WECC 2038 Scenarios Reliability AssessmentWECC Staff1/20/2020

Assessment Title

1. PrefaceState the assessment’s purpose, scope, methods, findings, conclusions and recommendations, and

Write report with audience in mind.

A lot of people won’t necessarily be technical. Terminology of scenarios and study cases are not the same thing, especially with

regard to other study requests. Make distinction that this is 20 year horizon. Reader to understand that this is

part of learning process and not as quantitative as 10 year studies or near term. What data would we have liked to use. What we weren’t able to use. Make sure to

acknowledge limitations and explanations as to why not.

2. Acknowledgements Mike all this is good from your draft.State the assessment’s purpose, scope, methods, findings, conclusions and recommendations, and

WECC Scenario Task Force

Study Program Collaboration

National Lab Partnerships

3. List of Acronyms and AbbreviationsState the assessment’s purpose, scope, methods, findings, conclusions and recommendations, and

4. Executive SummaryState the assessment’s purpose, scope, methods, findings, conclusions and recommendations, and present a summary of how results were obtained for the reasons for the recommendations.

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Assessment Title

Write the executive summary so it can be read and understood independently of the main body of the white paper. Use footnotes, figures, and tables sparingly and only if the information is essential to the summary. Do not refer to figures, tables, or references contained elsewhere in the document.

Though it appears at the beginning of the white paper, because abstract is a condensed version of the rest of the document, it should be the last thing the author writes.

Revisit after done with meat of report.

Motivation

Key Findings

Context

20 year horizon

Limitations

What we were able to study.

What we weren’t able to study.

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Assessment Title

5. Table of Contents1. Introduction......................................................................................................42. Participants......................................................................................................43. Assessment Approach.......................................................................................4

3.1. Assumptions............................................................................................................43.2. Data......................................................................................................................... 43.3. Collaboration with other assessment teams............................................................4

4. Describe any collaboration with other assessment teams. Analytical Results.45. Observations and Conclusions..........................................................................46. Recommendations............................................................................................5

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6. IntroductionBriefly explain the purpose of the assessment. The introduction should include a concise statement of the primary reliability question(s) that the assessment seeks to answer. The introduction also should identify the team working on the assessment and the team’s leadership.

7. Scenario Design

Scenario Development ProcessScenario-based planning is a technique for managing uncertainty in decision making. It is especially useful when long-term investments must be evaluated despite the human inability to accurately predict the distant future. Scenarios offer a tool for imagining plausible and well-researched futures thereby enabling planning across a wider range of potential futures. When used well, this approach can spur learning and help in identifying emerging risks and opportunities.

Scenarios cannot take into account all aspects of the complexity of interrelationships and interdependencies of the real world. However, scenarios are a powerful tool for sensitizing decision makers to emergent key factors which can influence the outcome of their decisions. When used as a tool for guiding long-term capital investment decisions, scenarios can help managers to more effectively assess both the timing and scale of investments.

The WECC 2018-2038 Scenarios emerged from a scenario development workshop held March 27-28, 2018 at WECC’s headquarters offices in Salt Lake City, Utah. The purpose of that workshop was to gather ideas, facts, and suggestions for new long-term scenarios from a diverse group of SDS members and stakeholders. The meeting was attended by 25 people from a wide range of WECC member organizations and WECC staff members, and was facilitated by a team of consultants hired by WECC from the Quantum Planning Group, Inc.

This report uses the WECC Scenarios as qualitative input into a quantitative modeling process. In that light, the The resulting scenario narratives were used to guide the selection of key quantitative inputs (for example the NREL Electrification data inputs) which approximate and meet the intent of expressed in the narrative. This creates is thus a process that is useful for approximating impacts and showing the direction of effect key variable have on one another. The process is is the essential aspect of using modeling and scenarios in tandem as a learning process. In this light, as underlying data and modeling capabilities improve over time, additional scenario-based analysis can provide longer term opportunities for learning, and in

Assessment Title

particular, for allowing WECC to assessing potential affects effects of the data for electric system reliability.

Focus QuestionScenario planning, as a tool for managing future uncertainty, enables stakeholders to create and test strategic responses given a diverse range of plausible future conditions. Good scenarios are based on a clear enunciation of the decisions and uncertainties at play: the “focus question” that ensures scenarios are developed with a clear sense of the issues at hand. Leading up to and during the scenario development workshop, the SDS agreed on the focus question detailed below. (Mike I put this one here, but I think you have a better one.)

Key Drivers and the Scenario MatrixWhile scenario analysis does not allow accurate predictions of the future, it does provide a tool for rigorously imagining alternative plausible futures in which important decisions may play out. The most useful scenarios derive these imagined futures from a studied consideration of factors and trends (“key drivers”) that will most likely and powerfully influence future conditions. For the WECC Scenarios, the SDS agreed on the following initial set of key drivers shown below. 1. Changes in State and Provincial electric energy market policies 2. Changes in Federal electric energy market policies 3. Evolution of customer-side energy supply technology and service options 4. Changes in the character and shape of customer demand for electric power 5. Changes in utility-scale power supply options

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Assessment Title

6. Changes in State, Provincial, and Federal electric system regulations for reliability 7. Evolution of climate change and environmental issues on electric power service 8. Evolution of fuel markets in the electric power sector 9. Shifts in the cost of capital and financial markets 10. Economic growth within the Western Interconnection 11. Worldwide developments in the electric power industry

Detailed definitions of the key drivers are contained in the WECC 2018-2038 Scenario Report (add a link here).

A “scenario matrix” is a tool for organizing and distinguishing ideas when creating scenarios. To create a matrix, the key drivers are first prioritized using the consensus or majority vote of a team to select the two drivers that are simultaneously the most uncertain and the most important. Additionally, the top two drivers should be independent of one another. These two drivers are then given a range of uncertainty, represented as an arrow with ends pointing in opposite directions to indicate polar extremes. Crossing these arrows represent two vectors (axes), and creates four quadrants that function as “scaffolding” for developing distinctive scenarios. This process was used during the SDS workshop to create the scenario matrix shown below.

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Assessment Title

Key Drivers and Reliability Metrics(Mike I will leave this to you. This could just be a section on Reliability Metrics. But you may want to go back to how you defined reliability and the key metrics. You have this on one slide I cannot locate which defined all of them (and about which there was some debate within WECC about how to define reliability). You have selected and modeled several and should present those with some explanation. You should also note places where data and analysis is not up to the task here or has key limitations.

8. Assessment ApproachDescribe the approach used by the assessment team, and how each part of the approach provides information to help answer the primary reliability question. Describe what tools were used, and the pieces of the question they were intended to answer.

Load

Generation Resources

Transmission

Economics

Customer

Policy

Market

Limitations

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Assessment Title

Results & Observations

We did some modeling to shine a light. Is it comprehensive? No, but it’s a start to build upon.

Bottom up transformation.

No one has been able to answer all of the questions.

Can’t understand or assess completely.

WECC has tee’d up key questions that need to be

We don’t even understand customer classes

Known knowns. Known unkowns. Unkown unkowns.

Metrics have already been pulled up in previous report.

Don’t necessarily need to pull up new metrics.

We already have a process of identifying early indicators and how we try to understand.

BTM complexity.

Modeling tools not keeping up.

Focus QuestionComplexity goes beyond the modeling.

Anticipation of long term…

The focus question of the WECC scenarios in is complex, and asks a question which can only be answered through the long term observation and the assessment of the electric industry transformation. The core of the intent of the question is to assess a fundamental evolutionary shift in the power industry where more distributed and close to the consumer electric options shape how electricity in produced and consumed. Such industry level transformations (for example in the telecom industry) take decades and involve waves of product innovation, and market failures and successes. There is no reason to think it will be different in the electric power industry.

Importantly, in a heavily regulated industry such as electric power, one can also anticipate series of regulatory shifts that will impact the economic viability of potential new electric services and products. The social equity issues associated with such a vital life-impacting service as electric power will also likely play are role in shaping the long

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Assessment Title

term transition of the industry. In this light, long term planning and modeling at WECC will likely revisit and adjust its analyses as new information and game-changing market developments become clear. In working with DOE, NREL and the U.S. national energy research labs in this process, WECC anticipates more learning opportunities and ways to assess emerging reliability related risk in the Western Interconnection. Included At in the conclusion of this report are starting suggestions for follow up analysis by the SDS in light of the learnings from this report.

(Mike you may want to consider using this graphic to alert folks that we understand the long term complexity of the industry transition we are studying:

CustomerContext

What able to model and study.

What were not . . .

What we observed (salient to key word).

During the development of the WECC Scenarios it became clear to participants that the evolution of customer demand and how customers might be classified, studied and served was subject to change in the 20 year study period envisioned in the scenarios.

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Assessment Title

Parsing Customer Segments

During the discussion of electric power customers, members also gave further thought as to how electricity customers might be put into distinct and useful categories. We anticipate further analysis of this issue as the scenario analysis process proceeds. As shown in Table A below, members saw customers in different segments which might have very different responses to developments within the scenario such as technology development, regulatory changes, and shifts in customer values.

Within each segment a customer could have a demand-side interaction with its electric service provider or not, and the customer might have distributed energy resources in which it might use or share with the electric service provider.

Depending on the customer conditions, Scenario Workshop members thought consumers might vary widely in response to the different conditions in the scenarios. Customer responses could include high, moderate, low, or no use of new product and service developments in the industry, and usage may be qualified by determining factors. A version of the following Table A specific to the scenario narrative was included in each of the scenario narratives to lend clarity and allow comparisons across the scenarios. The chart table describes how each Customer Segment responds to or uses the services listed across the top row of the Table.

Table A: Customer Segments and Choice -------- Electric Power Services or Products Offered to End Use Customers --------

Customer Segment

Wholesale Demand Side Management

Distributed Energy Resources

Local Micro-Grids

Self-Generation

Retail Choice CCAs

Large commercial & industrial

To Be Determined

To Be Determined

To Be Determined

To Be Determined

To Be Determined

To Be Determined

To Be Determined

Small-medium C&IResidential Rural*Residential UrbanAgricultural

*Based on a comment during the session, residential customers were split into the rural and urban categories.

The scenario studies detailed in thisThis report was were not able to shine light on this level of consumer evolution in the market place. The data and tools does not exist to do so at WECC, or in the any of the U.S. national labs or the DOE. However, This the studies detailed belowreport, andby using the NREL Electrification Scenarios most stronglydo captures some developments related to EV adoption by consumers. Assumptions about the use and adoption of other key electric technologies and services are contained in the selection of the Mid-Case (Mike please explain this here). We urge readers to review the NREL Electrification Futures Study found here (https://www.nrel.gov/docs/fy18osti/70485.pdf , ) for a fuller explanation of the assumptions and limitation involved in using the data from the NREL studyis report in

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Assessment Title

the modeling analysis of in this report. NREL readily admits the need for further data development on key sectors and products. As the electric power industry is in the early years of a potential transition— (and to what degree is unclear—), this report reports on analyzes what it can based on available data and modeling capabilities. As will be described below, some insights were gained about reliability even with this limited analysis. In short, reliability can be enhanced with the integration of distributed and behind the meter resources like EVs if they are used in an economically viable manner to influence energy demand.

ServicesFrom the WECC Scenario report we note that a factor which might contribute to consumers making a diverse set of choices about how they use electric energy services is the fact that electricity is not directly consumed, but is an input into getting other valuable services and products, including. Among those associated services are air conditioning and heating, lighting, the energizing of a wide assortment of tools and equipment, refrigeration, fueling all modes of transportation such as cars, trucks, rail, people movers, and many others.

Decisions about those associated services will in many cases override decisions about the efficient or most productive use of electricity. These decisions are so numerous, varied and diverse that we do not see it is unclear how one or even a few government policies could completely determine consumer decisions.

As explained above, the introduction, use, and evolution of new electric services over the time frame of the scenarios are in the early stages of development, and related data does not currently exist to assess their impact on reliability. Therefore, In this light the continued monitoring and analysis of unfolding development via the WECC EPS system can provide value. As data resources and modeling capabilities improve, future WECC studies might shine shed light on these developments and their implications for reliability.

Technologies(Mike this is from the NREL Study on page 1 (actually page 13) of the report. Some version of this that explains the technologies looked at and assumed in the use of the NREL data should be added here).

This report presents foundational data related to projected cost and performance of electric technologies that will be used in the EFS scenario analysis. Because the EFS focuses on power sector analysis, the report emphasizes technologies that have potential for substantial, direct changes to electric demand quantity and timing. The study scope includes direct electric technologies that could meet future end-use service demands in all major economic sectors— transportation, residential and commercial buildings, and industry—for the contiguous United States through 2050. Electrification in this context means replacing technologies that do not use electricity with ones that do—for example, substituting electric vehicles for gasoline or diesel powered vehicles, electric-powered

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Assessment Title

heat pumps for natural gas furnaces, or electric resistance heating for other sources of process heat. We focus on subsectors and end uses with the most significant historical energy demands, where electrification might be most cost-effective. We do include certain rapidly growing niches, such as battery electric buses, despite their small historical energy demand. We present projections for technologies that are applicable to the end uses and subsectors of most interest for assessing electrification opportunities and for the EFS. The substitute electric technologies considered in this analysis are shown in Table 1.

Table 1. Substitute Electric Technologies Considered in this Analysis

a Transportation Sector Buildings Sector Industrial Sector Light-duty cars and trucks (battery and plug-in hybrid electric vehicles) Medium-duty battery electric trucks Heavy-duty battery electric trucks Battery electric buses Air-source heat pumps Heat pump water heaters Air-source heat pumps Electric machine drives Industrial heat pumps Electric boilers Electric process heating

(Mike the above was in a table in the report but got ground up in my cut & paste. My guess is that this stuff inis buried in the details of the data selection we made, but you need to explain that here).

This chart might also be helpful to include and reference:

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Assessment Title

PoliciesThe WECC Scenario envisioned differences in Federal and State energy policies, particularly around support for new products and services whose costs and benefits were in their early stages. The scenarios also envisioned differences in the dominant roles of State level regulations as opposed to Federal regulations. These differences were not captured directly in the modeling of the scenarios in this report. However, existing policies related to renewable and clean energy support at the State level were included via the inclusion of the Anchor Data set in the Reference Case Analysis and in the DOE Mid Case assumption….(Mike you need to explain this)

Market-optionsThe WECC Scenarios envisioned differences in market developments for new electric services and products. As stated above in the Customer section, this is too complex a subject for current modeling. However, in this modeling differences were captured in rates of EV adoption and the impact on electricity demand. (Mike, it may be helpful here to lay out the differences in the EV use in the scenarios and NREL electrification data so people can see it, however modest). As data and modeling resources improve over time, revisiting this question in greater detail may be appropriate.

Industry(Mike, not sure we need this or have much to say in light of the above. We have no capability to model different business models or the implementation of Performance Base Rates across the Western Interconnection. This would be nice, but….)

Reliability(Mike I think what you may want to say here is to summarize the different measure for reliability that WECC envisioned here. However in the modeling you focused on a few (like unserved energy). You may want to just explain that here and define the ones people will see in each scenario section below.

Reference Case(Mike, I think you may want to drop in here a description of the reference case and its association with the Anchor Data set, and the extrapolation of that into the 20 year time frame).

Scenarios 1

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Assessment Title

Why not much difference from that of Reference and Scenario 3. Draw from NREL conclusions. Model limitations. Focus on where we need to deep dive going forward.

NREL narrow focus.

A lot of stuff going on at a customer level that we can’t identify.

Make sure to emphasize

NREL chart with category other and paragraph on limitations of storage and DER.

Results look the same because of . . .

What we learned is known unknowns which is the story. Limitations of data, models, tools. Scenarios are too complex for models. Suspend disbelief. Don’t constrain thinking by knowledge of model and tool limitations.

Scenario 2Models are telling us that flexibility on supply and demand side.

Market or policy provides mechanisms to incentivize TOU and flexibility.

We know that policies: rate structures.

Go back to EPS system. Example, PGE getting with car vendors to broadcast price signals. LMP and EPS.

Scenario 3

Scenario 4

Cross Comparison of Scenarios

Unserved Load

Generation Resources

Transmission Path Utilization

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Assessment Title

Economics(Mike I recall this high level summary and it may be good to return to it. The point being you could so some of this but not all of it. You were able to get some data on several of these in the modeling and they are included where possible in the scenario sections. The LMP analysis was helpful in explaining how reliability could be enhanced with EV electrification technology. Other measures like fuel costs were not varied in the analysis.

Mike – you have the capital costs for generation for the reference case and each scenario – a good way to show this are stcked bar charts for the Ref Case and each scenario in a single graphic, so it is clear how each scenartio differe from the Ref case and each other

Sensitivities(Mike I think you have these nailed down with the changes in assumptions on transmission constraints.) I think you need to explain that using the DOE Mid Case you were not able to vary generation technology costs in this modeling effort. However, from our previous scenario work we have a good idea of the direction of effects: lower production costs for a technology means it will likely be chosen in a least cost analysis. We also know that as storage costs decline they will be more widely used and could impact use of other fuels like natural gas (we have EPS on this from the industry).

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Assessment Title

9. ConclusionsAs the team reviewed analytical results, what did you observe that addresses the primary reliability question? Were there any unexpected results? What challenges did the team encounter and how were these challenges managed? Did you identify new reliability risks or observe mitigation or disappearance of previously-identified risks?

10. RecommendationsBased on the team’s observations and conclusions, do you have recommendations for generation or transmission developers, policy makers, utilities or others to consider? Are there specific risk mitigation strategies that one or more entities should consider?

Mike you may want to remind readers of the following graphic and suggest the SDS and WECC staff will continue this as questions become clearer, data available and modeling capabilities improve.

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Appendix A - References

Appendix B – Assumptions, Tools, Models, Methods, & Data

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WECC receives data used in its analyses from a wide variety of sources. WECC strives to source its data from reliable entities and undertakes reasonable efforts to validate the accuracy of the data used. WECC believes the data contained herein and used in its analyses is accurate and reliable. However, WECC disclaims any and all representations, guarantees, warranties, and liability for the information contained herein and any use thereof. Persons who use and rely on the information contained herein do so at their own risk.

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