The Effect of Natural Gas Prices on Power System Reliability

Purpose of Review Electricity production in United States of America is shifting from coal to natural gas. Much of this shift is driven by decreased natural gas prices, which are resulting from hydraulic fracturing. Decreased natural gas prices are causing a price reversal in the merit order between natural-gas- and coal-fired generators. Given that these fuel-price changes are anticipated to persist and are impacting power-system operations, a question is how these changes impact power-system reliability. Recent Findings We survey literature that pertains to how fuel prices impact power-system reliability. Most existing works focus on long-term dynamics and power-system planning. Moreover, most reliability assessments assume that power-system resources are operated correctly to meet reliability requirements. Thus, they may not capture the impact on the availability of generating capacity of power-system operations changing due to fuel prices. We use a case study that is based on Texas’s power system to show how operational decisions can impact power-system reliability. Summary We demonstrate that the operational impact of fuel prices can have dramatic reliability effects. These findings illustrate the importance of capturing power-system operations in assessing power-system reliability.