The reliability of the U.S. electrical grid is under increasing pressure. Aging transmission and distribution infrastructure, combined with more frequent and more severe weather events, has elevated the risk of extended power outages for commercial and industrial facilities across the country. The North American Electric Reliability Corporation (NERC) has identified elevated risk of energy shortfalls during peak demand periods in multiple regions, and has warned that power generation facilities are being shut down faster than new ones are being built to replace them.1 For many businesses, an extended outage is not just an inconvenience; it translates directly into property damage, production loss, and potential regulatory non-compliance.
These realities have prompted facility owners, operators, and their insurers to take a closer look at backup power preparedness. Advances in distributed generation and battery storage technology are expanding the options available beyond traditional diesel and gas generators; and a growing understanding of global fuel price volatility has added another argument for diversifying energy sources. This edition of HETI Horizons examines the current state of grid reliability, key backup power plans and strategies for reducing exposure to fossil fuel supply disruptions.
Grid Reliability Under Pressure
The February 2021 winter storm in Texas provided a prime example of what large-scale grid failure looks like in practice. More than four million homes and businesses lost power, with outages lasting up to several days and resulting in an estimated $195 billion in economic damage.2 The event exposed vulnerabilities in aging infrastructure, fuel supply chains, and weather forecasting that had been known for years but never fully addressed.
NERC’s 2023 Long-Term Reliability Assessment identified elevated risk of energy shortfalls during both summer and winter peak demand periods across the Midcontinent Independent System Operator and Southwest Power Pool regions, as well as portions of the Western Interconnection. Retiring coal and older natural gas plants have left thinner operating margins than traditional grid planning was built around.
For individual facilities, the practical consequence of these trends is that power interruptions are likely to become more frequent, longer in duration, and harder to anticipate. Facilities that have rarely dealt with serious outages may need to take a harder look at whether their backup power is actually adequate.
Emergency Generator Maintenance and Testing
Diesel and natural gas generators remain the most common backup power solution for commercial and industrial facilities, and they remain highly effective when properly maintained. However, generator failure during actual emergencies is not uncommon; and the root cause is usually maintenance related, not a problem with the equipment itself.
The National Fire Protection Association’s NFPA 110, Standard for Emergency and Standby Power Systems, establishes minimum maintenance and testing requirements for emergency power systems. Level 1 systems (those serving critical life-safety applications such as hospitals and emergency response facilities) require monthly testing under load. Level 2 systems (non-critical business operations) must be tested at least every six months.3
Diesel fuel degrades within six to 12 months, and moisture intrusion and microbial growth in fuel tanks can clog injectors and filters, preventing a clean start. Dead starting batteries are among the most common reasons generators fail when actually needed, yet battery condition is often the last thing to get attention in a maintenance program. Loss prevention guidance for emergency and standby power systems recommends comprehensive maintenance programs that include regular fuel testing, annual load testing, and battery replacement on a two-to-four-year cycle.4
Organizations should maintain detailed maintenance logs consistent with NFPA 110 recordkeeping requirements.3 After an outage, a well-documented maintenance history can be the difference between a covered claim and a denied one.
Solar Generation and Battery Storage as Backup Power
Solar photovoltaic systems paired with battery energy storage have emerged as a practical complement to, and in some cases a partial replacement for, conventional backup generators. A solar-plus-storage system consists of solar panels, battery storage, and power electronics that manage energy flow between the panels, the batteries, and the facility’s loads. When the utility grid fails, the system automatically disconnects from the utility and continues to supply power using stored energy and active solar generation.
The economic case for solar-plus-storage has improved substantially over the past decade as equipment costs have declined. Unlike a diesel generator that sits idle between outages and generates no return during normal operations, a battery storage system can reduce peak demand charges, participate in power buyback programs, and serve as a dispatchable resource, providing more value than traditional generators.5
Extended outages – the very scenario that represents the greatest risk – may exceed battery capacity, particularly when solar generation is unavailable due to weather or nighttime conditions. Most commercial installations can sustain critical loads for two to eight hours on stored energy alone. Facilities are therefore pairing a conventional generator for long outages with solar-plus-storage for shorter interruptions. This approach offers additional resilience that neither technology provides on its own.
Fossil Fuel Supply Volatility
The cost of diesel and natural gas is exposed to geopolitical shocks and supply chain disruptions that facility operators cannot see coming. The 2022 Russian invasion of Ukraine and the restriction of Russian natural gas exports, and the ongoing conflict in the Middle East with its disruption of global oil supplies, produced sharp increases in global natural gas prices, with effects that elevated utility costs for everyone. Depending on a single fuel type or supply chain introduces a category of risk that is separate from grid reliability, but just as significant for operating costs.
Solar-plus-storage systems offer a meaningful buffer against these types of uncertainties. Once installed, the operating cost of solar generation is effectively zero and unaffected by commodity markets or international events. Battery storage extends this advantage by capturing excess solar output for use during periods of peak grid pricing or constrained supply. For facilities with substantial generator runtimes, incorporating solar-plus-storage into a hybrid energy strategy can reduce fuel consumption and minimize operating costs associated with price swings.
A facility that draws from multiple energy sources, including renewable generation, grid power, and stored or conventionally fueled backup, is less exposed to any single point of failure – whether that failure originates in grid infrastructure, an extreme weather event, or a policy decision made overseas.
How HETI Can Help
HETI’s staff of engineers, environmental scientists, and technical professionals can assist facility owners and operators in evaluating their backup power preparedness, identifying gaps in maintenance programs, and assessing opportunities to incorporate renewable and distributed energy resources into a comprehensive site energy strategy. Our services in this area include backup power system assessments, emergency response procedure development, maintenance program review, and regulatory compliance support.
References
1 North American Electric Reliability Corporation. (2023). 2023 Long-Term Reliability Assessment.
2 The Perryman Group. (2021). Preliminary Estimates of Economic Costs of the February 2021 Texas Winter Storm.
3 National Fire Protection Association. (2022). NFPA 110: Standard for Emergency and Standby Power Systems.
4 FM Global. (2022). Data Sheet 5-23: Design and Protection for Emergency and Standby Power Systems.
5 Ramasamy, et al. (2021). U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks: Q1 2021. National Renewable Energy Laboratory. NREL/TP-6A20-81408.
For further information on HETI’s risk management and EHS services, please contact us.
Alexander Ostrobrod,
LSRP Senior Environmental Scientist