By Walt Bukowski, NERC Reliability Specialist
We know the ongoing conflict in the Middle East is concerning. Our thoughts are that this will impact generation and natural gas availability due to the price of power. Global energy markets are closely connected, and international events can affect wholesale gas and electricity prices. Natural gas demand continues to grow. In response, national drilling companies have started drilling more in Texas, but it takes time for a great increase of drilling. What we have seen in the past is an increase in the unavailability of natural gas. So, what does this mean for the grid? Power plants have been unable to run, have seen lower output, or even taken offline. However, it is important to be clear about what this means for consumers right now. In the short term, it looks like power plants will be affected by the production of natural gas in America and the Middle East. We wish that production was protected for availability and use only in the grid, but it is sent to other markets and countries. We wish that natural gas supplies had an energy price cap until after the Middle East conflict was over. This means that suppliers cannot charge more than a cap allows before the Middle East conflict, even if the wholesale gas market continues to rise the cap price for natural gas would stay the same during this period.
The situation is still developing, and it is still too early to know the availability of natural gas and how long it will last to have any impact on the grid. While the grid remains secure, sustained disruption of natural gas could put pressure on power plants and pricing of power. NERC and government officials continue to closely monitor developments in the situation and work with gas suppliers, industry, and power plants. NERC’s priority is to ensure the availability of natural gas for power plants and ensure the energy system continues to keep the lights on.
