Throughout the West, retiring coal plants and a plethora of clean energy policies in states, municipalities, and utilities have changed how electricity markets function, adding even more uncertainty to an already challenging enterprise: forecasting the future.
One of the essential building blocks of the Council’s regional power plan is its forecast for wholesale electricity prices. These future prices are used to understand the value of resources as the Council develops a resource strategy that will ensure that we continue to have a reliable and affordable power supply.
The wholesale price forecast also accounts for the carbon emissions associated with relying on the market.
A consistent finding throughout the process, which has involved feedback from the Council’s system analysis advisory committee, has been a large build of renewable resources across the West, signaling a long-term capital expansion as states strive to meet clean energy policy goals. The projected baseline build ended up just under 430 gigawatts.
In the Northwest, the projected build out is comparatively more modest. Under 5 gigawatts of nameplate capacity builds, along with over 4 average gigawatts of energy efficiency, shows the region is in a good position to meet clean energy policies, as well as from an adequacy perspective. This page shows a more complete picture of the region’s power supply.
Massive additions of solar generation in the Southwest means that at the end of the study, during the midday hours, 50 percent or more of solar may experience curtailments from excess generation—a situation that contributes to the duck curve phenomenon.
Solar and solar plus battery development is looking to be larger than what would be needed to meet load growth if the need was met by traditional methods like adding natural gas-fired plants. Additionally, from a fixed cost perspective, since the system will need to add more renewable and storage resources to meet system needs, it’s more expensive for utilities than building natural gas-fired generation.
Wholesale Electricity Market Prices
Prices are forecast to be low in the winter and spring, reflecting the impact of the Northwest’s reliance on hydropower and increased renewables throughout the West. In years with a larger run-off, negative pricing is a possibility in those seasons. The summer month prices are expected to be comparatively higher, especially during the evening hours when the sun goes down and solar generation drops to zero. But even summer prices become lower over time on an average basis because the low prices midday decrease as more solar generation is added throughout the West.
Carbon emissions are expected to decrease over time, with higher avoided emissions during the summer.
Follow the development of the Council’s 2021 Northwest Power Plan scheduled to be released in the spring/summer.