A Resource Adequacy Standardfor the

Pacific Northwest

Resource Adequacy Technical Committee

January 17, 2008

Portland Airport

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Outline

• Objectives for a resource adequacy standard

• Guidelines for a standard

• A proposed standard for the Pacific NWFor annual (energy) needs For hourly (capacity) needs

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5th Power Plan Action Items

• ADQ-1: Establish regional and West-wide reporting standards for the assessment of adequacy.

• ADQ-2: Carry out a process to establish adequacy standard. The Council will establish a Northwest Resource Adequacy Forum. This forum will examine alternative adequacy metrics and standards for the Northwest.

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Objectives for aResource Adequacy Standard

• Transparent and easy to calculate• Linked to a more sophisticated analysis (like a

Loss-of-Load-Probability assessment)• Provide adequate protection against

1. Unwanted curtailments (physical standard*) and2. High and/or volatile prices (economic standard*)

*A “physical standard” is equated to minimizing average cost and a “economic standard” is equated to minimizing the risk of high-cost years.

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Guidelines for a Standard• Components:

Metric – a unit of measurement

Target – acceptable value for the metric

• Standards for:Capacity – peak hourly demands

Energy – average annual demand

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Pacific NW Metrics

• Energy – Annual average load/resource balance in units of average megawatts*

• Capacity – Surplus sustained-peaking capability in units of percent (sometimes referred to as a planning reserve margin)

*One average megawatt is equivalent to 8,760 megawatt-hours.

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Pacific NW Targets

• Energy – Zero, i.e. on average, annual load and resources should be in balance

• Capacity – Reserve margin target is derived from an LOLP analysis and covers– Operating reserves– Extreme weather events– Other contingencies

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PNW Adequacy Standard• Targets for a physical adequacy standard are

chosen so that the resulting LOLP is 5% for both energy and capacity events

• Targets for an economic standard would result in a much lower LOLP and would lead to more resources and a higher average system cost

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Energy StandardAnnual Average Load/Resource Balance

Annual Average Load• Averaged over all hours of the year• Based on normal weather

• Includes net interregional firm contracts

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Energy StandardAnnual Average Load/Resource BalanceResources – Annual average, accounting for maintenance and derating for forced outages

• Firm thermal, wind and other non-hydro resources

• Uncommitted IPP generation – Full availability in winter and 1000 MW in summer

• Hydroelectric generation – Critical year average

• Out-of-region market supply – Derived from LOLP analysis

• Non-firm hydro – Derived from LOLP analysis

Currently, market and non-firm hydro = 1,500 MWa

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Energy LOLP vs. SW Supply(for different L/R balance values)

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 1000 2000 3000 4000 5000 6000 7000SW Winter Surplus Capacity (MW)

Win

ter

LO

LP

(%

)

Bal=0 Bal=-1000 Bal=-2000Bal=-3000 Bal=-4000 LOLP=5%

Illustrative Only

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Energy Planning Adjustment

-4000

-3000

-2000

-1000

00 2000 4000 6000 8000

SW Winter Surplus Capacity (MW)

Fir

m L

/R B

alan

ce (

MW

a)

Constant 5% LOLP

1500 MWa Target

3000 MW SW

Illustrative Only

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Energy StandardAnnual Average Load/Resource Balance

The annual average generating capability of firm and some non-firm resources should equal the annual average load.

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Energy StandardAnnual Average Load/Resource Balance

Raf + Ran – La = 0

Where:

Raf = Annual firm resources

Ran = Annual non-firm resources to be relied upon

La = Annual normal weather load

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Capacity StandardSurplus Sustained Peaking Capability

Peak Duration Load• Averaged over the peak duration hours –

6 consecutive hours/day over 3 consecutive weekdays

• Based on normal weather

• Includes net interregional firm contracts

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Capacity StandardSurplus Sustained Peaking Capability

Resources – Averaged over the peak duration • Uncommitted IPP generation

• Winter – all available• Summer – 1000 MW

• Hydroelectric – Critical year for winter and summer• Wind – Derived from wind study • Out-of-region market supply

• Winter – 3000 MW• Summer – Zero

• Non-firm hydro – Derived from capacity analysis for both winter and summer

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Capacity StandardNon-firm Hydro

• Determine the amount of non-firm hydro energy used in winter and summer (LOLP analysis)

• Using the energy/capacity relationship, determine the amount of additional hydro capacity is available based on the non-firm energy used

• Illustrative example (see next page): • Winter non-firm energy = 2000 MWa

capacity = 2000 MW

• Summer non-firm energy = 1000 MWa capacity = 1000 MW

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Capacity vs. Energy(6-hour duration)

20000

22000

24000

26000

28000

10000 12000 14000 16000 18000 20000 22000

Monthly Energy (average megawatts)

Capaci

ty (

MW

)

Summer

Winter

Critical Hydro

+1000

+2000

Illustrative Only

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Capacity StandardSurplus Sustained Peaking Capability

The peak duration generating capability of firm and some non-firm resources should equal the peak duration load plus a surplus* derived from the LOLP analysis.

*The surplus can be thought of as providing operating reserves and to cover deviations from normal loads due to adverse temperature and/or resource forced outages.

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Capacity StandardSurplus Sustained Peaking Capability

(Rpf + Rpn)/ Lp - 1 = RMWhere:

Rpf = Peak duration firm resources

Rpn = Peak non-firm resources to be relied upon

Lp = Peak duration normal weather load

RM = Peak duration reserve margin derived from an LOLP analysis