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Reconsidering Resource Adequacy, Part 1

Has the one-day-in-10-years criterion outlived its usefulness?

Fortnightly Magazine - April 2010

during peak periods; and the impact of actions that can be taken when reserves are low to avoid having to curtail firm customers, such as appeals to the public and voltage reductions.

The tendency is often to adopt conservative assumptions for many of these values, to make the overall result of the analysis conservative ( i.e., erring on the side of too much rather than too little capacity and reliability, identifying too large rather than too small a reserve margin). As a result, the resulting reserve margin may correspond to an LOLE less than, and perhaps much less than, 0.1. In addition, peak load forecasts might rely upon conservative assumptions and err on the side of over- rather than under-forecasting future peak loads.

These assumptions don’t always account for the full range of actions that utilities can take to avoid firm curtailments, including maximizing generation; recalling exports and calling upon assistance from neighboring power systems; tapping interruptible and emergency demand-response resources; reducing voltage levels; and appealing to the public to curtail consumption.

That resource adequacy planning has been very conservative and resulted in a lower frequency of outages than the 1-in-10 criterion suggests, is reflected in the Standard EOP-002-2 reports of capacity and energy emergencies that utilities submit to the North American Electric Reliability Corporation (NERC). These reports—filed by 134 entities—show the vast majority of incidents didn’t result in lost load, or they were caused by T&D system equipment failures, or were caused by extreme weather such as wind, snow, or hurricanes. Perhaps a dozen incidents occurred over the past decade in which there was a loss of load due to capacity shortages. This is a very small number considering the 1-in-10 criterion; 134 utilities following the 1-in-10 criterion might be expected to suffer 134 outages due to inadequate resources in 10 years. So in practice, resource adequacy is much more conservative than 1-in-10—by roughly one order of magnitude.

Highly conservative capacity planning might reflect concerns that if load forecasts or new capacity projections prove inaccurate, a region might suffer frequent, costly outages. That is, the main concern might be not one or a few outages in ten years, but the risk of unforeseen circumstances leading to multiple outages in a single year, for instance, on many hot days in a single summer. Roughly speaking, “many hot days” could be quantified as 10 days in one year, or two orders of magnitude greater frequency than 1-in-10.

However, the extreme peak loads targeted by the 1-in-10 criterion occur rarely, and peak load levels on nearly all other days are considerably lower. Consequently, for there to be shortages on many hot days, rather than just the rare extreme peak day, capacity would have to fall far short of the amount targeted under the 1-in-10 criterion. This suggests that concern about the possibility of circumstances that could lead to outages on many days doesn’t help to justify the 1-in-10 criterion.

Take for example the highest daily peak load levels attained in recent years on the PJM, ISO-New England, and California ISO systems, respectively (see Figures