an Arctic cold event. The grid held only through emergency measures and thin margins, according to Caldwell.Caldwell said long-term solutions will require grid modernization, targeted upgrades to gas delivery and better coordination between gas and electric systems."Adding more natural gas generation will not fix and may exacerbate the risks," she said.PJM Interconnection did not immediately respond to FOX Business request for comment.LINK: Get updates and more at foxbusiness.com.
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