Executive Summary
For the regional power supply to be adequate in 2027, the region will need to develop new resources at least as aggressively as the 2021 Power Plan outlines. The 2027 regional power supply would not be adequate if the region relied solely on existing resources, existing reserve levels, and with no new energy efficiency measures. If demand growth remains consistent with the plan’s baseline forecast, then the power supply would be adequate with resources and reserves identified in the 2021 Power Plan’s resource strategy. However, if future electricity market supplies are significantly limited, if new policy commitments to electrification accelerate demand growth, or if major resources are retired earlier than expected without replacement, then additional resources and reserves will be required to maintain system adequacy, as detailed in the 2021 Power Plan.
To better assess customer risk, the Council examined additional adequacy measures, in conjunction with its current loss of load probability (LOLP) adequacy metric. The additional metrics provide information about the frequency, duration, and magnitude of potential shortfall events as follows:
- Loss of load events, or LOLEV, sets a limit for the expected frequency of shortfall events to prevent an excessively frequent use of emergency measures
- Duration Value at Risk sets a limit for shortfall duration during rare (once per 40 year) events
- Peak and Energy Value at Risk set limits for the maximum capacity and energy shortfalls during rare (once per 40 year) events
Using this full suite of metrics, along with provisional thresholds that postulate the tolerable range of risk to avoid, the Council was able to provide a more complete assessment of system adequacy.
The 2021 Power Plan’s resource strategy recommends that between 750 and 1,000 average megawatts of energy efficiency, at least 3,500 megawatts of renewable resources, and 720 megawatts of demand response be acquired by 2027. The plan also highlighted the importance and need for achieving the increasing reserves requirement to respond to the growing short-term uncertainty in generation from significant additions of variable energy resources (primarily solar and wind generation). As part of this assessment, the resource strategy was tested under a large range of potential future conditions. Like the plan, this assessment confirms that an adaptive approach is required to maintain adequacy, from the perspective of ensuring that the full suite of adequacy metrics remain within their provisional thresholds.
This assessment finds that the 2021 Power Plan resource strategy is effective at eliminating nearly all summer shortfalls, when resource needs peak in the rest of the Western grid. Implementing the strategy does not eliminate winter shortfall events, but it does mitigate them by reducing shortfall event magnitude and shortening event duration to only a few hours during the morning and evening ramps.
New clean energy policies will result in a significant level of renewable generation built throughout the west, both within and outside the region. This projected renewable resource acquisition changes market supply and demand dynamics because the hourly pattern of renewable generation does not always coincide with the hourly pattern of greatest energy need. This leads to periods during certain times of the day with a surplus of very inexpensive market supply (mostly solar).
During these periods, due to this increased market supply and persistence of lower prices, the Northwest is expected to consistently import more power than it has in the past. However, there also will be times within the same day, often during morning and evening ramps, when available market supply is smaller and more expensive than in the past, providing an opportunity for the Northwest to export to other regions in the West. The ability of Northwest hydroelectric and thermal systems to ramp up and down to respond to those changing market dynamics requires appropriate market signals, either from a regional reserve pooling effort or from an enhanced market structure.
In light of these changing dynamics, this assessment considers a number of potential market uncertainties. The findings indicate that out-of-region market supply uncertainties have, for the most part, a minimal effect on regional adequacy, assuming the Council’s current market reliance limits. However, under certain future scenarios, results show regional adequacy levels becoming borderline or unacceptable. These scenarios include futures with high gas prices, continued supply chain challenges, increased demand (due to accelerated electrification without a supply and reserve increase), and lower than expected West-wide renewable generation acquisition.
As in the plan, this assessment found risk factors to monitor when determining how to implement and adapt the resource strategy to the wide range of uncertainties the region faces. If regional planners observe increased demand due to accelerated electrification in any part of the region without an associated increase in resources and reserves, and/or resources of significant size are retired without replacement, the risk of adequacy issues increases significantly.
The plan analysis identified these same risks and indicated that significantly larger builds of renewable resources and accompanying reserves would be required to maintain an adequate system. The resource strategy recommends that jurisdictions pursuing aggressive emissions reductions should evaluate adding more renewables to avoid these risks. The plan also recognized that additional energy efficiency would likely be cost-effective for those jurisdictions pursuing electrification policies.
If the region is ineffective at coupling the investment recommendations from the plan with a coordinated reserve pooling effort of sufficient size to match the increase in the short-term uncertainty from load and generation, the region will be more susceptible to adequacy risk from the market.
During this time of significant uncertainty, the Council will continue to track these risk factors and revisit them in the annual adequacy assessment and its other efforts as part of the ongoing 2021 Power Plan implementation. In addition, the Council will continue to host discussions exploring the provisional thresholds and interpretation of a multi-metric approach to assessing adequacy with stakeholders to better characterize and help the region address the evolving adequacy issues as they arise.
