Arizona’s potential to develop unbiased 15-year resource plans is up for grabs

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Arizona State University’s initial plan for a utility modeling tool that it will donate to state regulators does not include a capacity expansion module, which is the starting point for developing a 15-year utility resource plan.

Without that module (the first green shape in the image above), the Arizona Corporation Commission (ACC) could not check the outputs of 15-year plans submitted by utilities, nor develop independent 15-year plans to compare against the utilities’ plans.

The Arizona State University team currently plans to develop only a production cost analysis tool (the second green component above) and a reliability analysis tool (which may overlap with the third green component above)—leaving out the capacity expansion analysis at the beginning.

The university team says it could create a capacity expansion tool, and asks “can this assist ACC to evaluate [utility] integrated resource plans?”

 

Regulatory value of a utility model

A complete utility model that starts with capacity expansion analysis would enable the ACC to hire an expert to run the model, using inputs that the ACC deemed valid (e.g., for future costs of solar and storage).  That way, the ACC could check the outputs of a 15-year resource plan submitted by a utility, or develop its own resource plan from scratch, letting the model optimize across all potential generating sources.

That capability relates to Commissioner Sandra Kennedy’s expectation, in a letter last February, for modeling the integration of various generating sources at different levels:

Arizona State University (ASU) has offered a tool for modeling and evaluating the integration of various types of electric power generating sources at different levels into the grid in Arizona, at no cost to the Commission. It would be a useful, unbiased, and objective modeling tool to assist Commission Staff and the Commissioners, especially in determining how Arizona’s electric grid could handle the phasing in of more renewable energy sources as well as the retirement of various coal and natural gas-fired facilities.”

Arizona regulators last March accepted ASU’s offer to develop a modeling tool, as they work to gain better insight into the state’s renewable potential.

 

Fossil-heavy 15-year plans

Arizona’s three investor-owned utilities are now operating without updated resource plans, after Arizona regulators voted in March 2018 not to acknowledge the gas-heavy plans they submitted in 2017, suggesting that utilities instead aim for 80% clean energy by 2050. 

Utilities in Arizona and 32 other states are required to periodically develop a long-term “integrated resource plan” (IRP) to project how they will meet future demand for electricity.  To do so, a utility uses a model that can optimize across all resources to identify the least-cost resource mix.

But some utilities favor fossil-fired generation in their plans, regardless of its higher cost—for example, by using high assumptions for solar costs (TVA, Dominion Virginia), partially disabling their model (Duke Energy), or not evaluating flexible solar generation (Georgia Power).

State regulators typically lack access to a utility model and modeling expertise, which together would enable them to develop a resource plan independent of the one submitted by a utility.

 

The ASU team and its modeling project

The Arizona State University (ASU) model is being developed by ASU’s Lightworks initiative, which aims to harness solar energy for “solving urgent problems affecting our planet,” Lightworks Director Gary Dirks states on the initiative’s website.  Dr. Dirks, formerly president of BP Asia-Pacific and BP China, leads a team of six working on the utility modeling tool.

Developing a utility model is a complex undertaking.  At the same time, every existing utility model was originally built from scratch, and at least two have been developed recently: the Encompass model by Anchor Systems, and the open-source Switch model.  If the ASU team develops a utility model complete with a capacity expansion component, its model will join a small pantheon of these powerful tools.