| The Dalles hydro dam on the Columbia River is a major power generation asset for the Northwest and the broader Western U.S. |
Keeping the lights on in 2023 and beyond may not get any easier in the Western United States.
Power system operators have experienced unprecedented threats to grid reliability in recent years — from extreme weather and snarled supply chains to malicious attacks on infrastructure and an accelerated but uneven transition to cleaner sources of energy.
In its latest long-term reliability assessment, released in December 2022, the North American Electric Reliability Corp. flagged the entire Western Interconnection, the far-flung grid that delivers electricity to 82 million people living between the Pacific Ocean and the Rocky Mountains, for "high" or "elevated" risk of energy shortfalls through at least 2027.
The specter of blackouts has become an annual occurrence in some areas, especially during peak demand periods on hot summer evenings, when solar generation zeros out, conventional generators may underperform and grid operators often scramble to plug power supply gaps with emergency calls for conservation. Meeting the challenges ahead will require a new level of collaboration across the Western energy landscape, according to utility executives and reliability experts.
"We don't want to just cross our fingers and hope that [generating capacity] is there," Sarah Edmonds, president and CEO of the Western Power Pool said in an interview.
Formerly known as the Northwest Power Pool, the Portland, Ore.-headquartered nonprofit group rebranded in 2022 to reflect its broader regional focus on reliability amid an accelerating shift toward variable renewable energy resources. In August 2022, it filed a proposal with the Federal Energy Regulatory Commission to administer the first reliability planning and compliance program for western North America, dubbed the Western Resource Adequacy Program, or WRAP.
Born out of growing utility concerns over reliability, WRAP is one of several major market, reliability and transmission initiatives in the West at critical junctures entering 2023. While FERC did not approve the WRAP tariff by December 2022, as the group requested, the WPP did receive commitments from a host of utilities and power marketers in the U.S. Pacific Northwest, California and Canadian province of British Columbia to proceed with the next binding phase of implementation.
In 2023, the WPP plans to continue building out its program, initially including nonbinding forward showings of anticipated resources and a system to pool resources during any real-time capacity crunch. Pending FERC approval to fully operate under the tariff and implement governance reforms, the binding program would launch between summer 2025 and winter 2027-2028, and be operated by the Southwest Power Pool.
"We are angling for a West-wide footprint," Edmonds said. "One thing that markets, resource adequacy and even transmission have in common is that they work better, they provide more economic and efficiency benefits, when you're dealing with a bigger footprint."
'Important stepping stone'
Among those to sign on for the next phase of WRAP are two of the biggest power suppliers in the West: Berkshire Hathaway Energy utility subsidiary PacifiCorp, whose sprawling grid serves retail customers in six states, and the Bonneville Power Administration, or BPA, a federal agency that markets wholesale power from 31 federal hydroelectric dams in the Northwest and operates a high-voltage transmission system touching eight states.
"It's an important stepping stone because it gives us an understanding of what's available at any given time ... with a common language, a common set of metrics," BPA Administrator and CEO John Hairston said in an interview. "And once you have that understanding, and that is the standard across the board, then something like a day-ahead market becomes more effective."
BPA Administrator John Hairston signs up for the next phase of the Western Resource Adequacy Program. |
In May 2022, the BPA joined the real-time Western Energy Imbalance Market, or EIM, managed by the California ISO, and is exploring together with its customers whether to join CAISO's extended day-ahead market or SPP's competing day-ahead platform, known as Markets+.
WRAP is being designed to operate across both day-ahead markets envisioned in the West. CAISO plans to file a tariff proposal with FERC in the second quarter and go live with its day-ahead market in 2024. SPP, an existing regional transmission organization, or RTO, in the Eastern Interconnection with westward ambitions, is advancing its Markets+ program in 2023 ahead of an anticipated 2026 launch.
"When you take that step into a day-ahead market, you're talking about a much larger percentage of your daily sales," Hairston said.
Collectively, the reliability and market developments are widely viewed as incremental steps toward a more integrated Western grid, possibly culminating in one or more RTOs.
Whatever initiatives the BPA joins, the amount of surplus power available will depend on the water year and growing demand for electricity within the Northwest, including from the transportation and building sectors.
"There will still likely be surplus available to market," Hairston said. "Now, the quantity at times will differentiate based on what we see in terms of snowpack and [other factors]."
'The challenges are indeed great'
"There's going to be huge increases in the situational awareness that grid operators will have and a much higher volume of transactions than we see in the [real-time] EIM," said Stefan Bird, president and CEO of PacifiCorp's Pacific Power division.
At the same time, PacifiCorp is adding new resources and transmission to decarbonize its system and handle "surprise events" such as heat waves and wildfires, Bird said.
The utility is advancing its strategy presented in September 2021 to add about 10,000 MW of new resources by the end of this decade, mostly in the form of energy storage, renewables, energy efficiency and natural gas generation converted from coal. But a bid to add an advanced nuclear reactor with energy storage in Wyoming by 2028 has hit a speed bump. Bill Gates-backed developer TerraPower LLC in December 2022 said the project would be delayed by at least two years because of insufficient uranium availability following Russia's invasion of Ukraine in February 2022.
"While the challenges are indeed great ... those are just bigger motivators for us to very aggressively pursue everything that we can control," Bird said.
| A wind farm in north-central Oregon, near the Columbia River. Source: S&P Global Market Intelligence. |
Western RTO efforts to ramp up in 2023
Efforts to form the first RTO in the Western Interconnection also appear poised to advance in 2023.
CAISO is working on a report on the impacts on California of expanded regional electric sector collaboration, consulting with PacifiCorp, the Los Angeles Department of Water and Power, the Western Area Power Administration and other balancing authorities in the state. Planned to be sent to lawmakers by the end of February, the study could set the stage for another attempt to transition the CAISO into a multistate RTO.
"By enabling the CAISO to become an RTO, we would bring all these diverse entities together to form one organization to manage the Western energy grid," California Assemblymember Chris Holden, who authored a 2022 resolution requiring the report, said in an address at a CAISO symposium in November 2022. "Demand for an RTO is increasing around the West and will continue as long as the underlying factors of climate change and goals for decarbonization exist."
While California lawmakers in the past have balked at the idea, largely over concerns about loss of state control — California's governor appoints CAISO board members — both Colorado and Nevada passed laws in 2021 directing their in-state utilities to join an RTO by 2030.
SPP, however, has a jump on CAISO. Seven organizations serving parts of the Mountain West and Desert Southwest are expected to decide by March 1 whether to join SPP's RTO West initiative, with implementation planned for 2025, Carrie Simpson, SPP's director of western services development, said at a California Energy Commission meeting in December 2022.
"So if that happens ... then there will be an RTO in the West, under the SPP footprint," Simpson said.
But the formation of one or more RTOs in the region does not guarantee a more reliable power system.
SPP, for instance, "is exposed to energy risks in ways that are similar to Texas and the U.S. West," according to NERC's long-term reliability assessment.
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