SPP Proposes Fast-Track Plan to Address Looming Power Generation Shortfall

SPP’s coordination center in Little Rock. It oversees the grid in a 14-state region. (Provided)

Southwest Power Pool, the Little Rock nonprofit that oversees the electrical grid in 14 states, has the tough mission of ensuring adequate wholesale electricity and transmission infrastructure.

That job is getting harder by the day as a projected generation gap threatens to overwhelm the Midwest and, indeed, most of the United States.

So we sat down virtually with SPP Vice President of Engineering Casey Cathey to discuss how the regional transmission organization will cope with power demands that are expected to rise by 75% in the next decade.

Basically, SPP has asked federal regulators to approve a study to expedite connecting new power plants to the grid. Utilities will propose new generation sources and line up in a queue that’s separate from the RTO’s traditional pathway to interconnection.

The Expedited Resource Adequacy Study, or ERAS, is a “one-time study process” for adding new power generation in a crisis. Generation entities that are committed to supplying customers with power will be asked for new generation proposals if the Federal Energy Regulatory Commission approves SPP’s plan, perhaps in a month or six weeks.

Before describing the process Cathey outlined the crisis the grid faces in an age of surging power demand.

‘We Need More Capacity’

“What we’re seeing now is astronomical,” he said. “Demand forecasts for 10 years out are 75% load growth on our summer and winter peaks, over 7% year-over-year growth.” For contrast, he said that early in his 23-year career, 1% per year was considered considerable load growth.

“Actual total energy consumption throughout the year … is going up above 100% in the next 10 years,” Cathey said. “So we’re more than doubling our energy consumption for the region in 10 years’ time. That’s pretty fascinating.”

It’s also worrisome, and the reason for SPP’s urgency. Why is power demand soaring? Data and artificial intelligence centers are proliferating, the oil and gas industry is electrifying, electric vehicles are still hitting the road, and heat pumps and cryptocurrency hubs are gobbling up power.

“We need more capacity, and we need it now,” Cathey said.

A flood of renewable power generation requests has clogged SPP’s usual interconnection queue over the past few years, he said. “Ten or 15 years ago, if Oklahoma Gas & Electric wanted to build a gas turbine, they got in line and we processed them. But then came the rush of renewables — and we’re proud of the amount of wind that we’ve been able to interconnect over the past 10 or 12 years — and for a while it worked.” The checkout line moved along, in a metaphor Cathey seized onto to describe the process in laymen’s terms. “But for a number of reasons, a lot of them technical … it got clogged up.”

The ERAS proposal will add “a whole separate checkout line to unlock the ability for generators to connect.”

“ERAS offers utilities who are responsible for keeping the lights on a clearly defined and impactful opportunity to address real and immediate needs,” SPP President and CEO Lanny Nickell said. “It’s not a replacement for broader interconnection reforms, but this complementary effort will ensure reliability isn’t compromised … while we work to implement more permanent solutions.”

Eligible projects must be capable of coming online within five years of reaching interconnection agreements. And the utilities proposing new power plants will face a ceiling on new capacity.

Utilities of all types are likely to submit proposals, Cathey said. “Investor-owned utilities, municipals and cooperatives,” he said. “But from a ratepayer perspective, the location [of new ERAS projects] will depend on the need for power. With this study we want to make sure that we’re not harming those customers that are already in line with our main program by opening up the second cash register, so to speak.”

SPP takes usual interconnection requests in the order they come, though it gives some consideration to how multiple proposals in the queue might affect each other.

The need will be determined based on how much capacity utilities already have in their portfolio, and their expected load growth in the next five years. “So by the 2030 calendar year, plus that fall and winter for 2031, we calculate effectively how much load those utilities could have,” Cathey said. “We don’t know exactly where those new generators will be, but we have a pretty good idea, and they’re going to be based on need.”

The new generation plants may not be built in Arkansas, but they will feed power to Arkansans, Cathey said.

SPP supplies wholesale power for Southwestern Electric Power Co., a subsidiary of American Electric Power, in 13 counties in west Arkansas. It also supplies Arkansas Electric Cooperative Corp., which powers the state’s hometown cooperatives.

“I can’t say for certain that this particular generator or this particular amount of megawatts is going to serve Arkansas,” Cathey said. “However, what is critical is that this process will add capacity to the system, and that will 100% increase reliability and resiliency for Arkansas ratepayers. Let’s say there’s a new generator north of Tulsa. Well, we’re all interconnected, and since we operate a single balancing authority, and we balance the load for consumption, then that additional generator helps to serve Arkansas ratepayers.”

More Gas Generation

Utilities across the region have been clamoring for more “dispatchable” electricity, power that can be delivered immediately. The ERAS process doesn’t favor any fuel source over another, but indirectly it is likely to support more natural gas-fired generation.

The plan includes a “winter planning reserve margin,” which Cathey compared to the bench strength of a sports team. “We’ve determined that risks are shifting more to the winter, when summer has historically been our riskiest season. In the last five winter seasons, we’ve had four extreme winter conditions and winter events. And solar is not the best [resource] in the winter.

“The sun is weaker and farther away, radiance levels are lower and the days are shorter,” Cathey continued. “So from what we call accredited capacity, solar is not really the best means of meeting that bench strength requirement. So we don’t require dispatchable [power], but we are requiring a certain amount of bench strength for the winter, and that is driving additional conventional dispatchable resources. Primarily more gas.”

Cathey said the ERAS program is just one way that SPP is leveraging innovation to help meet modern consumer needs.

“We’re continually looking at other avenues,” he said. “There are other initiatives to extract more value out of our existing grid, and try to get more generation online, even at existing sites. There’s more to come. This is a crisis, and we’re actively looking at many ways to get generation online fast.”