Published: July 9, 2025
By: Concentric Staff Writer
Key takeaways:
- U.S reliability officials expect adequate energy supply this summer, but there are areas of concern in the mid-continent and Texas, especially if there is extreme heat.
- Challenges to the grid include generation retirements, an influx of more variable solar and wind generation and problems with inverter-based renewable energy resources.
- A surge in battery storage, especially in California and Texas, will help address demand in evening hours and help to store solar and wind energy when it is available.
- California officials expect adequate supply this summer, citing the addition of 20 GW of new supply since 2021 and more than 10 GW of energy storage.
U.S. electricity grid planners are preparing for summer demand, with concerns in many areas about demand growth and generation retirements that could create tight supply conditions.
The North American Electric Reliability Corporation’s (NERC) 2025 Summer Reliability Assessment projects an aggregated peak demand increase across all 23 of its assessment areas. Sources include new data centers, electrification of transportation and other infrastructure, as well as increased industrial activity.
All areas in NERC’s territory, which includes the U.S. and parts of Canada, are expected to have adequate resources under normal conditions, but if there is above-normal demand, periods with low wind and solar generation and widespread heat could present a problem, NERC said. Growth in renewable resources is being offset by generation retirements, and those new resources introduce more complexity and energy limitations, the organization said.
The summer risk profile is shaped by rising demand, growth in generation, and changes in the resources mix, NERC said in the assessment. Peak demand has increased by 10 GW across all assessment areas in the new analysis, more than double that which occurred between the summers of 2023 and 2024, while 30 GW of new solar and 13 GW of new energy storage have been added. New wind resources will provide 5 GW during on-peak times, the analysis says, but in general the generation fleet has less flexibility and more variability.
“While the grid faces several challenges this summer, areas such as Texas, California, and across the U.S. West have seen an influx of battery energy storage systems in recent years, which is reducing energy shortfalls associated with supply variability and demand spikes,” Mark Olson, NERC’s manager of reliability assessments, said in a May 14 news release. “This is improving system operators’ ability to manage energy risks during challenging summer periods.”
Areas of concern include the Midcontinent Independent System Operator’s (MISO) 15-state territory in the middle of the country, where a decline in generation capacity and firm imports has led to worries about shortfalls if demand grows too high. In the Southwest Power Pool—which covers all or part of 14 states—wide areas with increased heat could leave grid operators with insufficient resources flexible enough to counter the variability of wind, NERC said.
There are also concerns in the Electricity Coordinating Council of Texas due to an influx of solar energy that could leave the grid short when the sun goes down.
In New England, reserve capacity has declined since last summer due to the loss of resources and higher demand, which increases reliance on neighboring regions when demand is high.
NERC, over the past couple of years, has also focused on problems created on the grid from inverter-based resources (IBR) such as wind and solar, which led to the creation of inverter-based reliability standards. The Federal Energy Regulatory Commission (FERC) in February 2020 formally approved three key NERC reliability standards for inverter-based resources, including disturbance monitoring and reporting, general disturbance monitoring and reporting, and mitigation of unexpected IBR events.
“As solar, wind, and battery resources continue to be the predominant types of resources being added to the bulk power system, it is imperative for industry, vendors, and manufacturers to take the recommended steps for system modeling and study practices, and IBR performance,” John Moura, NERC’s director of Reliability Assessments and Performance Analysis, said.
In the Western Electricity Coordinating Council-Mexico area, a 3.7 GW peak demand will be met by a 5.6 GW resource mix that is primarily natural gas (4.2 GW), with some geothermal, solar, wind, and oil-fired generation. The 14% reserve margin in the WECC-Mexico region exceeds the margin needed for reliability (10%) calculated by WECC, NERC said.
“For the upcoming summer, NERC assesses that historically average generator outage rates for peak demand periods can cause a supply shortfall within the WECC-Mexico assessment area and trigger the need for non-firm resources from neighboring areas,” NERC said in the document.
Above-average summer temperatures are expected across much of North America, along with below-average precipitation in the Northwest and Midwest, the organization said. Temperature is the primary driver of demand and can also contribute to forced generation outages for generation and other equipment on the bulk electric system.
Last summer, temperatures were not as high as summer 2023 but still ranked among the top four hottest summers on record, with record-setting highs in many areas. But there were few energy emergency alerts issued between June and September 2024, and no supply disruptions resulting from balancing authorities, transmission operators, and reliability coordinators. There were, however, a number of operational mitigations and demand-side measures that were employed. Natural gas-fired generation also broke records, illustrating its role in meeting demand, NERC said.
Load growth is also a significant factor, as 15 of 23 assessment areas are expecting an increase in peak demand from last summer. A 10 GW projected increase in peak demand is more than double the increase between 2023–2024, with one of the largest increases in the U.S. West, where about 5% load growth is forecast. In the West, heat is a major reliability concern among balancing areas in WECC, exacerbated by predictions of lower-than-normal precipitation. Natural gas plants and demand-side management “could be important” in offsetting lower-than-expected hydro generation.
NERC’s southeast region is also projecting a sizable increase in demand, expected to rise more than 2% from last year. This is due to economic growth as well as increased industrial and data center growth.
Another worry is the aging of generation facilities, as forced outage rates for conventional generators, as well as wind, have been increasing in recent years. Some generators have been in operation for about 60 years, which is a particular concern in the Southeast. Planning needs to consider increased forced outage rates for these resources, NERC said, and older generators can also require overhauls and other refurbishments that take them out of service.
“System operators face increasing risk of resource shortfalls and operating challenges caused by forced generator outages, especially during periods of high demand or when relatively few conventional resources are dispatched to serve load,” NERC said.
Battery storage is helping address energy shortfall risks that can arise from the variability of intermittent renewable resources and new demand peaks, with special improvement in Texas, California, and in the U.S. West. Batteries can not only help meet the evening generation ramp when the sun goes down and solar wanes but also help meet peak demand, along with natural gas-fired plants.
While NERC is working on long-term solutions to the problem of inverter-based resources like wind and solar tripping offline, grid operators need to remain vigilant about these resources. NERC in April published its “Aggregated Report on NERC Level 2 Recommendation to Industry: Findings from Inverter-Based Resource Model Quality Deficiencies Alert.” This study revealed that many grid operators do not have the data they need, interconnection process requirements for inverter-based resources are inadequate, and two-thirds of the protection settings used by grid operators on these resources are not set to provide the maximum capability. This creates an artificial limitation of these resources’ ability to “ride-through” system disturbances.
Gas-electric system coordination remains an issue, and operators of natural gas-fired power plants should maintain lines of communication with natural gas pipeline operators to ensure grid reliability, FERC said. Natural gas power plants broke records last summer, with a monthly peak average in July of 208 TWh of output. The U.S. Energy Information Administration projects that rising demand for natural gas exports this year as liquified natural gas production increases, combined with lower field production levels could create tightening on natural gas supplies relative to last summer, NERC said. With increasing load, natural gas generation could set another record this summer, the organization said.
At the federal level, U.S. Energy Secretary Chris Wright issued an emergency order May 23 that the White House said is intended to minimize the risk of blackouts and address “critical grid security” issues in the Midwestern region of the country amid expected high electricity demand.
The order directs the MISO to work with Consumers Energy to ensure the 1,560 MW J.H. Howard Campbell coal-fired power plant in West Olive, Michigan remains operating and addresses any energy shortfalls. The plant was scheduled to shut down on May 31, 15 years before its scheduled design life, DOE said.
“Today’s emergency order ensures that Michiganders and the greater Midwest region do not lose critical power generation capability as summer begins and electricity demand regularly reach high levels,” Wright said in a written statement.
The emergency order issued by DOE’s Office of Cybersecurity, Energy Security, and Emergency Response is authorized by the Federal Power Act and is in accordance with President Trump’s Executive Order “Declaring a National Energy Emergency,” Wright’s office said.
The DOE release mentioned NERC’s Summer Reliability Assessment, pointing out that the organization said MISO’s region is at an elevated risk of electric supply problems.
California officials in May also held a workshop on summer reliability, saying that the addition of resources should ensure adequate supplies, although widespread extreme heat events could cause problems. More than 20 GW of new supply has been added since 2021, including 13 GW of battery energy storage that will help supply the grid in the evening hours.
The California Legislature also created a Strategic Reliability Reserve with 4 GW of back-up resources, including virtual power plants and demand response. The state also extended operations at the Diablo Canyon nuclear power plant and state agencies are better coordinating on energy planning, including a memorandum of understanding between the CAISO, the California Public Utilities Commission, and the California Energy Commission.
An extended day-ahead market due to launch in May 2026 will also help resource-sharing, while the Western Energy Imbalance Market has led to better reliability and billions of dollars in benefits to its participants since 2014.
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All views expressed by the author are solely the author’s current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, related companies, or clients. The author’s views are based upon information the author considers reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.
