When developing a fundamentals-based wholesale price of electricity forecast to represent the dynamic supply of and demand for electricity throughout the Western power grid (WECC[1] footprint) it is generally assumed that entities will build to meet load growth, while respecting reserve margins[2] and meeting state/utility/local policies/goals.  Traditionally, forecasted increases in load were the primary driver and justification[3] for additional resource build over and above the existing system capability, however, to meet increased state/utility/local policies/goals additional resources are also necessary[4]. To better reflect the effect of these changes on wholesale power prices and the associated emissions, the Council employs the AURORA software, which has a capital expansion module that estimates the buildout of future resources throughout the western grid.

There were many modifications to the default AURORA modeling configuration of the long-term capital expansion (buildout) and revised input assumptions for this power plan. These changes are catalogued in detail in the following material:

Common Input Parameters 

Outputs from Classic GENESYS, Inputs to AURORA

Integrating Climate Change Data and Policies

Integrating Generating Resources Data

Integrating Energy Efficiency Data

Integrating Demand Response Data

Integrating Demand Forecast

Integrating Fuel Prices

Integrating Policies 

The timeline of the presentation of and changes to assumptions and modeling techniques is covered in more detail on the System Analysis Advisory Committee webpage.

For the 2021 Power Plan, a number of different buildouts were required to capture the effects on market prices depending on the policy or risk exploration in a given scenario. Some buildouts were used to support analyses on multiple 2021 Power Plan policy scenarios, like the No Gas Build Limitations buildout. Some scenarios were supported by multiple buildouts, like the Markets for Energy and Capacity scenario.

To get a capital expansion that can inform a price forecast over the 2021 Power Plan time horizon from October 2021 through September 2041 that also mitigates some of the modeling artifacts that occur in optimization at the beginning and end of studies, the simulations were for a timeframe that included all of 2021 through 2045.[5] Additionally, the expansions considered production costs, supply and demand from every hour of a sample day in each month for computational efficiency.[6]

The goal of all buildouts is to generate a least cost[7] table of new resources[8] with attributes including the following: build timing and location, associated fixed and variable costs, nameplate capacities, capabilities[9] and associated emissions rate. That table will be used in production cost simulations to create a price forecast for a particular scenario assuming a particular resource buildout. The following are buildouts used to support the scenario work in the plan:

Baseline Conditions

Early Coal Retirement

WECC-Wide Carbon Price

No Gas Build Limitations

Limited Market

Organized Market

As was seen in the resource strategy analysis focused mostly on the region, the WECC-wide results in all scenarios showed a large buildout of renewable resources as can be seen in the following file.

Summary of WECC Buildouts 

Due to being a WECC-wide model, AURORA has a broader view than the Regional Portfolio Model (RPM) of the value of mitigating operational limitations a future Western power system with a static transmission buildout and limited flexibility options might experience. Thus, some of the WECC-wide buildouts of resources showed the additional context was worth consideration. Per a November 2021 presentation to the Council,[10] solar plus storage and stand-alone storage resources seemed to have considerably more value in the WECC-wide analysis in AURORA than was apparent from the focused regional analysis in the RPM.

[1] WECC stands for Western Electric Coordinating Council which is the not for profit corporation that exists to ensure a reliable bulk power system throughout the Western Interconnection, which includes the following: British Columbia, Alberta, Washington, Oregon, Idaho, Wyoming, California, Nevada, Utah, Arizona; most of New Mexico, Montana, Colorado; and some of the Dakotas, Nevbraska and North Baja California.

[2] Planning reserve margins are an additional resource requirement over and above what is required to meet supply and demand. These requirements often account for unexpected load growth, lower generation due to uncertain fuel supply (wind, solar, hydro, etc.) and additional reserves required for short-term forecast error.

[3] Some entities do utilize economic retirement logic to replace the existing fleet. The Council broadly does not assume economic retirement for the plan simulations other than what has been announced by utilities.

[4] The policies specify particular attributes of resources, such as non-emitting or renewable fuels, that limit which resources qualify to meet requirements. Since many resources in the existing fleet do not fulfill those attributes it is assumed that additional resources will be built to meet the policies.

[5] It is fairly traditional utility practice to run a buildout a little longer than the study time frame in question to deal with end effects, and was useful in this case due see the effect of certain policies taking effect in 2045.

[6] Studies were run with different sampling regimes, and results were presented to the SAAC. The consensus was that the differences in results were not significant with final set of assumptions.

[7] Within a tolerance of mixed integer programming solvers called a gap. The least cost optimization is solved within that particular tolerance. The parameters for this information are stored within an AURORA project file of any particular simulation.

[8] This table is called a resource modifier table in the AURORA software.

[9] Capability of a resource is the capacity available at any particular time for that resource.

[10] November Power Committee presentation, “Energy Storage in the Draft 2021 Power Plan”