Balancing Cost and Risk: The Treatment of Renewable Energy in Western Utility Resource Plans

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Markets for renewable energy have historically been motivated primarily by policy efforts, but a less widely recognized driver is poised to also play a major role in the coming years: utility integrated resource planning (IRP). Resource planning has re-emerged in recent years as an important tool for utilities and regulators, particularly in regions where retail competition has failed to take root. In the western United States, the most recent resource plans contemplate a significant amount of renewable energy additions. These planned additions--primarily coming from wind power--are motivated by the improved economics of wind power, a growing acceptance of wind by ... continued below

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Bolinger, Mark & Wiser, Ryan August 10, 2005.

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Description

Markets for renewable energy have historically been motivated primarily by policy efforts, but a less widely recognized driver is poised to also play a major role in the coming years: utility integrated resource planning (IRP). Resource planning has re-emerged in recent years as an important tool for utilities and regulators, particularly in regions where retail competition has failed to take root. In the western United States, the most recent resource plans contemplate a significant amount of renewable energy additions. These planned additions--primarily coming from wind power--are motivated by the improved economics of wind power, a growing acceptance of wind by electric utilities, and an increasing recognition of the inherent risks (e.g., natural gas price risk, environmental compliance risk) in fossil-based generation portfolios. This report examines how twelve western utilities treat renewable energy in their recent resource plans. In aggregate, these utilities supply approximately half of all electricity demand in the western United States. Our purpose is twofold: (1) to highlight the growing importance of utility IRP as a current and future driver of renewable energy, and (2) to identify methodological/modeling issues, and suggest possible improvements to methods used to evaluate renewable energy as a resource option. Here we summarize the key findings of the report, beginning with a discussion of the planned renewable energy additions called for by the twelve utilities, an overview of how these plans incorporated renewables into candidate portfolios, and a review of the specific technology cost and performance assumptions they made, primarily for wind power. We then turn to the utilities' analysis of natural gas price and environmental compliance risks, and examine how the utilities traded off portfolio cost and risk in selecting a preferred portfolio.

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  • Report No.: LBNL--58450
  • Grant Number: AC03-76SF00098
  • DOI: 10.2172/843154 | External Link
  • Office of Scientific & Technical Information Report Number: 843154
  • Archival Resource Key: ark:/67531/metadc782968

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  • August 10, 2005

Added to The UNT Digital Library

  • Dec. 3, 2015, 9:30 a.m.

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  • April 4, 2016, 12:20 p.m.

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Bolinger, Mark & Wiser, Ryan. Balancing Cost and Risk: The Treatment of Renewable Energy in Western Utility Resource Plans, report, August 10, 2005; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc782968/: accessed August 17, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.