In Defense Of Capacity Accreditation
In Defense of CapacityAccreditationThe Importance of ELCC and Effective Capacity in theTransition to a Low Carbon Electricity SystemCREPC Spring 2022 MeetingNick Schlag, Partner
E3 has worked extensively to support modernization ofresource adequacy planning throughout the country Founded in 1989, E3 is a leading energy consultancy with offices inSan Francisco, Boston, New York, and Calgary E3 works extensively with utilities, developers, governmentagencies, and environmental groups to inform strategy and keydecisions E3 is a recognized industry leader in studying the resourceadequacy needs in the transition to a decarbonized grid Technical support for multiple Western utilities in application of an ELCC-basedaccounting framework Strategic support to PJM & NYISO in integration of ELCC into capacity marketconstructs Participation in ESIG Redefining Resource Adequacy task force and IEEEResource Adequacy working group Multiple technical studies of the implications of economy-wide long-termdecarbonization goals upon resource adequacyKey E3 Publications on Resource Adequacy Resource Adequacy in the Pacific Northwest(sponsored by a coalition of Northwest utilities) Long-Run Resource Adequacy under DeepDecarbonization Pathways for California(sponsored by Calpine) Capacity and Reliability Planning in the Era ofDecarbonization(E3 whitepaper) Resource Adequacy in the Desert Southwest(sponsored by a coalition of Southwest utilities)2
Three topics for discussion today1. Why is capacity accreditation needed for robustresource adequacy planning?2. Why is “effective load carrying capability” (ELCC, or“effective” capacity) the preferred approach forcapacity accreditation?3. A recent case study: E3’s Resource Adequacy in theDesert Southwest3
Why is capacity accreditation neededfor robust resource adequacy planning?
Planning for reliability is increasing in complexity – andimportance Transition towards renewables and storageintroduces new sources of complexity in resourceadequacy planning The concept of planning exclusively for “peak” demand isquickly becoming obsolete New challenges – including the “net peak,” the need for“energy sufficiency,” and potential “renewable droughts” –must factor into a robust approach for resource adequacyplanningGraph source: alysis-Mid-August-2020-Extreme-Heat-Wave.pdf Reliable electricity supply is essential to our dayto-day lives at home and at work – and willbecome increasingly important Meeting cooling and heating demands under morefrequent extreme weather events is may be a matter of lifeor death Economy-wide decarbonization goals will driveelectrification of transportation and buildings, making theelectric industry the keystone of future energy economyGraph source: 5868825
Loss of load probability modeling is foundational to robustplanning for resource adequacy General agreement behind the notion that aprobabilistic approach to resource adequacyis needed: NERC & WECC are both encouraging use ofprobabilistic methodsWhat is “Loss of Load Probability” Modeling? Uses stochastic techniques to simulate theavailability of generation to meet loads across thefull spectrum of conditions throughout the year,accounting for: ESIG, NREL, and IEEE RAWG emphasize theimportance of an “all hours” approach Weather variability of loads & renewables Utilities and RTOs are increasingly relying onLOLP models to establish the parameters that areused in planning & procurement for resourceadequacy Dispatch of energy limited resources (storage, DR)“Chronological stochastic analysis is thus increasingly important,simulating a full hour-to-hour dispatch of the system’s resources for anentire year of operation across many different weather patterns, loadprofiles, and random outage draws.”Redefining Resource Adequacy for Modern Power Systems (ESIG) Generator forced outages Simulates hundreds to thousands of years’ ofconditions to ensure tail conditions areappropriately represented Produces metrics that characterize the frequency,size, and duration of reliability events, including: Loss of load expectation (LOLE) frequency Expected unserved energy (EUE) size Loss of load hours (LOLH) duration6
Why do we also need a robust framework for capacityaccreditation? Transactability: assigning capacity credits to resourcesenables more efficient transactions among utilities in abilateral world – and is essential to any organized capacitysharing programTotal capacity requirementResource n Tractability: LOLP modeling is computationally intensive,and embedding an LOLP model within every relevantfunction at a utility is impracticalResource 5Resource 4 Long-term resource planning, bid evaluation, short-term procurement EE/DER cost-effectiveness, program designResource 3 Tariff and rate designCapacity credits Ease of Understanding: LOLP modeling is a highlyspecialized & technical field; capacity accreditation canfacilitate more active engagement in resource adequacyplanning by regulators, stakeholders, and policymakersassigned to eachresourceResource 2Resource 17
Why is “effective load carrying capability”(ELCC, or “effective” capacity) the preferredapproach for capacity accreditation?
Adapting today’s PRM framework for a high renewablefuture Historically, utilities have relied upon a “planningreserve margin” (PRM) to ensure enough supply isavailable during peak periodsCapacityPRMrequirementDRStorageGas To continue using a PRM, we must revisit how wecount capacity to ensure resources are measuredbased on their contributions across all hours – notjust during peak periods A resource’s effective load carrying capability(ELCC) reflects its contribution to reliabilityconsidering all hours of the year, across multipleyears of load weather itionalPlanningParadigmResourceaccountingbased onnameplatecapacityGasAll resourcesmeasured using“effective loadcarrying capability”(ELCC)NuclearFuturePlanningParadigm9
What is effective load carrying capability (ELCC)? Effective load carrying capability (ELCC) providesa means of translating a resource’s contributionto resource adequacy in terms of equivalent“perfect” capacity A “perfect” capacity resource is one that can generate atmaximum capacity in all hours of the year Calculations are highly system-specific and depend onthe characteristics of load and other resources ELCC is quickly becoming the preferred methodfor capacity accreditation among utilities and RAprograms alike, offering multiple advantages overalternatives and heuristics:?Generator(e.g. renewables,storage, firm)“Perfect”Capacity ELCC’s derivation from LOLP modeling leverages thestrongest foundation for resource adequacy analysis ELCC naturally captures complex interactive effects,including saturation effects and diversity benefits ELCC is agnostic to technology and can be applied toall resourcesA resource’s ELCC is a measurement of theamount of perfect capacity that provides thesame reliability benefit to the system10
ELCC captures complex dynamics resulting from increasingpenetrations of variable & energy limited resources“Variable” resources shift reliabilityrisks to different times of day“Energy-limited” resources spreadreliability risks across longer periodsA portfolio of resources exhibitscomplex interactive effects, where thewhole may exceed the sum of its partsSolar Impact on Net LoadStorage Impact on Net LoadCombined Solar & Storage Impact on Net 00(MW)Increasing solarpenetration shiftsnet peak to evening,moving reliabilityrisks away from thetraditional peak(and loweringmarginal capacityvalue of solar)15,00010,0005,0000(MW)Total solar installed capacity: 10 GW1Hour of Day24(MW)20,000Increasing levels of storageprogressively flatten netload shape, extending thewindow of system needs tolonger durations15,00010,00015,000Combined capacityvalue exceeds sumof individual partsdue to a value5,000Total storage installed capacity: 5 GW1Hour of Day240Total solar installed capacity: 10 GWTotal storage installed capacity: 5 GW1Hour of Day24The ELCC approach inherently captures both capacity & energy adequacy11
No resource is “perfect” – ELCC can be applied to allresources By measuring all resources against a common benchmark, anELCC approach places all resources on a level playing field Current ELCC studies account for a range of factors that limitavailability: Hourly variability in output Duration and/or use limitations (dispatch of energy-limited resources) Seasonal temperature derates Forced outages Incorporating additional factors is technically feasible butdepends on quality & availability of data; more researchneeded: Correlated outage risk, especially under extreme conditions Internal transmission constraints & resource deliverabilityIllustrative ELCC Values Across Technologies0%% ELCC Value100%WindSolarStorage (4 hr)Storage (8 hr)HydroDemand ResponseNatural GasInterruptible ServiceNatural GasFirm Pipeline ServiceNatural GasOn-Site Fuel Storage12
A recent case study: E3’sResource Adequacy in the Desert Southwest
Resource Adequacy in the Desert Southwest: studypurpose In light of expected changes to loads andresources across the Southwest, theproject’s six sponsors retained E3 toconduct a study of resource adequacyneeds in the region over the coming decadeStudy Geographic ScopeIncludes all balancing authorities in Arizona and New MexicoGRIFWALC Purposes of this effort are threefold:1. Examine the current situation in the DesertSouthwest and identify any immediate risks toreliability in the region;2. Identify best practices for resource adequacyplanning that will provide a durable foundation forutilities’ efforts to preserve reliability within theregion; andAPSSRPPNMHGMAGRMADEAATEPEPE3. Demonstrate best practices in an assessmentof the region’s readiness to meet the resourceadequacy challenges it faces in the next decade14
Significant increases in renewable & storage penetrationaccompanied by declines in “effectiveness” (ELCC)Total Installed Capacity(MW)50,00070,000 38 GW60,000Additionalrenewables andstorage between2021 and atural GasCoal10,000020212025GW2033 projected peak: 32 GW2033How much steel isin the ,0000140,000Demand Response120,00016%2033How much resourcescontribute to reliabilitycarbon-freeenergy160,0002025 projected peak: 25Demand nnual Genera onEffec ve mand al 60,000NuclearGeothermalNatural Gas 40,000Natural GasCoalCoalNuclear20,0000202120252033How “clean” theportfolio is15
Maintaining reliability will require immediate and sustainedaction over the next decade The rate of new resource additions required in thenext ten years is nearly unprecedented in thehistory of the Southwest Utilities, regulators, developers and stakeholderswill share responsibility for working cooperativelyto ensure new resources are in place as needed With project development timelines measured inyears and near-term supply chain risks looming,advance planning and prompt action by utilitiesare needed to avoid falling behind in the transition Plans for new resource additions should account forreasonable risks of project delays and cancellationsNew Installed Capacity Addi ons by Year (Southwest Region)(Nameplate MW)6,000 Failure to develop new resources in a timely manner willeither result in (1) a degradation of reliability or (2) theneed to retain existing plants with scheduled retirementsAftermath of WesternEnergy Crisis5,000Maintaining regional reliabilitywill require significantinvestments in new resources4,000based on utility plansStorage3,000Solar2,000GeothermalNatural Gas1,0000Wind200020052010201520202025203016
Thank YouNick Schlag nick@ethree.com
Appendix
What is resource adequacy? Resource adequacy is a measure of the ability of aportfolio of generation resources to meet loadacross a wide range of system conditions,accounting for variability of supply & demand Typically, electricity systems are planned to astandard where loss of load due to insufficientsupply occurs very rarelyThe most common standard used throughout North America is a“one-day-in-ten-year” standardLoss of Load ExampleInsufficient resource capacity to serve loadMWLoss of LoadEventIncreasing Risk ofLoss of LoadNERC Definition of Resource Adequacy:ResourceCapacity “The ability of the electric system to supply the aggregateelectrical demand and energy requirements of the end-usecustomers at all times, taking into account scheduled andreasonably expected unscheduled outages of systemelements.”Source: NERC Glossary of TermsHour of Day19
Overview of best practices in resource adequacy analysisLoss of Load ExpectationMarginal Effective Load Carrying Capability(days per year)(%)Perfect CapacityTotalCapacityRequirement(can be translatedto PRM)LOLE Standard(e.g. 0.1 days per year)Energy-LimitedWindELCC measures a resource’s contribution tothe system’s needs relative to perfect capacity,accounting for its limitations and constraintsx10001 yearSolarFactors that impact the amount of perfectcapacity needed include load & weathervariability, operating reserve needsFirmLoadCalculate capacity contributions ofdifferent resources using effectiveload carrying capabilityWindLOLP modeling allows a utility to evaluateresource adequacy across all hours of the yearunder a broad range of weather conditions,producing statistical measures of the risk ofloss of loadIdentify the amount of perfectcapacity needed to achieve thedesired level of reliabilitySolarDevelop a representation of theloads and resources of an electricsystem in a loss of load probabilitymodelEffective (“Perfect”) Capacity (MW)20
Examples of ELCC curves for individual technologies Marginal ELCC curvescan show theincremental ELCC ofindividual resources atincreasing penetration While these curves areuseful for buildingintuition, they are anapproximation forresource planningpurposes since they donot capture interactionsbetween resources21
specialized & technical field; capacity accreditation can facilitate more active engagement in resource adequacy planning by regulators, stakeholders, and policymakers. Why do we also need a robust framework for capacity accreditation? Resource 1. Resource 2. Resource 3. Resource 4. Resource 5 Resource n. Total capacity requirement .
Defense Advanced Research Projects Agency. Defense Commissary Agency. Defense Contract Audit Agency. Defense Contract Management Agency * Defense Finance and Accounting Service. Defense Health Agency * Defense Information Systems Agency * Defense Intelligence Agency * Defense Legal Services Agency. Defense Logistics Agency * Defense POW/MIA .
Practice Accreditation Program Web based program launched in January 2011 Application, interview and data collection forms, surveyor report and summary are all captured electronically No more paper ACR-ASTRO accreditation outcomes 3 Categories: Accreditation Defer Denial of Accreditation ACR-ASTRO Accreditation Accreditation Cycle is 3 years
Research, Development, Test and Evaluation, Defense-Wide Defense Advanced Research Projects Agency Volume 1 Missile Defense Agency Volume 2 . Defense Contract Management Agency Volume 5 Defense Threat Reduction Agency Volume 5 The Joint Staff Volume 5 Defense Information Systems Agency Volume 5 Defense Technical Information Center Volume 5 .
The Accreditation Criteria are divided into three levels. To achieve Provisional Accreditation, a two year term, providers must comply with Criteria 1, 2, 3, and 7–12. Providers seeking full Accreditation or reaccreditation for a four-year term must comply with Criteria 1–15. To achieve Accreditation with
o Accreditation Visit by the Commission on Public Schools o Accreditation Decision Substantive Change Policy Glossary . 3 NEASC CPS - Accreditation Handbook (Revised Fall 2021) Overview of the Redesigned Accreditation Process The NEASC Accreditation process is a 10-year cycle intended to serve as a guide for schools to meet .
This will result in one accreditation determination that will apply to all the facilities in the group. Length of Accreditation Cycle. APEx accreditation is granted for up to four years. In order to avoid a lapse in accreditation, the ROP must complete the next facility visit no later than 90 days after the expiration of its current accreditation.
Accreditation Application Review Process The accreditation application review is the first step in the accreditation process. Once submitted, the SSH Accreditation staff will review the application. If the application is complete and all eligibility criteria met, an on-site review will be scheduled. Accreditation On-Site Survey Process
accounting purposes, and are rarely designed to have a voting equity class possessing the power to direct the activities of the entity, they are generally VIEs. The investments or other interests that will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns are called variable interests. In February 2015, the Financial Accounting Standards Board .
