Northwest Power Pool (NWPP) members last week discussed a proposed Western resource adequacy program that would create a “binding” capacity mechanism for summer and winter but be able to change course if peak loads shift to other seasons in the face of a changing resource mix.

NWPP formally kicked off the RA effort in April in response to mounting evidence that the West could face capacity deficits as early as this year, raising the risk that load-serving entities could inadvertently draw on the same resources for RA as fossil fuel generators retire and the region increasingly relies on intermittent renewables. (See NWPP Planning Western Resource Adequacy Program.)

While still in its early stages, the RA program is proceeding apace after the NWPP stakeholder group spearheading the effort outlined its initial concepts just two months ago. (See NWPP Details Proposed Reliability Program.) Eighteen NWPP members spanning nine U.S. states and one Canadian province have already signed on to the effort, with three additional entities expressing interest in joining, NWPP President Frank Afranji told ERO Insider.

Speaking during a webinar Thursday, Afranji said that NWPP’s RA group has already completed “Phase 2A” of the initiative — the preliminary design — and is now advancing to the detailed design work of “Phase 2B.”

Implementation of a “nonbinding” RA program (Stage 1 of Phase 3) is slated for next year, followed by the rollout of progressively comprehensive Stage 2 and 3 “binding” program — which would require participating LSEs to demonstrate RA in advance and enforce penalties for noncompliance — heading into 2024.

“The implementation phase begins in 2021; however, we have not put out specific dates for the different stages in this phase because the timeline for implementation is still preliminary at this point. I anticipate, as these dates become more certain, we’ll have more information to share at a future public webinar,” Lea Fisher, Public Generating Pool senior policy analyst, said in an email.

“Even when we move into the implementation phase, the program is going to be designed to be very dynamic,” RA group member Gregg Carrington, Chelan County (Wash.) Public Utility District’s managing director of energy resources, said during the webinar.

“We’re going to be able to learn as we go, and it’s going to be continuous improvement,” Carrington said. “To the extent that we discover things that work for us, we’ll keep them, and to the extent we find things that don’t work, we’ll make changes as we go.”

‘Refining as We Go’

NWPP’s current proposal envisions a Stage 1 nonbinding, no-penalty program that asks participants to offer “forward showings” of resource adequacy and availability from participants seven months in advance of the summer (June to September) and winter (November to March) seasons.

“This would be an opportunity to gain experience with the program administrator and submit data, [and] certify all the resources,” said RA group member Joel Cook, Bonneville Power Administration’s senior vice president of power services. “That data would be available to all the participants. We’d have a multilateral agreement between the program administrator and each of the participants to establish requirements.”

The absence of enforcement and penalties will likely exempt Stage 1 of the program from FERC oversight, Cook said.

Stage 2 would introduce a more stringent requirement in which participants must demonstrate to the RA program administrator that they have sufficient resources to meet required metrics for the binding season seven months ahead of the operational timeline.

“An inability to meet showing requirements would result in a penalty or other consequences, and enforceability of the provisions and penalties for noncompliance would likely make the program, at this point, FERC-jurisdictional,” Cook said.

Stage 3 would extend the depth of the RA program by creating a pool of resources for participants to buy and sell for each season’s operational timeline, Cook said.

“The details would be developed with the [NWPP] program developer, so we have a lot of work still ahead of us,” he said. “This is intended to mitigate the risk for participants when the spot market is less liquid, and we have entities relying on that spot market to serve some of their resource adequacy needs.”

Alan Comnes, senior director at consulting firm Energy GPS, asked whether seasonal requirements would be broken down into individual months or consist of a single requirement.

“This is a design aspect that we’re going to be refining as we go,” Carrington replied. “SPP, for example, has a summer-binding season. People submit that six months in advance, but then people also submit information as they get closer and closer to the operational time period. Cal-ISO has an annual review of their capacity product, but then they do a true-up on a monthly basis. We have not made a determination whether or not we’d do a monthly true-up.”

Fred Heutte, Northwest Energy Coalition senior policy associate, asked whether NWPP would consider a monthly, rather than seasonal, RA showing.

“My concern is that system conditions vary a great deal within seasons, and a seasonal approach could lead to over-acquisition of RA resources. Also, the gap months between the seasons are a bit problematic. If RA is addressing both coincident peak demand and need for ramping [and] flexibility, then we will have RA needs in all months,” Heutte said.

“The program that we set up was designed to cover what we considered to be the coincidental peak demand,” Carrington responded. “What we did is we took a look at 10 years of records, and we determined exactly the number of peak-hour demands that occurred … and all of them fell within the time periods that we’ve designed right now. If that changes in the future … the program’s going to be set up to be dynamic, and we’ll be able to make adjustments as we move forward as well.”

RA group member Mark Holman, managing director with Powerex, said the group selected summer and winter as the program’s binding seasons because they contain the greatest risk of a capacity shortfall. Northern reaches of the footprint tend to peak in winter, while those farther to the south peak in summer.

“But that doesn’t mean that entities are not planning their systems in the April-May and the October time periods,” Holman said. “And, of course, if you meet your summer and winter season peaks, you’re often going to have resources available in those other periods. I think the thinking is that as we launch this program, we need to address the critical periods of greatest risk.”

But Holman also agreed with Carrington that if stakeholders identify the need for a spring- or fall-binding RA period, “we can certainly move to that in a future year.”

Stage 0

Portland General Electric Senior Director of Power Operations Cathy Kim reviewed how the program would treat resource eligibility, with resources likely required to undergo a registration and certification process.

Kim also noted that many resource-rich Northwest entities sell capacity out of their systems, requiring the future RA program administrator to validate the counting of capacity to prevent “overselling” as it is transferred from one system to another.

She also emphasized that the program would be “technology-agnostic” and consider all resources, including demand response and battery storage in addition to the region’s predominant thermal, hydro and pumped storage generation.

In reviewing the program’s import-export assumptions, Holman pointed out that modeling assumptions of future hourly imports into the NWPP footprint will have a “significant impact” on identifying the critical hours of RA need and the calculations of participants’ regional planning reserve.

He also delved into an important point for a region populated by entities with heavy surplus capacity, explaining that participants that export energy to other regions must demonstrate those exports are drawn from true surpluses and do not in any way contribute to regional planning reserve margins or lean on the RA program.

It is presumed that entities are making those exports from their surplus capability beyond what they are obligated to show as part of the showing component of the program,” he said.

NWPP is proposing that Stage 1 of the program be preceded by a Stage 0 “stopgap” solution in the event of a loss-of-load event before the RA program commences operation. This interim program would allow participants to give and receive RA assistance “on a voluntary basis during high grid stress periods” in summer and winter. “The intent is for the Stage 0 interim solution to be available this summer,” Fisher said.

Holman wrapped up Thursday’s webinar by applauding the level of stakeholder interest in the RA program.

“I’ll just say that it’s really good to see that people are engaged, and that they’re thinking about the same issues that we’re all thinking about, which is how to achieve a resource adequacy program that really achieves two core purposes: ensures reliability and unlocks investment savings through diversity — and we do that in a very efficient manner.”