Draft January 3, 2018

WECC 2018 Scenario Focus Question

Situational Assessment—U.S. and Western Electric Power Market Development

Drawing from WECC’s EPS system over the last two years we see the following as major developments that are and will continue to influence electric power market evolution:

  1. Long term natural gas prices and possibly oil prices will tend to be moderate based on hydraulic fracturing (fracking) technological innovation. Natural gas prices are not anticipated to rise to such a level that the fuel would be uncompetitive in electric generation markets.
  2. The drive toward a cleaner and less carbon intensive electric supply market will continue in the form of renewable portfolio standards, clean energy set asides and preferences, and further investment in reducing the costs and improving the performance of solar and wind based generation.
  3. Information technology in the forms of computing, software, sensing and communications technologies will find applications in the electric power sector. This will likely be at both large and small scales impacting energy provision at the transmission and distribution levels of the industry.
  4. In conjunction with #3 above, smaller scale electric power supply options (solar and storage in particular) will emerge and be available to large and small businesses and consumers. The costs, features, reliability, areas of application and overall competitiveness of these technologies are unclear, but entrepreneurial efforts will be applied.
  5. Natural gas appears to play a continuing significant role in the electric supply picture into the 20-year planning horizon. This dependence of the electric system on a reliable natural gas transportation system may pose risks to the ongoing reliability of the Bulk Power System.

Market dynamics, regulatory policies and government rules will all have an influence on how the mix of market, economic, social and other factors influence the direction of electric power market evolution. A twenty-year or long term perspective will likely prove useful in thinking through potential scenarios. One thing that is likely predetermined in all of this is: energy consumers will not likely tolerate large swings in or declines in electric power reliability. We think this is clear in light of dependence on reliable power that is pervasive throughout the economy, homes and businesses. As a useful point of fact, most digital and information based technologies need high quality and reliable power. There is no ready evidence that indicates businesses or consumers want less reliable power.

Draft Focus Question for 2018 WECC Scenarios and Key Factors

QPG conducted interviews with SDS members to get input on the most important and uncertain issues they saw facing the electric power industry over the longer term. The results of those interviews can be found on the SDS portion of the WECC website. In the light of those interviews and the situational assessment above, we might see the following as a focus question:

How might customer demand for electric services in the Western Interconnection evolve as new technologies and policies create more market options, and with that, what risks and opportunities may emergefor industry in sustaining electric reliability?

Key factors which are essential in addressing this question (and which will be worthy of research and analysis) include:

  1. The changing nature of electric customer demand
  2. How might customer demand shift in the Western Interconnection (state-level analysis)
  3. Which technologies will be important and how might they evolve?
  4. What will be market dynamics in technology adoption?
  5. What energy policies at both State and Federal levels will be important and influential?
  6. What kinds of risks might we see for power reliability?
  7. Will there by opportunities to redefine and shift how reliability is met?
  8. As all of this occurs, how will a sustainable, effective and reliable power system form and be maintained?
  9. What risks to reliability might we experience related to the interconnectedness of the natural gas and electricity systems?
  10. How might increasing use of distributed energy resources change customers’ needs for a Bulk Power System based on long, inter-regional transmission lines?