Capacity planning for the smart grid.
James F. Wilson is an economist and principal of Wilson Energy Economics, and also is an affiliate of LECG, LLC. Email him at email@example.com. This article expresses the author’s views and not necessarily those of any client.
The one-day-in-10-years criterion for capacity planning is coming under scrutiny. Making the most of the smart grid and demand management requires a less conservative approach. Markets and prices rather than administrative rules will ensure resource adequacy in a more efficient way.
Resource adequacy planning in the United States has rested upon a very conservative criterion (“one day in 10 years;” perhaps an order of magnitude more conservative than can be justified by marginal benefits) that also has been applied conservatively, as explained in Part I of this article (see April 2010 Fortnightly). Why has electric resource planning been so conservative? If there was a rationale for this practice in the past, is the rationale still applicable today, and for the future? How must resource adequacy practices be adapted for the coming smart grid?