High reserve margins and blackout risk are part of the extended forecast.
Richard Lauckhart is vice president at Global Energy Advisors. Contact him at Rlauckhart@globalenergy.com.
The Western Electricity Coordinating Council (WECC) continues to experience a glut of generation and historically high levels of generating reserve margins. Global Energy Decisions recently completed its fall 2005 analysis of changing WECC regional power and gas market fundamentals,1 and we expect high reserve margins driven by the addition of new power plants to preclude widespread power shortfalls for the next several years.
Generation additions between 2001 and 2007—including plants currently under construction—add up to almost 52,000 MW. When added to a base quantified in 2000 of 160,000 MW, significantly more generation than needed will cover a WECC load forecast expected to peak at almost 150,00 MW in 2007.
Despite some retirements of older, inefficient power plants, planning reserve margins are running around 41 percent on a WECC-wide basis. Global Energy’s current forecast shows that 2,300 MW more of gas-fired generation will be built in the next couple of years than forecast six months ago. These additional plants generally are being built near load centers by (or under contract to) utilities (see Figure 1).