(Originally published by www.westernenergy.org)
Conventional wisdom acknowledges that the electric grid is undergoing transformative change. From the influx of variable renewable resources to the suite of public policies aimed at deep decarbonization, there are tangible effects on utility operations and planning. For the Northwest, the future of reliable electric services means new tools — such as a resource adequacy program — are needed to avoid blackouts during extreme weather, unexpected plant outages, or other emergency conditions.
The problem is a function of the rapidly changing energy landscape. While wind and solar resources are contributing more energy than ever to the grid, their fuel sources are not always available. Despite exciting developments in battery storage, commercially available technologies have limited duration and cannot always substitute for traditional generation resources. At the same time, traditional fossil-based resources are disappearing as new state policies and societal preferences spur the shift to cleaner generation. Only four new natural gas plants totaling 1,100 MW have come online in the Northwest since 2011, and 2,000 MW of coal resources are set to retire within three years. Several large regional utilities also have ambitious 100% clean energy goals or propose to retire their coal resources earlier than anticipated. Major changes to the regional grid are well underway.
Utility planners across the industry recognize that there will be practical, operational implications to such a significant change to the existing system. Their number-one concern? Achieving a low-carbon, electric future at a reasonable cost while ensuring enough generating resources are available to meet peak demand at an acceptable outage risk. In utility parlance, this is known as resource adequacy.
The scale of this challenge led a broad coalition of Northwest utilities to work together to find solutions. In November 2019, the Northwest Power Pool (NWPP) released a report that captures the growing sense of unease and makes recommendations. Exploring a Resource Adequacy Program for the Pacific Northwest (Findings Report) draws upon studies and analysis from the Bonneville Power Administration, the Pacific Northwest Utilities Conference Committee, the Northwest Power and Conservation Council, and the consulting firm Energy & Environmental Economics. The conclusion is that the Northwest is on track to face capacity shortages as soon as 2020, with a capacity deficit of thousands of megawatts by the mid-2020s.
All the studies point to planned and prospective coal retirements as the key driver of decreased firm capacity available to the region. Based on current utility plans, over 2,000 MW of the region’s coal plants will retire between 2019 and 2023, and an additional 1,500 MW will retire by 2029. These figures could increase as utilities continue to evaluate the viability of maintaining aging baseload assets. Coal retirements are not isolated to the Northwest; it is a Westwide phenomenon. The retirements in other parts of the West will affect both load- resource balance in the Northwest and the availability to purchase surplus capacity from other regions when Northwest supplies are tight.
In addition to retirements, the studies compiled in the NWPP Findings Report suggest that load growth is also on the upswing.