Washington — Natural gas-fired generation presents the best solution for new capacity needed in the near term to ensure resource adequacy in the Pacific Northwest, until zero-carbon alternatives that can provide firm capacity become available, an energy analyst told state regulators Tuesday.
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Speaking on a panel at the National Association of Regulatory Utility Commissioners' winter policy summit, Arne Olson, a senior partner with the consulting firm Energy and Environmental Economics (E3), said coal retirements and load growth have put the Pacific Northwest in a rough load-resource balance.
The region is at risk of significant capacity shortfalls in the 2020s that could exceed 10 GW by 2030 if more coal retirements beyond what have been announced take place.
The resource stack in the Northwest is dominated by hydropower, accounting for about 35 GW of installed capacity. There is roughly 12 GW of gas-fired generation in operation, and 11 GW of coal. Of that, some 6 GW of coal have announced plans to retire and more announcements could come.
Olson said if all the coal plants in the region were to retire, "we might see a shortfall of as much as 16 GW of capacity by 2030." Given ambitious clean energy targets throughout the West such a scenario is plausible.
While wind, solar and energy storage are contributing to the capacity needs of the region, their inherent intermittency and limited duration put constraints on their ability to address the shortfall, Olson said.
SOUTHWEST VS. NORTHWEST
"We have a challenge of how do we keep the lights on in the near term when we need new investment," Olson said. That challenge of ensuring reliability over the long run is complicated by aggressive carbon reduction goals being pursued by a number of states and utilities.
The Southwest has a clear path forward over the next 10 years in that it's a summer peaking system with plentiful solar resources that have been combined with lithium ion batteries, Olson said. Beyond those 10 years though, that region will have to look for other solutions as batteries are generally seen as capable of meeting 20-25% of peakload due to their limited duration.
The Northwest, however, does not have that 10-year buffer, Olson said. The area is winter peaking and its resources' performance is greatly impacted by weather events.
"Everywhere we studied it, when a cold weather event comes through, it coincides with a loss of wind production," Olson said. "The system is designed to have a significant surplus of renewable capacity on most days, ... but you don't have the ability to store that amount for the four or five days you might need it to meet a loss of load event."
Olson contended that when weather doesn't cooperate, the Pacific Northwest could face situations where "almost half of the load can't be served in this system," based on simulations of multi-day events with high loads and low wind production.
E3 concluded after doing these kinds of studies that the region needs "some kind of firm capacity that can turn on and run for an extended, maybe an unlimited, period of time when you really need it."
Currently, the only zero-carbon, firm candidates are nuclear power, fossil generation with carbon capture and sequestration, long-duration storage, hydrogen storage, or net zero carbon fuel like renewable natural gas, Olson said.
"We need at least one of those resources to be able to have a zero carbon electricity system and still provide the reliability people have come to expect, yet each of those, I would say, isn't commercially ready to be deployed at scale today," Olson said. "So we certainly hope that technology gets us there by the time we get to our 2040, 2050 goals, but we have a near term problem that we need investment in these systems throughout the West in order to be able to keep the lights on in the near term."
He continued: "In the absence of one of these zero carbon alternatives, we really have no choice in the near term but to invest in natural gas generation."
Regarding the magnitude of that need, Olson said E3 sees some 20-24 GW of new capacity is needed in the Northwest by 2050, when not accounting for the possibility of further load growth.
"That's twice as much capacity as we have natural gas capacity today in the region," Olson said. "We think there needs to be significant investment in natural gas in the near term, with the intention of using it less and less over the years as more and more wind and solar are built and other zero carbon resources become available to solve this capacity challenge."