The Northwest Power Pool is moving to wrap up the design phase of its regional resource adequacy program, stakeholders heard Friday.

“We are closing in on the tail end of the detailed design,” NWPP President Frank Afranji said during a status update on the program, which is about a year in the making. (See NWPP Planning Resource Adequacy Program.)

Next stop: rollout of a “nonbinding” version of the RA program, a milestone NWPP is “hoping” to achieve in the third quarter of this year, Afranji said. (See NWPP Effort Quickly Ramping Up.) Under that version, participants will be asked to offer “forward showings” of resource adequacy and availability seven months in advance of the summer and winter capacity periods, but they would not be penalized for failing to meet their showing requirements.

The full binding program is slated for a 2024 rollout.

The urgency for a comprehensive RA program has been building in the West after an extended heat wave last summer forced Experts Urge West to Address RA Shortfall Immediately.)

“It’s a right-now problem, not a five-years-from-now problem,” Arne Olson, senior partner with Energy and Environmental Economics, said at the time.

Afranji was almost understated in his agreement with that sentiment. “As many of you know, the region has been at risk of a capacity deficit situation,” he said Friday.

Perhaps presciently, NWPP began to address that situation last summer when it implemented an interim program allowing participants to give and receive RA assistance on a voluntary basis during high-stress periods on the grid in summer and winter. Afranji said 12 participants signed up for the summer program, with one trade occurring during the summer heat wave. Ten participants have joined the winter program, which has seen no trades so far, something Afranji said could be attributed to relatively mild conditions and COVID-19 pandemic load patterns.

But NWPP’s initial nonbinding RA program is rapidly taking shape. Afranji pointed out that the program recently attracted its 20th participant in Xcel Energy’s Public Service Company of Colorado. NWPP has also engaged SPP to Develop NWPP Resource Adequacy Program.) The law firm Wright & Talisman has been retained to provide advice on regulatory and legal issues.

The nonbinding program provides the template for the binding one, and not much has changed in the proposed program structure since NWPP revealed initial details last summer. NWPP still envisions a bilateral — rather than “organized” — market, meaning participants themselves will determine what resources to procure instead of a central market operator. Participation will be voluntary, although participants must follow program requirements or face penalties once the binding period begins. NWPP will establish policies describing how parties can join and leave the program.

Program Mechanics

As conceived, the RA program will consist of two binding seasons, summer and winter, with NWPP classifying spring and fall participation as “advisory.” The winter season will run from Nov. 1 to March 15, and summer from June 1 to Sept. 30. Participants will need to provide their forward showings seven months ahead of a binding season, followed by a two-month “cure” period to allow participants to make adjustments in the event of deficiencies.

Capacity accreditation will be based on methodologies “appropriate” for each resource type participating in the program, said Geoff Moore, principal originator with Portland General Electric. Variable energy resources such as wind and solar will be accredited based on effective load-carrying capacity (ELCC), while run-of-river hydro will be scored based on ELCC analysis and historical data. Thermal units will rely on unforced capacity values.

Program designers are still contemplating how to credit storage hydro as they look to a “common hydro model that considers [the] appropriate set of water conditions allowing [the] program administrator to verify data,” according to NWPP.

Fred Heutte, Northwest Energy Coalition senior policy associate, asked whether NWPP is coordinating with the Bonneville Power Administration and Northwest Power and Conservation Council on storage hydro modeling.

Moore noted that BPA is a member of NWPP’s Steering Committee, as well as working groups dealing market design, operations and hydro. “So, they’re covering the board, working with us there. We also have other hydro entities — Powerex and a lot of the Mid-Columbia counties,” a few of which operate public utility districts with significant hydro resources.

“Right now, we think we’ve got the initial hydro methodology, and we’re doing some testing. A lot of data has been provided to SPP, and once that comes back, we’re going to start to refine that and go from there and figure out what the next steps are,” Moore said.

Similarly, accreditation for pumped storage, demand-side resources and behind-the-meter solar are still being worked out.

Charles Hendrix, SPP manager of compliance and advanced studies, said the final phase of the detailed design will include treatment of demand response resources. That will entail, in part, examining how other RA programs deal with DR.

“You can look at demand response as a load modifier or a capacity resource,” Hendrix said. DR used as a load modifier would translate into a reduction in a participant’s net peak demand. If functioning as a capacity resource, DR would count toward load-serving capability but also be backup with planning reserves.

Hendrix said NWPP should consider requiring any load-modifying DR resources participating in the RA program to demonstrate a testable ability to follow through on load reduction and not be permitted to “economically opt out” of performance in the way that many bilaterally contracted resources in the West can opt out of delivery and pay liquidated damages to a buyer.

“Demand response resources acting as load modifiers need to show they can act as such,” he said.

‘All in it Together’

For what the NWPP refers to as the “operational program” — the day-to-day workings of the RA effort — the organization is proposing that program participants only be authorized to call on pooled capacity based on the formula: load + contingency reserves > forecasted peak load + planning reserve margin (PRM) – forced outages – VER underperformance + VER overperformance. A participant could only draw a pooled capacity volume equal to the amount that its load exceeds its reliability metrics. The program administrator would ask participants not experiencing loads above their RA obligations to assist those in need.

Charles Cates, SPP manager of operations engineering analysis and support, said one of the program’s primary objectives is to access the diversity of the region’s resources to ensure reliability.

“A lot of this is driven by diversity,” Cates said. He called the bilateral nature of the program “more of a light touch” in the provision of RA because it does not dictate how participants must operate or what resources to dispatch.

Cates said the program will allow the region to maintain a lower overall capacity margin than if each participant were to go it alone, reducing the need to build or contract for new capacity.

“On top of that, because it’s sort of this ‘we’re all in it together approach,’ participants are able to look at their PRM and hold that back and have a market for their surplus, instead of just worrying about their own footprint.”

NWPP plans to hold another status update webinar regarding the RA program in the second quarter.