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The Value of Resource Adequacy

Why reserve margins aren’t just about keeping the lights on.

Fortnightly Magazine - March 2011

See FERC Notice of Proposed Rulemaking on Planning Resource Adequacy Assessment Reliability Standard, Docket No. RM10-10-000, Oct. 21, 2010 (responding to NERC’s filing of the regional reliability standard BAL-502-RFC-02).

4. See the NERC Generation and Transmission Reliability Planning Models Task Force (GTRPMTF) “Final Report on Methodologies and Metrics - September and December, 2010 with Approvals and Revisions.”

5. Sweeney, James (2002) The California Electricity Crisis, Hoover Institution press, ISBN 978-0817929121, p. 171.

6. Weare, Christopher (2003). The California Electricity Crisis: Causes and Policy Options. San Francisco: Public Policy Institute of California . ISBN 1-58213-064-7, pp. 3-4.

7. SERVM has been used extensively by large utilities in the southeastern U.S. In contrast to several other reliability modeling tools (such as GE-MARS), SERVM allows for the explicit consideration of economic factors such as the cost of emergency purchases, the cost of integrating intermittent or energy-limited resources, the cost of demand side resource dispatch, and the economic and reliability value of tie line capacity to neighboring power systems.

8. 40 weather years x 7 load forecast error points x 400 unit outage iterations = 112,000 simulations.

9. Purchase prices during reliability or emergency events may also include premiums associated with high opportunity costs of energy-limited resources, emergency assistance available from high-dispatch-cost demand-side resources in neighboring systems, or markups related to the exercise of market power by suppliers during scarcity events.