Exploring Key Power Supply Questions Through Scenario Analysis
Proposed 2021 Power Plan scenarios
- February 26, 2020
- Ben Kujala
The Council’s regional power plan is not just an opinion of how the region should supply electricity. It is a strategy developed through a rigorous analytical process, conducted in the public sphere, where interested parties are invited to participate.
A critical aspect to this process is scenario analysis, which gives the region a forum to explore different futures and gain insight into how alternate choices play out. It is a unique space where opinions are formed and changed based on vetted information and open analysis. Undertaking thoughtful scenario analysis helped establish the Council's reputation for strategic guidance in energy planning.
Resource Supply Analysis
The 1983 power plan, the first plan adopted by the Council, stated the strategy for acquiring new resources needed to be robust to deal with an uncertain future. In the 1986 power plan, the Council explored "portfolio uncertainty," analyzing specific risks for the regional power supply by asking: What if the supply of energy efficiency was lower or higher or what if the utilities couldn't build energy efficiency programs quickly enough to defer the need for new generating resources? What would happen if industrial load left the region?
From its early days, the Council has emphasized planning under uncertainty by building narratives or scenarios around risks that are still relevant to understanding the regional power supply.
Some of the scenarios we propose for the 2021 power plan are extremely similar to the scenarios of concern in 1986. Are plans for new resources to supply power robust if we acquire more or less energy efficiency? What happens if coal generation retires earlier than expected? Questions like these would not look out of place in any of the previous power plans.
Robustness of Energy Efficiency
To understand the impact of energy efficiency, we ask questions like those in the 1986 plan. What if we under or over-estimate the supply of energy efficiency? What if we achieve energy savings faster or slower? These questions have always helped the Council in determining cost-effective energy efficiency opportunities. But we also have questions that may not have occurred to the Council in 1986. What if the estimated impact on peak electric need is higher or lower? What are the impacts of energy efficiency on the supply of demand response?
Early Retirement of Coal Generation
Coal has been generating electricity since the beginning of the electric grid. But now, there are plans to retire coal generators to reduce greenhouse gas emissions. Many regional utilities have announced planned retirements of coal generation. In the next decade, coal plant retirements will change the Western electric grid. How utilities decide to replace these resources will affect the cost and reliability of electricity in the Northwest for many years to come. What if regional coal generation retires by the end of 2026 and coal outside the region retires by the end of 2030?
Change in Reliance on Extra-Regional Markets for Resource Adequacy
The Northwest spent billions building transmission to connect to the rest of the West. This enables surplus electricity sales that offset the regional cost of electricity and allows purchases when our need exceeds the capacity of the regional generators. Relying on electricity purchases from outside the region defers the need to build new generators, which reduces the cost of using electricity. However, maintaining reliable electricity requires both transmission to the Northwest and available generators outside the region.
The electric grid is a dynamic planning environment. The expected retirements and plans for new generation constantly change. We propose further refining the examination of the Northwest's interaction with external markets, especially with the potential surplus of solar and wind generation in California and Desert Southwest.
Organized and Limited Markets for Energy and Capacity
When the Seventh Power Plan was adopted in 2016, the energy imbalance market was only the California ISO and PacifiCorp. Since then, it has expanded rapidly and is expected to cover the majority of the Western Electric Grid. In this plan, we propose examining the potential impact of both broader markets and more limited markets. Well-formulated markets have multiple benefits that would affect planning for the electric grid. To illustrate these effects, we propose expanding the available generating resource potential, reducing the planning reserve margins, and looking at the interaction with peak energy use outside the region.
Analyze the Bonneville Portfolio
The 1980 Power Act directs the Council to plan for the Bonneville Power Administration’s resource needs. But by the 1986 power plan, Bonneville’s role was already changing. The plan questioned whether Bonneville was a "Catalyst for Cooperation or Just Another Utility?" Planning for Bonneville requires understanding its current and potential future obligations.
Since Bonneville is in the latter half of its long-term contracts, this plan will look at the potential changes in Bonneville's obligations that could come with renegotiating its contracts. We propose doing a Bonneville-specific portfolio analysis, looking at the balance between its electric load and its supply of electricity. While portfolio analysis has limitations, this analysis, taken with the other scenarios considered, should assist the Council in formulating its recommendations to the Bonneville Administrator.
Greenhouse Gas Emissions Analysis
Concern about greenhouse gas emissions from electric generation has a long history in the Council's power plans. In 1989, the Council adopted a supplement to the 1986 power plan:
Environmental concern regarding fossil fuel use, particularly the possibility of global warming from increased concentrations of carbon dioxide and other "greenhouse" gasses in the atmosphere, has focused interest on the advisability of continued development of fossil-fuel-fired generating resources. These issues will be considered by the Council for the next plan.
The Council started examining the impact of greenhouse gas emissions in the 1991 power plan. In this plan, we propose a couple of different scenarios to continue this work.
Greenhouse Gas Cost Tipping Points
The Fifth Power Plan (2005) introduced pricing greenhouse gas emissions. In the 2021 power plan, we propose exploring what emissions prices substantially reduce emissions from the existing generators and what prices change decisions about new generators. We propose testing a range of prices both inside and outside the region and examining the implications for system reserves.
Paths to Decarbonization
In this plan, we intend to analyze aggressive reduction in greenhouse gas emissions. But limiting the analysis to the emissions related to generating electricity would fall short of aggressive regional greenhouse gas emission reduction and exclude impacts from emission reduction strategies that require switching from other fuels to electricity.
We propose expanding our forecasting to include the use of fuel for transportation, including electricity, and to include the use of fuel for residential, commercial, and industrial purposes, including the direct use of natural gas. These forecasts supply a more comprehensive picture of expected regional emissions.
We propose exploring many different approaches to reducing emissions, including electrifying transportation, reducing upstream methane emissions, blending low-carbon fuel in natural gas, and expanding generating resource options without greenhouse gas emissions.