TOPIC #6
Resource Adequacy: Ready for an Update?
Recent grid emergencies highlight the electric industry’s reconsideration of its approach to resource adequacy.
Extreme Events and Changing Resource Mix Challenging the Bulk Power Grid
- The past several years have seen weather events challenge the grid operators’ ability to balance supply and demand on the bulk power grid.
- In February 2021, an extended cold snap in the south-central United States (dubbed Winter Storm Uri) dipped south into Texas, combining high load for heating with widespread generator outages. Those outages were largely due to fuel availability issues for dispatchable gas-fired generators and cold weather impacts, including ice accumulation and low temperature limits for solar and wind units and frozen sensing lines, water lines, and valves on thermal units (see Figure 6.1 below).
- California, in late summer during the past three years, has endured long-duration wide-area heat events that have led to emergency actions and, in some cases, controlled rolling outages.
- Most recently, late December’s Winter Storm Elliott caused unanticipated load surges accompanied by generator breakdowns, reliance on oil-fired units in some regions, and controlled rolling outages in the Tennessee Valley region and the Carolinas.*
- In addition, as NERC notes: “Planning and operating the grid must increasingly account for different characteristics and performance in electricity resources as the energy transition continues.”
- As the electric industry and regulators further consider these reliability events and the changing nature of grid resources, they are reconsidering traditional reliability planning approaches to determine what improvements and modifications may be needed.
Figure 6.1: Winter Storm Uri ERCOT Net Generator Outages and Derates by Cause (GW)
Source: ERCOT
KEY TAKEAWAYS
The nature of bulk power resources has changed over the past decade, and significant amounts of proposed solar and wind resources are in interconnection queues.
Recent summer and winter weather events have tested power supply availability— both for renewable and gas-fired generation—on several systems.
Traditional measures of resource adequacy—availability at peak—are deficient as more energy-limited resources come online and hours of energy insufficiency during non-peak hours and shoulder months increase.
Resource adequacy analysis is adapting to account for different supply composition, potential effects of climate change, the needs for energy adequacy through multi-hour and multi-day events, and load flexibility.
The nature of bulk power resources has changed over the past decade, and significant amounts of proposed solar and wind resources are in interconnection queues.
Recent summer and winter weather events have tested power supply availability— both for renewable and gas-fired generation—on several systems.
Traditional measures of resource adequacy—availability at peak—are deficient as more energy-limited resources come online and hours of energy insufficiency during non-peak hours and shoulder months increase.
Resource adequacy analysis is adapting to account for different supply composition, potential effects of climate change, the needs for energy adequacy through multi-hour and multi-day events, and load flexibility.
Resource Adequacy: The Historical View
- Resource adequacy is the ability of the electricity system to supply aggregate electric power and energy to always meet the requirements of consumers, taking into account scheduled and unscheduled outages of system components.
- It is a long-term planning metric, focused on a 10-year horizon over which programs can be instituted (e.g., demand response) and resources can be activated (e.g., new generating resources).
- Adequacy has historically been measured as the ability to meet peak demand with a margin of excess resources (as a percentage of MW demand or “planning reserve margin”) in the event of a loss of a system element (typically a large generating unit).
- The standard level of expected reliability—measured in terms of loss-of-load expectation—is defined as one day in 10 years (or 2.4 loss of load hours per year). The origin of this standard is unclear, although some trace it back to seminal academic work in the late 1940s. While few have questioned the metric until recently, some have questioned whether it imposes too high a cost for customers.
- These standards vary by region; some have higher or lower targeted reserve margins as dictated by the prevailing regulatory authority or the market operator. FERC has targeted 15% reserve margins in predominantly thermal systems. NERC sub-regional margins vary from 10.42% to 20%.
- Resource adequacy planning is typically co-optimized with least or lowest reasonable cost resource planning.
- This approach was developed in an environment of large, dispatchable, thermal generating stations with large stocks of on-site fuel—oil, coal, and nuclear.
- However, those traditional units are rapidly retiring. In their place, amounts of variable and natural gas-fired resources are increasing in all U.S. bulk power systems.
- Reliability remains of prime importance, so the changes from a system of mostly dispatchable resources to those with limited or no dispatchability, or with potential fuel deliverability risk, create variability and uncertainty, affecting operations and planning.
Figure 6.2: U.S. Net Summer Capacity by Energy Source (% of MWs)
Resource Change
U.S. renewable, hydro, and natural gas generating capacity has gone from about 1/3 of total capacity in 1995 to more than 2/3 as of 2021.
Notes: Hydroelectric includes pumped storage. Other includes non-hydro renewable resources such as wind and solar.
Source: EIA
Gaps in the Status Quo
- Weather’s increasing impacts on supply: Weather is now a key driver of generation capability.
- With increased variable resources, including resources relied upon for meeting peak load, weather or environmental conditions (wind droughts, overcast skies) can directly affect resource output.
- Extreme weather is of particular concern, as common mode failures from extended droughts can, for example, affect hydropower supply and force derates of thermal generation.
- Similarly, as current storage solutions are duration limited, natural gas-fired generation has been used to provide flexible, quick response capacity. However, in extreme cold events, gas deliverability for power generation can be compromised.
- Changing demand levels and patterns: As end-use applications electrify (e.g., buildings, vehicles), the electric industry expects significant growth in both consumption and peak demand. These changes can shift demand more dramatically than may currently be modeled.
- Heating load can peak in early morning hours in winter when relatively few resources are running. Late afternoon demand peaks can occur from post-workday residential demand or electric vehicle charging. Further, with increased electrification, system peaks can shift from summer to winter as heating load increases.
- Demand has traditionally been viewed as static. However, increasing distributed energy resources can provide some demand flexibility, although lack of visibility may keep system planners and operators cautious in their treatment of these resources.
- Energy insufficiency (versus peak sufficiency): Resource adequacy has focused on meeting peak demand, but recent supply/demand imbalance risks have occurred during multi-hour or multi-day events, when piped or stored fuel access or battery recharging is difficult to achieve. There is an increasing need to analyze all hours of the year probabilistically to identify more frequent periods of potential risk, including shoulder seasons when units are often on maintenance outage.
- Seasonality: Unlike weather, these effects are more predictable. For example, solar irradiance in the Northern Hemisphere is greater during summer than during winter. As such, while peak load solar resources may be adequate on a hot summer afternoon, those resources may not be able to perform at similar levels on winter mornings.
- Complexity: With so many new or different variables and stochastic characteristics in supply and demand drivers, both planning and operating the grid are becoming more complex and require more sophisticated approaches to scenario planning for resource adequacy.
Note: The December 2022 North American winter storm (Winter Storm Elliott) intensifying over Canada on December 23, 2022.
Resource Pooling and Capacity Transfers: An Approach to Adequacy
- For each increment of reliability, additional cost is required for resource procurement and maintenance. This is particularly acute for high-renewable systems that have elevated redundancy requirements. Thus, while systems could procure all resource adequacy needs within their footprint, some are employing resource pooling arrangements.
- In the western United States, the Western Power Pool is developing the Western Resource Adequacy Program (WRAP), the first regional reliability planning and compliance program in the history of the West. It will deliver a region-wide approach for assessing and addressing resource adequacy, providing coordination and visibility across participants, and “encouraging the use of western regional resource diversity compared to the status quo.” FERC approved WRAP in February 2023.
- Per its FERC application, WRAP’s 26 entities represent winter and summer peak load of approximately 65 GW and 72 GW, respectively, across 10 states and one Canadian province (see Figure 6.3). As of January 2023, 20 utilities from the Northwest, parts of the Desert Southwest, Canada, and northern California have committed to the program.
- WRAP is a voluntary program that uses the West’s bilateral market structure (i.e., it does not establish an ISO/RTO or a centralized capacity market) to conduct regional resource adequacy planning. It is comprised of two components:
- Forward-Showing: WRAP sets a regional reliability metric and a consistent approach for counting resources. Seven months in advance participants must demonstrate they’ve brought their fair share of regional capacity for the upcoming season—winter or summer. If they are short of needed resources, participants may secure more before the applicable season.
- Operational: This component allows participants to pool and share resources during tight grid-operating conditions. It measures the forward-showing forecast against a much nearer-term forecast, a week or day ahead of when energy needs to flow to keep the lights on. Depending on load and output from variable resources, for example, participants could have a deficit or surplus compared to forward-showing positions or portfolios. Those with a surplus will share resources with those who have a deficit in the hours of greatest need.
- This resource pooling and transfer approach relies upon deliverability of the resources to the system in need.
- Adequate transmission capacity between regions is critical. WRAP includes an analysis of transmission capabilities and availability, and each participant has a forward-showing requirement for transmission service.
- Moreover, the external resources must be available. This can be problematic where wide-area events affect nearby regions and, during emergency conditions, may require system operators to limit exports.
Figure 6.3: Western Resource Adequacy Program Footprint
Note: As of March 1, 2023.
Source: Western Power Pool
Source: Photo courtesy of ISO New England.
Rethinking Resource Adequacy
- As mentioned earlier, changes in characteristics of supply and demand have introduced more variability in resource adequacy. Probabilities of reliability events due to mechanical failure (forced outage) were assumed to be independent or largely uncorrelated with other variables such as weather.
- Variable renewables are, by nature, subject to weather variability, such as wind availability, solar irradiance, and ice accumulation on wind turbine blades.
- As gas turbine units are increasingly the key dispatchable resources, their performance is increasingly correlated with weather, which influences fuel supply, derates due to high ambient temperatures, and frozen equipment.
- Climate trends require reconsideration of reliance on solely historical data for probabilistic analysis.
- New hybrid technologies (solar + storage) and long-duration storage have novel operating characteristics that do not fit neatly into traditional resource adequacy analyses.
- The Energy Systems Integration Group has proposed some principles for modernizing the approach to resource adequacy analysis. Those principles and related considerations are shown in Figure 6.4.
Figure 6.4: Six Principles (and Objectives) of Modernized Approaches to Resource Adequacy
Notes: RA means resource adequacy. EFORd means equivalent forced outage rate demand, which is the probability that an electric power generating unit will not be available due to a forced outage or forced derating when there is a demand on the unit to generate.
Source: Energy Systems Integration Group
IMPLICATIONS
Traditional measures of adequacy—meeting peak with a margin of spare resource availability—worked well in the past when power supply was provided primarily by large, dispatchable, thermal units, many of which had ample on-site fuel.
Conditions today are different and continue to change: rapidly growing and more variable demand with electrification of “everything,” two-way grid resources (distributed energy and possibly electric vehicles), less dispatchability, more long-duration extreme weather events affecting both supply and demand, among other things.
Resource planners are adjusting through resource-sharing arrangements and reconsidering how asset availability metrics, such as equivalent load-carrying capability, are applied.
With increasingly complex interactions of variables, utilities must re-examine tools and models, planning criteria, assumptions, and resource-planning processes to accommodate these evolving supply, demand, and environmental dynamics.
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