NorthWestern Energy Capacity Planning and Resource adequacy

Transcription

1 NrthWestern Energy Capacity Planning and Resurce adequacy ETAC Presentatin Steve Fisher Lands Energy Cnsulting July 24, 2013

2 Histric Perspective Histrically (pre-2000), the NWPP Regin was the nly energy-cnstrained regin in the US Electric system Critical water planning dictated need fr new resurces Nrthwest peaks primarily in the winter, with Califrnia peaking capacity available in a pinch (February 1989) Installed hydr capacity made peak lad planning a ccktail napkin exercise. Things changed Reginal resurce additins mstly nn-hydr - either natural gas, r wind (energy w/ capacity) fr RPS. Flexibility t utilize hydr machine capacity declined. Reginal summer peak appraching winter peak Reginal entities recgnize that peak lad service and flexibility requirements nw dictate resurce additins The ccktail napkin is n lnger sufficient.

3 The Cmplexity Cntinuum Initially, Default Supply lad served by PPL requirements cntract at a fixed price fully hedged, with explicit PPL bligatin t serve peak lad. Simple! Tday, mix f cal, wind, gas peaking resurces, with majrity f Default Supply MWH supplied by layers f whlesale market purchases staggered hedges, with indeterminate bligatin t serve peak lad and fllw wind. Anything but simple! Next 3 t 5 years, add mre physical generatin t serve Default Supply peak and energy lad and t fllw wind hedge bth gas and electric price, with clarified bligatin t serve peak. Way cmplex!

4 Nrthwest Pwer Planning Prtland General Electric, Puget Sund Energy, Avista, PacifiCrp, Idah Pwer all use a cmbined apprach t pwer planning: peak lad service (reliability) first/energy cst (financial risk management) secnd Hydr based public utilities (Seattle, Tacma, Grant PUD, Chelan PUD) with high installed capacity t peak lad ratis use energy cst planning similar t NWE NWPCC frecasts peak lad service deficits starting in 2017 Wind integratin requirements influence IOU resurce decisins Mid C Purchaser lsers in particular (thse lsing shares in the Mid-Clumbia ver time). Even BPA in the market lking fr capacity resurces

5 2018 NWE Peak Lad/Resurce Balance 2018: The earliest feasible n-line date fr a new peaking resurce NWE Firm Peaking Resurces 432 MW Less 2018 Peak Lad (50% Prbability) (1201 MW) Less Planning Margin (14% f lad) (168 MW) Capacity L/R Deficit (937 MW) There is n crisis tday, but the Western resurce landscape cntinues t evlve mre intermittent renewables, less cal, less nuclear, less hydr flexibility

6 NWE Current Lad Service Strategy Acquire generatin and generatin-supprted PPAs fr peak lad and energy service Purchase HLH Mid C-delivered cntracts (WSPP Schedule C) t hedge a prtin f energy bligatin mnths int the future cnvert t NWE system delivered purchases a few mnths prir t delivery Purchase additinal NWE system-delivered HLH energy n a quarterly r mnthly basis (including replacement fr generatin frced utage) as delivery date appraches (1-18 mnths ut) Preschedule generatin and generatin-backed PPAs (including hur-by-hur wind utput estimates), including natural gas fr Basin Creek if justified by market heat rates Purchase (and sell) additinal energy in the day-ahead and hur-ahead markets as necessary t balance lads and resurces Frward market purchases are dictated by mnthly energy requirements nt peak lad service

7 Peak Day HLH Winter Deficit Purchase Preschedule/Hur Ahead MW Lad Gen Whlesale (HLH) Hur Ending

8 Schedule C Purchases as a Capacity Resurce Effective way t hedge energy price risk, and Liquidated Damages prvisins act as a gd (albeit imperfect) deterrent t interruptin by suppliers, but Reliable electricity service depends n the cntinued peratin f prperly lcated generatin (e.g. Clstrip, Crette, Mntana hydr) t serve physical peak lad Standard HLH prduct shape desn t match daily lad shape Risk that pwer unavailable at any price: July 24, 2006 July 1, 2013

9 Risks f Relying n Market Purchases Market purchases send price signals t generatin wners regarding the financial feasibility f cntinued peratin versus generating plant clsures MATL prvides access fr in-state generatrs t a new, higher clearing price market in Alberta Clstrip 3/4 utage ver peak frces NWE int the market with ther wners als lking fr replacement pwer Extreme cld and ht weather puts everyne in the market lking t cver peak lad

10 Cnclusins 2013 NWE Prcurement Plan shuld incrprate mre rigrus capacity planning and analysis. The Plan shuld include a strategic plan t address near- and lng-term capacity deficits. Addressing capacity deficits with generating resurces culd be mre cstly than cntinued reliance n market (fr nw) Western Systems Pwer Pl (WSPP) Schedule C cntracts culd prve inadequate fr meeting peak lad requirements (resurce adequacy issue). Must balance cst with availability and interruptin risk. Ensuring the cntinued peratin f existing in-state resurces that prvide the vltage and current t supprt NWE peak lad service shuld be part f the NWE strategy t address capacity deficits.