Climate Influences on Capacity Expansion Planning with Application to the Western U.S.

Electric power system planners utilize a variety of planning tools to inform decisions concerning generation and transmission additions to the electric grid, the need for operational changes, and to evaluate potential stressors on the system. Numerous factors contribute to the planning process including projected fuel and technology costs, policy and load profiles. There is also a growing recognition of the interdependency of the electric grid with other natural and engineered systems. Here we explore how future climate change and hydropower operability might influence decisions related to electricity capacity expansion planning and operations. To do so we assemble a multi-model framework. Specifically, water resource modeling is used to simulate climate impacts on future water supply for thermoelectric and hydropower generation. Separately, temperature impacts on electricity load are evaluated. Together, these climate factors spatially constrain a capacity expansion model that projects generation and transmission additions to the grid. The projected new capacity-builds are then evaluated on their operations, reliability, and cost under average and extreme climate conditions using production cost modeling. This coupled framework is demonstrated on the electric grid in the Western U.S., supporting capacity expansion planning by WECC, the North American Electric Reliability Corporation (NERC) regional entity responsible for reliability assurance of the Western Interconnection. This region was selected in part because the West is unique in that it has high potential for renewable penetrations and is experiencing large retirements/displacements of baseload resources, primarily coal, leading to possible operational challenges in terms of changing resource mix and the need for resource flexibility. Toward this challenge, planning scenarios encompass a range of alternative energy, climate and drought futures. In this context we explore answers to two strategic questions: 1) How does changing climate influence electricity expansion planning (generation and transmission) and future operations, including type and capacity of new builds, system reliability, cost and environmental impacts? 2) How does the representation of hydropower in the modeling framework influence the evaluation of bulk power system operations? Results indicate that climate has a measurable influence on recommendations concerning the capacity, type and location of new generation and transmission additions, with up to 17 GW additional capacity needed by 2038 to meet peak loads (~6.6% increase over capacity-builds based on historical climate). The extent of additional infrastructure needs is strongly influenced by future water availability for hydropower and the potential deployment of demand response technologies. Systems designed for future climate conditions were found to maintain high system reliability under a range of electricity and water availability scenarios (including significant drought), with minimal system curtailments. Additional capacity needs due to higher load tend to increase cumulative 20-year investment and operating costs by $$5-$$17 billion and generation costs increase by 9 to 19%. Finally, changing the representation of hydropower flexibility has a relatively small influence on capacity expansion in the Western Interconnection through 2038, but hydropower flexibility impacts generation costs to a similar extent as climate.