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Ensuring Efficient Reliability

New Design Principles for Capacity Accreditation

Note: this blog is cross-posted from the original source:

A megawatt-hour of energy on the grid is indistinguishable based on its source, but the same is not true for a megawatt of capacity for resource adequacy. When and where resources are able to generate those megawatts can differ significantly, leading to some resources providing more reliability benefits than others. Capacity accreditation establishes a way to measure the reliability contributions of individual resources to collectively meet the resource adequacy needs of the entire system.

Power system planning used to be a straightforward endeavor. The load forecasters would estimate peak load several years out, and the grid planners would ensure enough capacity was available to meet that peak load, plus an additional margin to cover uncertainty in weather, generator outages, and load growth. The assumption was that if the system had enough capacity to cover the peak load hour, there was by default enough capacity for the rest of the year. In other words, the planning reserve margin would set the necessary amount of capacity, and generators would stack up “blocks of capacity” to meet it. The blocks of capacity were largely the same - a natural gas combined cycle, steam coal, or a nuclear generator were all considered equivalent from a capacity perspective.

In the clean energy transition, this simplified approach to capacity planning no longer applies for several reasons. For one, the period of risk is no longer isolated to single peak load hours. Risk - measured by the amount of surplus capacity available - is increasingly shifting to later evening hours (after the sun sets), to winter cold snaps that threaten natural gas supply and equipment failures, or to periods of wind lulls. The generation mix is also much more diverse - the future power system will comprise a portfolio of variable renewable resources (wind and solar), energy limited resources (energy storage and load flexibility), and clean firm resources.

Instead of stacking up blocks of capacity to meet a single peak load, grid planners must now play a game of tetris across every hour of the year, piecing together a system where every block of capacity is different.

This capacity counting - referred to as capacity accreditation - is the process that allows resources to be compared against one another for the firm capacity value that they bring. In other words, it assigns a value for each MW of capacity for its likelihood of being available when the system needs it most to avoid a capacity shortfall and potential load shedding.

Capacity accreditation helps grid planners couple economic efficiency and reliability. Accreditation allows grid planners or market designers to remove blocks of capacity (representing generator retirements) and replace them with different types of resources, in different locations, with different operating characteristics.

A robust capacity accreditation framework, therefore, accomplishes three goals of planning: (1) to secure reliability in an economically efficient manner, (2) send a price signal to new market entrants, and (3) ensure that load-serving entities are equitably meeting their obligations to reliably serve load.

Most ISO/RTOs and utilities are redesigning their accreditation process, and this has big implications for retirement decisions and new resource procurements. Given the unique resource mix and regulatory regimes in each region, uniformity may not be desirable or feasible, but foundational pillars can be applied. The ESIG report Ensuring Efficient Reliability: New Design Principles for Capacity Accreditation lays out several of these pillars to help guide capacity accreditation redesign efforts currently underway. This report gives particular attention to two key considerations:

Capacity Accreditation for All: Accreditation methods should be expanded and applied to all resource types, not just wind, solar, and battery storage. This includes considering the reliability implications of correlated outages of thermal resources, the benefits of interregional transmission, and load flexibility.

Linking Accreditation to Real Time Operations: Power system modeling is never perfect, and there are inherent risks with accrediting resources solely based on modeling and simulation. As a result, there is a need to link simulated accreditation with actual operations.

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