Flexible solutions to capacity issues
By Jason Gates
For most of the last three decades, the American Pacific Northwest has been able to avoid building new utility power generation resources. Despite significant population growth, the region has been able to maintain sufficient capacity because of its flexible hydro generation, the loss of some industrial loads, and significant investments in energy efficiency.
Investing in conservation has allowed the region to handle the load growth associated with rapid population while building minimal new generation resources. This focus on conservation has made sense – and has worked – since the region has had plenty of capacity historically but faced energy deficits at multiple times throughout the year.
Now, however, the region is increasingly facing new challenges. This change is due to several factors, including the rapid growth of renewable generation in the region, the return of some load growth and evolving constraints on the region’s hydro systems.
These emerging (and rapidly growing) new challenges require innovative, flexible solutions. Balancing the variability of renewable generation can require resources to respond within seconds. For example, clouds moving over an area can cause all solar generation to drop off nearly instantly. When this happens, the grid needs to be able to respond immediately, switching to an alternative supply source of generation supply or dispatching demand response or other tools to lower demand.
There are many unanswered questions that will help us solve these new challenges, including:
1.) How big is the need and when do we need it?
This is the key question. Unfortunately, the answer is not simple, nor straightforward. Instead, it requires assessing multiple, constantly evolving variables, such as load growth, variable energy resource construction, scheduling periods, forecast accuracy, potential for market development, regulatory and policy decisions and the impact of distributed generation. Regional groups and planners are continually grappling with all of these questions, individually and as interdependent variables collectively, in determining capacity needs.
One good example is trying to determine the amount and type of reserves the region will need to balance the variability of wind generation. Estimates vary widely, mostly based on assumptions about construction timing and growth, forecasting and scheduling accuracy, the potential for new acquisition methods such as a regional energy imbalance market and the impact of uncertain policy and incentive decisions.
2.) Which flexible resources will be the best investments? Should we invest in long-term resources or shorter-term solutions?
This is really a question of timing. How long will it take until some of the lesser-known variables become easier to predict? Will potential developments such as a regional energy imbalance market materialize, and if so what will be their impact? Who will pay for new flexible capacity?
All organizations worry about stranded investments to some degree, but this is a particularly strong concern given the uncertainties about timing and quantity of regional capacity needs. As an example, utilities or other regional organizations, such as wind producers, may be reluctant to enter into a long-term agreement to purchase capacity until they know whether an energy imbalance market is likely to develop in the region.
3.) What is the business case and how should costs be allocated?
Since there are not established energy markets or regional transmission operators in the Pacific Northwest, there are many entities both involved and interested in ensuring the region has adequate resources.
The interested parties range from Bonneville Power Administration, the wholesale power marketer and provider of much of the region’s transmission, to various power-focused interest groups such as the Northwest Power and Conservation Council and the Public Power Council, investor-owned utilities, state regulators and individual power consumers.
Perhaps more than in any other region of the country, the lack of energy markets combined with the sheer number of interested stakeholders creates a significant focus on making the right investments and ensuring equitable allocation of costs.
Demand response is one potential source for enhanced regional flexibility. While some utilities may choose to build demand response programs to address seasonal peaks, others may focus on economic opportunities. Still others may be able to build multiple value streams by addressing their own needs as well as offering solutions to other organizations in the region.
For example, some utilities in the region can reap significant savings on their wholesale power costs by reducing peak loads on winter mornings and summer afternoons. The rest of the time, those utilities may be able to create additional revenue by selling their demand response assets to help others address their capacity and flexibility needs.
4.) Will emerging technologies, smart grid investments, distributed generation and energy storage help or create additional challenges?
Having more alternatives cannot be a bad thing, but there is also potential for a bit of a ‘chicken and egg’ scenario. System operators in the region are not likely to trust new, less proven tools unless their capabilities have been thoroughly tested and proven.
Additionally, utility regulators, customers and other stakeholders may not be willing to accept the risks of investing in these new technologies when more established and proven alternatives are available.
On the other hand, when compared with building traditional generation these new tools may be cost effective, available in smaller quantities and/or with shorter contract periods and may be welcomed as more environmentally favorable choices.
While these challenges are relatively new to the Pacific Northwest, other regions of the country have been grappling with capacity issues for years. Though the drivers and timeframes are different, many of the lessons learned by other regions will provide a valuable foundation for solving regional challenges.
One promising opportunity is the potential to address multiple regional needs using the same resource. For example, consider an energy storage project with multiple uses, each creating a unique revenue stream and/or cost avoidance opportunity. Despite the well-known cost effectiveness challenges with battery energy storage, it is possible to build a favorable business case by stacking benefits from deferring infrastructure investments, avoiding outages and providing ancillary services.
Ultimately, we are at the forefront of identifying responsive, economic, and reliable new flexible tools. As such, our experiences should help other regions as they increasingly face similar issues.
HyNet North West and InterGen to build Zero Carbon plant
Expected to begin in the mid-2020s, the partnership could reduce the CO2 emissions from the Runcorn power station by over 150,000 tonnes each year, the equivalent of taking 60,000 cars off the road every year.
Situated across one of the UK’s largest industrial areas which supports the highest number of manufacturing jobs of any UK region, HyNet North West will bring clean growth to safeguard jobs, and create thousands of new employment opportunities.
Following a commitment of £72 million in funding, HyNet North West will transform the North West into the world’s first low carbon industrial cluster, playing a critical role in the UK’s transition to ‘net zero’ greenhouse gas emissions by 2050 and the global fight against climate change.
HyNet North West will begin decarbonising the North West and North Wales region from 2025, replacing fossil fuels currently used for electricity generation, industry, heating homes and transportation with clean hydrogen. The project will also capture and lock up carbon which is currently emitted into the atmosphere.
It anticipates that by 2028, Rocksavage will have enough hydrogen produced by HyNet to move towards a 100% net zero power generation power station as the Gas Turbine technology becomes available.
InterGen’s Rocksavage Plant Manager Dan Fosberg said Rocksavage has been safely generating energy to power the north west for nearly 25 years, but in order to meet the UK’s net zero targets, traditional generation needs to adapt.
"HyNet North West will allow us to pivot our operations as we transition to a low-carbon world. The proximity of the Rocksavage Power Plant to the HyNet North West hydrogen network provides us with an exciting and unique opportunity," he said.
As soon as the first stage of the hydrogen network is available at Runcorn, InterGen intends to modify the existing generating plant to consume a blend of hydrogen with natural gas and start to reduce our emissions.
The HyNet North West project milestones mean that Rocksavage could be the first plant in the UK to blend Hydrogen with natural gas, a step forward for the industry in the target for net-zero. Once the gas turbine technology becomes available, it will explore options with HyNet North West to create a zero emissions power station using 100% hydrogen.
The project will play a big part in supporting Liverpool City Region in its commitment to reach zero carbon by 2040 and accelerate the UK’s transition to net zero by 2050.
Steve Rotheram, Metro Mayor of Liverpool City Region, said: “Putting the Liverpool City Region at the heart of the Green Industrial Revolution is one of my top priorities. With our existing strengths in green energy, we have the potential to become the UK’s renewable energy coast.
“I am committed to doubling the number of green jobs in our region and exciting projects like HyNet will be a key part of that. We’re going to lead the way, not only in doing our bit to tackle climate change, but in pioneering new and innovative technology that in turn attracts more jobs and investment to our region.”
David Parkin, HyNet North West Project Director, said HyNet North West will play a big part in tackling climate change regionally. "It will ensure the region remains an attractive location for investment and for companies to grow through the establishment of a clean economy, protection of skilled jobs and creation of thousands of new long-term employment opportunities.
“Our partnership with InterGen at Rocksavage shows just how great an impact HyNet will have on the region – decarbonising homes, workplaces, travel and industry.”
HyNet North West is a low carbon energy project at the forefront of the UK’s journey to a Net Zero future, being developed by a consortium comprising Progressive Energy, Cadent, Essar, Inovyn, Eni, University of Chester, CF Fertilisers and Hanson.