Utility resource planning is becoming an important driver of new renewable generation in the West, according to a new report released by the Lawrence Berkeley National Laboratory (LBNL). Through the resource planning process, 12 western utilities have called for the addition of more than 8,000 MW of new renewable generating capacity by 2014.
Nearly half of these additions are planned not because of state or federal requirements, but rather because utilities are finding that renewable energy can make good business sense for them and their customers, according to the authors. This growing utility acceptance of renewable energy especially wind power is motivated by the improved economics of renewables, they say, as well as an increasing recognition of the inherent risks such as natural gas price risk and environmental compliance risk in fossil-based generation portfolios.
The report, “Balancing Cost and Risk: The Treatment of Renewable Energy in Western Utility Resource Plans,” examines how the utilities treat renewable energy in their recent resource plans. “Our purpose is to highlight the growing importance of utility resource planning as a current and future driver of renewable generation,” said Mark Bolinger, one of the authors of the study, “as well as to suggest possible improvements to the methods used to evaluate renewable energy as a viable resource option.”
The report begins with a discussion of the planned renewable energy additions, an overview of how the plans incorporated renewables into different possible resource portfolios, and a review of the specific technology cost and performance assumptions made by the plans, primarily for wind power. It then evaluates the utilities’ analysis of natural gas price and environmental compliance risks, and examines how trade-offs between the expected cost and risk of different supply options were made.
“Our review of the planning efforts of these utilities reveals that resource plans are becoming increasingly sophisticated in their treatment of renewable resources and the costs and risks that they both entail and mitigate,” states co-author Ryan Wiser. “Many analytical improvements have been made in just the past few years.”
Despite this progress, the authors identify a number of areas ripe for further improvement. “There are still many enhancements to be made,” noted Bolinger. “The improvements we propose will help resource plans to do an even better job of weighing the benefits and costs of different resource options.”
For more information, contact Mark Bolinger, MABolinger@lbl.gov, phone (603)795-4937 or Ryan Wiser, RHWiser@lbl.gov, phone (510)486-5474.
The report can be downloaded at:
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