Electricity Markets, Reliability and the Evolving U.S. Power System

The electric power system in the United States is undergoing a transition. Significant quantities of older electric generating capacity are being retired--largely from coal, oil, and natural gas-fired facilities. This capacity is primarily being replaced by new natural gas plants and renewable resources. The nature and pace of these changes have prompted two fundamental questions in public debates among electric industry participants, regulators, stakeholders, and practitioners: (1) what exactly are the primary drivers of the transition underway in the industry; and (2) could the changes in the mix of generating resources undermine power system reliability?

An Analysis Group team of Principal Paul Hibbard, Senior Advisor Susan Tierney, and Manager Katherine Franklin undertook a comprehensive review of these questions for an independent report supported with funding from the Advanced Energy Economy Institute and the American Wind Energy Association. In Electricity Markets, Reliability and the Evolving U.S. Power System, the team found that fundamental market forces, and in particular the drop in natural gas prices, are the primary drivers of industry changes, and that the transition underway in the industry is not harming reliability. Consumers are likely to benefit from the combination of the development of highly efficient new gas-fired resources, low natural gas prices, and flat demand for electricity, as well as from the increased diversity of resources on the system. 

Click here to hear a recording of authors Paul Hibbard and Susan Tierney presenting their findings from this white paper at a webinar hosted by the Advanced Energy Economy Institute in June 2017.