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Vol. 25, No.34 Week of August 23, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Power generation, electricity use evolving, experts tell legislators

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Alan Bailey

for Petroleum News

On Aug. 14 three experts in the field of resource planning and reliability assurance for electricity systems talked to the Alaska House Energy Committee about the evolving world of electricity generation, transmission and distribution. During the last legislative session the committee was involved in the passage of Senate Bill 123, a bill designed to provide a statutory basis for the regulation of electricity reliability organizations, or EROs, in Alaska. The Regulatory Commission of Alaska is in the process of developing regulations for implementing the bill.

The Railbelt system

The particular focus in Alaska is a drive to unify the overall management of the Railbelt electricity system that stretches from the southern Kenai Peninsula, through Southcentral Alaska and north to the Fairbanks region. The system is owned and operated by six independent utilities and the State of Alaska. It is anticipated that the implementation of an ERO for the Railbelt would provide a number of benefits including the unified planning of new power generation and transmission facilities, the more cost effective transmission of power through the system, the more optimum usage of the most efficient generation, equable access to the system for independent power producers and the mandating of a unified set of reliability standards.

The unique nature of the Railbelt system presents some particular challenges in its management and operation. While supporting a relatively small number of consumers, the system spans a huge geographic area, with some lengthy transmission lines connecting the main electricity load centers.

The six utilities are forming an organization called the Railbelt Reliability Council, or RRC, with the intent of filing an application with the RCA for certification as a Railbelt ERO. Key components of SB 123 include requirements that the ERO conducts integrated resource planning, involving the forward planning of coordinated upgrades across the system, and the maintenance and enforcement of systemwide reliability standards. The RCA will have approval authority over integrated resource plans, proposals for major system upgrades and the reliability standards.

An evolving industry

A common theme in the three presentations to House Energy emphasized the importance of recognizing the manner in which planning by the electricity industry is evolving. In particular it is becoming critically important to consider the changing needs of electricity consumers, the speakers emphasized.

Steve Colt, research professor in the Alaska Center for Energy and Power at the University of Alaska Fairbanks, said that, while in the 20th century integrated resource planning tended to focus on the provision of sufficient power generation capacity, nowadays transmission, distribution and electricity storage have come more into play. Moreover, as technologies such as electric vehicles and heat pumps come into use, the electricity loads can become more flexible, with loads managed through direct control and pricing to make optimum use of generation capacity.

Any factor that impacts the cost effectiveness of the electricity system should be considered in an integrated resource plan, Colt said.

Flexible capabilities

Picking up on these same issues, Michael Hogan, senior advisor with the Regulatory Assistance Project, emphasized a need to move the focus to the overall flexibility of the electrical system, rather than on how much electricity to supply. Clearly, the capacity of the system still matters. But the systemís capabilities will matter more - looking forward into the coming decades, factors such as the ability to ramp power generation up and down, and to ensure stability of the electricity supply in the face of generation and load variations will increasingly come into play. The more the operational adaptability of the electricity resource portfolio, the less capacity may be required, Hogan said. For example, the scheduling of the electricity load to better synchronize with forecast power generation can save substantial cost, he said. David Farnsworth, a principal with the Regulatory Assistance Project, commented that the need to be able to flexibly manage varying electricity loads has made the oversight of comprehensive planning something of a challenge for regulators.

Hogan emphasized the importance of adaptability, arguing that it has never been more important to balance the need to ensure the availability of the electrical system against the need to protect consumers from being saddled with decades of cost associated with imprudent investments in the system.

Supply reliability

Hogan also talked about the issues that surround electricity supply reliability. Although reliability is a paramount concern, every electrical system will experience outages. And the cost of ensuring some level of reliability escalates rapidly beyond a certain reliability level. On the other hand, there has tended to be an over emphasis on investment in generation capacity for assuring reliability, while undervaluing investment in transmission, distribution and other aspects of the electrical system. In the United States between 2012 and 2016, excluding unusual events such as hurricanes, 99.773% of supply interruptions resulted from distribution and transmission problems, Hogan said.

And achieving reliability increasingly needs to take into account the extent to which electricity demand can be controlled, rather than just considering the supply side of the system, Hogan suggested.

The planning process

In terms of the process for integrated resource planning, the speakers emphasized the importance of establishing a continuing planning process, able to respond to unanticipated changes that impact the electrical system, rather than simply producing a static plan. They also emphasized the importance of a public planning process, with access to planning information available to all stakeholders in the system, including utility customers.

Farnsworth recommended that, while an integrated resource plan should involve a 20- to 30-year time horizon, there should be an associated action plan describing what should happen in the next two to five years. An integrated resource plan can successfully create a vision of what may happen in the long-term, while also addressing shorter term actions, he said. Planning involves evaluating options for the future, focusing on the more plausible scenarios and assessing the risks associated with different options.

Colt particularly emphasized the importance of considering people as an essential resource in the electrical system and, hence, a critical factor in the planning process. People bear the risks associated with the electricity supplies; make decisions impacting the electrical loads and about their own production of electricity; and they supply investment capital, he said.

Integrated resource planning can be a continuing transparent, iterative and adaptive process that seeks shared goals for stakeholders in the electrical system while encouraging new ideas, rewarding beneficial improvements, and empowering the sharing and management of risks, Colt said.

- ALAN BAILEY



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