By Hudson Sangree

A resource adequacy program that could eventually encompass eight Western states and two Canadian provinces is being planned by the Northwest Power Pool (NWPP) to ensure sufficient capacity at a time of increasing retirements and shifts toward renewable energy in the West.

The retirement of fossil fuel plants, especially those fired by coal, and the variability of wind and solar resources means a shortfall could be coming starting later this year, NWPP President Frank Afranji said in a webinar Friday.

“Soon, areas in the West may face a capacity deficit of thousands of megawatts. Deficits of that magnitude may result in both extraordinary price volatility and unacceptable loss of load,” Afranji said in his presentation to the online meeting, hosted by the Committee on Regional Electric Power Cooperation and the Western Interconnection Regional Advisory Body.

More than 2,000 MW of coal generation in the Pacific Northwest will go offline by 2023, and another 1,500 MW will retire by 2029, Afranji said in a recent article. Only four new natural gas plants totaling 1,100 MW have come online in the Northwest since 2011, and battery storage for renewable resources hasn’t reached the point where it can replace traditional generation, he said.

“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,” Afranji wrote.

“The scale of this challenge led a broad coalition of Northwest utilities to work together to find solutions,” Afranji said in a related web post.

Last year, NWPP issued a report titled “Exploring a Resource Adequacy Program for the Pacific Northwest.” It noted that resource planning is largely performed by states and utilities, using different standards and methods, and that, as a result, “the region lacks insight into its overall resource situation.”

After the report’s publication in October, NWPP and 18 of its member utilities moved forward to design an RA program intended to improve reliability and lower costs. Members funding the program’s design phase include Avista, BC Hydro, NV Energy, Portland General Electric, Seattle City Light and Tacoma Power.

“The plan is to start with the 18 entities that are currently funding the program, which will cover the majority of the NWPP footprint, and once the program is up and running, cooperate with others that may be interested to join,” Afranji said in an email to RTO Insider. “We strongly believe in building this program in building-block type fashion. Once we have the first building block in place successfully, others will be invited to join or may request to join.”

NWPP has a total of 34 members, including major utilities such as the Bonneville Power Administration, PacifiCorp and Xcel Energy, along with smaller public utility districts. Its footprint covers British Columbia, Alberta and all the states in the Western Interconnection except California, Arizona and New Mexico.

The RA program is in a preliminary design phase with more detailed design work scheduled for the second half of 2020. The effort to implement the program is scheduled to start in 2021.

As outlined in Friday’s presentation, the RA program would include a “forward showing” component, in which entities would have to demonstrate they meet capacity requirements months in advance, and an “operational” component for short-term resource sharing.

NWPP planners have been studying the work of CAISO and SPP, which have their own RA programs, Afranji said.

The NWPP program would be unique because it wouldn’t operate as part of an RTO or ISO, but it could still fall under FERC jurisdiction if it includes binding agreements, planners said. It would be voluntary to join, but once a utility joins, it will be contractually committed to the program’s requirements, they said.

A public webinar on the proposed program is scheduled for April 24. The RA section of NWPP’s website features videos and other materials related to the program.

Capacity Shortfalls Ahead?

Concern about Western RA has been a recurring theme during the past year, based largely on the replacement of fossil fuel generation with renewable resources. The number of states and local jurisdictions passing carbon-reduction requirements continues to grow and now includes California, Nevada and Washington, which have 100% clean energy mandates by midcentury.

Some are worried the difference between those goals and existing capacity will lead to shortfalls. Price spikes in the Pacific Northwest last spring left many questioning the region’s RA. (See NW Price Spike a ‘Wake-up Call,’ Ex-BPA Chief Says.)

CAISO and the California Public Utilities Commission have said capacity shortfalls could arise as soon as this summer and worsen next year. The state’s policy goals of increasing reliance on renewable energy resources while phasing out natural gas plants is behind the potential problem, CAISO and CPUC officials said. The planned closure in 2024 and 2025 of the state’s last nuclear generating station, Pacific Gas and Electric’s Diablo Canyon Power Plant, could worsen the situation, they said. (See CAISO, CPUC Warn of ‘Reliability Emergency’.)

In response, the CPUC ordered all load-serving entities under its oversight to collectively procure 3,300 MW of capacity, on a basis proportional to projected load, by August 2023. The CPUC voted in November to recommend that the State Water Resources Control Board allow four once-through-cooling gas plants built in the 1950s and 1960s to remain online even though they are the last of their kind and are slated to retire by the end of the year.

Concerns about a lack of coordination and oversight in Western markets have been raised in meetings of the Western Electric Coordinating Council. (See Western Reliability Margin is Thin, WECC Warns.)

A working group within WECC reported in February that the expected expansion of CAISO’s Western Energy Imbalance Market from a real-time only market to a day-ahead market will yield reliability benefits that could outweigh expected risks in the West. But those assurances haven’t done much to eliminate concerns. (See Study Gauges Reliability Benefits of EIM Day-ahead.)

WECC has an RA role, but it is more limited than that of the proposed program, NWPP said in its October report.

“Although both NERC and WECC publish information on resource adequacy planning, ensuring resource adequacy is the responsibility of utilities, state utility commissions, and other local and regional governing bodies,” it said.

Afranji said NWPP’s RA efforts will bolster WECC’s efforts.

“As to the WECC, this program will be complimentary to the RA activities they are engaged in,” he said. “The NWPP is part of WECC, and we have a great and symbiotic relation with them.”