PacifiCorp will lean on the wholesale power market to meet the bulk of its summer and winter peaking capacity needs over the next decade, according to the utility's 2019 integrated resource plan filed with state regulators Oct. 18.
Without market purchases, PacifiCorp says it will have a summer capacity deficit through 2029, starting with a 746-MW deficit next year and rising to 1,038 MW in 2025 and 2,827 MW in 2029. But with market purchases the utility expects will be available, summer peaking deficits don't show up in the IRP until 2028 (839 MW) and 2029 (1,359 MW).
The utility's winter position, without market purchases, doesn't show a deficit until 2024 (333 MW), climbing to 1,867 MW in 2029. Market purchases (called front office transactions) give the utility a winter surplus in 2020 of 1,806 MW before dwindling to zero in 2024 and falling into a deficit in 2029 of 399 MW.
But there's no cause for concern, said Rick Link, vice president of resource planning and acquisitions at PacifiCorp.
"We're confident the market will be there. That is a reasonable assumption, but that also doesn't mean that we'll end up buying that much. It's a maximum we could need," Link said.
PacifiCorp's reliance on market purchases during summer peak periods averages 366 MW per year over the 2020-2027 time frame—down 60 percent from market purchases identified in the 2017 IRP preferred portfolio, Link said.
PacifiCorp's plan for market purchases comes as resource adequacy in the region has become a growing concern.
PacifiCorp is not the region's only utility facing capacity issues. Portland General Electric's 2019 IRP shows the utility's resource portfolio heavy on non-emitting energy technologies and renewable resources, but the utility could be looking at a capacity deficit ranging from 309 MW to 1,065 MW in 2025. To meet its capacity needs in 2024 and 2025, the utility plans to pursue contracts for "existing capacity in the region."
Pacific Northwest Utilities Conference Committee's Northwest Regional Forecast, released in April, showed the region with a 988-MW winter capacity deficit in 2020, rising to 1,875 MW in 2021 and climbing to 3,246 MW in 2025. In 2026, the region could be facing a 4,195-MW winter deficit, climbing steadily until reaching 5,500 MW in 2029.
Summer deficits begin in 2022 with 781 MW, growing to 1,320 MW in 2023. By summer 2026, the region's summer capacity deficit could be 2,926 MW, climbing to 4,039 MW in 2027, before dropping to 3,696 MW in 2028, according to PNUCC's forecast.
While there is concern over capacity availability toward the end of the next decade, PacifiCorp says actively participating in regional efforts to develop day-ahead markets and a resource-adequacy program will help unlock regional diversity and facilitate market transactions over the long term, the IRP says.
"We are confident that the region is stepping forward to address resource adequacy," Link said. "We aren't in a crisis mode, but we see a storm on the horizon and we recognize that we need to do something about it. The sky is not falling, we just need to address the issue in the region."
PacifiCorp's 2019 IRP shows wholesale power prices in 2020 at just under $20/MWh (average of Mid-Columbia/Palo Verde flat power prices), steadily climbing to just under $50/MWh in 2027, and landing a little south of $60/MWh in 2030.
The company plans to convert the Naughton Unit 3 coal-fired plant in Utah to natural gas in 2020, and sees the potential for a need to develop new, dispatchable gas-fired resources starting in 2026, which is outside the IRP's action-plan window. The utility plans to evaluate whether non-emitting capacity resources can supply the flexibility needed to maintain system reliability well into the future, according to the IRP.
PacifiCorp plans to release an all-resource request for proposals in 2020, the IRP says.
PacifiCorp is a summer-peaking utility, while its Northwest cousins peak in the winter, Link noted. The utility also has a broad footprint across a six-state service territory that can mitigate some market purchases when prices are high.
The company will close 16 of its 24 coal units by 2030, and will eliminate four more units by 2038. The unit retirements will reduce the company's 5,900-MW coal portfolio by nearly 2,800 MW by 2030 and by nearly 4,500 MW by 2038. The utility will add nearly 7,000 MW of new renewable energy and build 400 miles of transmission line over the next decade to accelerate decarbonizing its grid, according to the 2019 IRP.
PacifiCorp also plans to develop 3,500 MW of new wind generation by 2025 and more than 4,600 MW of additional wind generation by 2038. It also expects to add nearly 3,000 MW of new solar by 2025 and another 6,300 MW by 2038. The IRP identifies an additional 2,800 MW of energy storage coming on line by 2038.