Consultants at The Brattle Group recently assisted ERCOT in improving its long term transmission planning process.
The prior review of ERCOT’s long-term transmission planning framework was published in a 2013 report, “Recommendations for Enhancing ERCOT’s Long-Term Transmission Planning Process”. The recommendations included streamlining ERCOT’s planning model development process, improving its analysis of the economic value of transmission facilities, and enhancing its approach for developing scenarios of future market conditions that could form the basis for long-term transmission planning studies.
In its most recently-released 2014 Long Term System Assessment (LTSA), ERCOT adopted many of Brattle’s recommendations, including enhancing its approach to developing scenarios for analyzing future transmission needs. Working with ERCOT since 2013, Brattle consultants Judy Chang, Johannes Pfeifenberger, and Michael Hagerty developed and implemented a new stakeholder-driven scenario-development process that applied a scenario-based strategic planning framework, which Brattle developed specifically for companies operating in today’s rapidly changing electricity industry. The stakeholder-based scenario development process involved experts on a wide range of subjects relating to oil and gas industry development, local economic development, cost of various types of power generation, availability and costs of renewable energy resources, and water constraints in Texas.
With Brattle’s planning framework, ERCOT stakeholders—representing power generators, transmission owners, renewable developers, environmental groups, landowners, and ERCOT staff—identified the key trends, uncertainties, and drivers of long-term transmission needs in ERCOT and developed detailed descriptions of ten internally-consistent scenarios covering the wide range of plausible future market conditions shown below. The planning framework and the results of the stakeholder process are summarized in the Brattle report, “Stakeholder-Driven Scenario Development for the ERCOT 2014 Long-Term System Assessment”. The resulting scenarios developed in early 2014 range from “High Economic Growth” to “Low Global Oil Prices,” as described below:
- Current Trends: Trajectory of what we know today (e.g., LNG export terminals and West Texas growth, prolonged high oil prices)
- Global Recession: Significant reduction in economic activities in the U.S. and abroad
- High Economic Growth: Significant population and economic growth from all sectors of the economy (affecting residential, commercial, and industrial load)
- High Efficiency/High DG/Changing Load Shape: Reduced net demand growth due to increase in distributed solar, cogeneration and higher building and efficiency standards
- High Natural Gas Prices: High domestic gas prices
- Stringent Environmental Regulation/Solar Mandate: On top of current regulations, the Environmental Protection Agency (EPA) also regulates GHG emissions. Federal or higher Texas renewable standards. More stringent water regulations. Texas legislative mandate on utility-scale and distributed solar development.
- High LNG Exports: Significant additional construction of liquefied natural gas (LNG) terminals (beyond Current Trends)
- High System Resiliency: Severe climate and system events leading to more stringent reliability and system planning standards
- Water Stress: Low water availability
- Low Global Oil Prices: Sustained low oil prices
ERCOT converted detailed scenario descriptions into transmission planning assumptions consistent with each scenario’s projected long-term market and regulatory conditions. Those planning parameters include load growth, environmental regulations, generation technology options/costs, oil and gas prices, transmission regulations and policies, resource adequacy, end-use markets, and weather and water conditions. ERCOT performed initial planning analyses on all scenarios and identified four scenarios to carry forward for detailed long-term transmission planning. Those four scenarios covered the most distinct range of possible futures, including Current Trends, Global Recession, High Economic Growth, and Stringent Environmental. The “Low Global Oil Prices” scenario (with prices sustained at or below $50 per barrel) had similar ERCOT-specific planning assumptions as those under the “Global Recession” scenario, the latter which was chosen for ERCOT’s detailed planning analyses.
The 2013 Brattle report also recommended linking ERCOT’s near-term and long-term transmission planning processes. Such a linkage was expected to increase the consistency in modeling assumptions and results across the two planning horizons, avoid overlapping modeling efforts, and allow the effective use of results from long-term studies to inform near-term planning efforts. ERCOT now uses its LTSA to look ahead 15 years in an effort to guide its shorter-term (six-year) transmission planning process by: (1) providing a longer term view of system reliability needs and economically cost-effective transmission projects; and (2) identify system needs that require solutions that will take longer than six years to implement.
The Brattle reports were part of the U.S. Department of Energy’s effort to improve the nation’s transmission planning processes.