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WECC Long-Term Planning Scenario
Report
In support of the Regional Transmission Expansion Planning Project
By
Scenario Planning Steering Group
Western Electricity Coordinating Council
March 29, 2013
W E S T E R N E L E C T R I C I T Y C O O R D I N A T I N G C O U N C I L • W W W . W E C C . B I Z
155 NORTH 400 WEST • SUITE 200 • SALT LAKE CITY • UTAH • 84103 -1114 • PH 801.582.0353
WECC Scenarios
Table of Contents
Introduction ................................................................................................................................ 1
Scenario Background ................................................................................................................. 1
Focus Question for the Scenarios ......................................................................................... 2
A Consistent Set of Key Drivers of Change ........................................................................... 3
Key Scenario Drivers, Predetermined Elements and Uncertainty .......................................... 3
The Organizing Scenario Matrix ............................................................................................ 4
The Organizing Scenario Matrix ................................................................................................. 5
Point of View of the Scenarios ............................................................................................... 6
Policy Implications for the Scenarios ..................................................................................... 6
Modeling and the Transmission Planning Results for the Scenarios ...................................... 8
Scenario One: Focus on Economic Recovery ............................................................................ 9
Key Scenario Metrics in 2032: ............................................................................................... 9
Beginning Years: 2013-2017/The Dark Before the Dawn .....................................................10
Middle Years: 2018-2022/A New Day Dawning ....................................................................15
Final Years: 2023-2033/A Bright New Day ...........................................................................18
Scenario One - Overview by Key Driver ...............................................................................22
Scenario One – Overview of Modeling Parameters ..............................................................26
Scenario One - Policy Themes .............................................................................................29
Scenario Two: Focus on Clean Energy .....................................................................................31
Key Scenario Metrics in 2032: ..............................................................................................31
Middle Years: 2018-2022/Tension Passing Through the Inflection Point Toward Sustainability
.............................................................................................................................................37
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Final Years: 2023-2033/The Lumpy Implementation of the Advanced and Clean Technology
Power Industry .....................................................................................................................43
Scenario Two - Overview by Key Driver ...............................................................................47
Scenario Two – Overview of Modeling Parameters ..........................................................50
Scenario Two - Policy Themes .............................................................................................52
Scenario Three: Focus on Short-Term Consumer Costs ...........................................................54
Beginning Years: 2013-2017/The Doldrums Don’t End.........................................................55
Middle Years: 2018-2022/Struggling to Get on Track ...........................................................57
Final Years: 2023-2033/Same as it Ever Was ......................................................................59
Scenario Three - Overview by Key Driver .............................................................................63
Scenario Three – Overview of Modeling Parameters ............................................................66
Scenario Three – Policy Themes ..........................................................................................69
Scenario Four: Focus on Long-Term Societal Costs .................................................................71
Beginning Years: 2013-2017/The Rise of Smart Energy.......................................................72
Middle Years: 2018-2022/The Age of Self-Sufficiency ..........................................................77
Ending Years: 2023 to 2033/The Re-Optimization of Electric Power ....................................79
Scenario Four - Overview by Key Driver ...............................................................................82
Scenario Four – Overview of Modeling Parameters ..............................................................86
Scenario Four - Policy Themes ............................................................................................88
Using the Scenarios for Long Term Thinking and Early Indicators ............................................90
Long-Term Use of the Scenarios ..........................................................................................90
Early Indicators for Long-Term Transmission Planning .............................................................92
Early Indicators for Scenario 1: Focus on Economic Growth ................................................92
Early Indicators for Scenario 2: Focus on Clean Energy .......................................................93
Early Indicators for Scenario 3: Focus on Short-Term Consumer Costs ...............................94
Early Indicators for Scenario 4: Focus on Long-Term Societal Costs ...................................94
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WECC Scenarios
Appendix I: Scenario Narrative EPS..........................................................................................95
Scenario 1: ...........................................................................................................................95
Scenario 2: ...........................................................................................................................95
Scenario 3: ...........................................................................................................................96
Scenario 4: ...........................................................................................................................96
Appendix II: Comparative Scenario Summary ...........................................................................98
Appendix III: Policy Theme Table ..............................................................................................99
Appendix IV: Annotated Policy Theme Table ..........................................................................101
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WECC Scenarios
Introduction
This report presents the final version of long-term planning scenarios created in support of the
Western Electric Coordinating Council’s (WECC) Regional Transmission Expansion Planning
project (RTEP) funded partially by a United States Department of Energy (DOE) contract
awarded to WECC in 2009 as part of the American Recovery and Reinvestment Act.
These scenarios incorporate input, ideas, and recommendations that the Scenario Planning
Steering Group (SPSG) provided Reos Partners during and between workshops held in Salt
Lake City, Utah, on May 23rd, 2011, July 11th-12th, 2011 and December 12th-13th, 2012. This
report is therefore a draft revision of the scenarios, which were first completely presented in the
draft report issued in October 2011, with subsequent revisions to incorporate policy guidance in
March 2012.
These scenarios are the qualitative basis from which quantitative inputs were developed by the
SPSG’s Metrics Data Task Force (MDTF) during 2012 to feed into the Study Case Development
Tool (SCDT) and the Network Expansion Tool (NXT). The first draft of these scenarios was
used in an iterative fashion to develop the quantitative modeling inputs and refine the arguments
and ideas included in these final scenario narratives. The SCDT and NXT are the basis for
generating alternative transmission expansion plans for the WECC region so that a wider range
of possible developments might be considered in WECC transmission planning. The
transmission planning results of the modeling of these scenarios are more fully presented in the
report by WECC staff, which contains the 20 Year TEPPC Planning Results.
Scenario Background
Scenario-based planning is a technique for managing uncertainty in decision making. It is
especially useful when long-term investments must be evaluated despite the human inability to
accurately predict the future. Scenarios offer a tool for imagining plausible and well-researched
futures and thereby enable planning across a wider range of potential futures. When used well
this approach can spur learning and help in identifying emerging risks and opportunities.
Scenarios cannot take into account all aspects of the complexity of interrelationships and
interdependencies of the real world. However, scenarios are a powerful tool for sensitizing
decision makers to emergent key factors, which can influence the outcome of their decisions.
When used as a tool for guiding long-term capital decisions, scenarios can help managers to
more effectively assess both the timing and scale of investments. They can also provide the
time needed to create alternative financing and risk management options. It is in that manner
that these scenarios have been prepared and used by WECC and its stakeholders in the
transmission planning process.
These scenarios emerged from a series of workshops lead and facilitated by consultants from
Reos Partners under contract to WECC. The Reos team facilitated several phases of work in a
comprehensive scenarios analysis process working with and under the guidance of the SPSG
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and WECC staff. Phases of this work included: (1) Scenario-planning workshops to create the
scenarios; (2) The creation of an on-going research process which allowed SPSG members to
contribute useful information on energy industry developments to an on-line database (the
Event/Pattern/Structure system1); (3) Facilitation of webinars to share and discuss ongoing
research; and (4) Participation in task forces which developed metrics and policy ideas for the
overall project effort. Archived information and related work products from this process are
available on the WECC website in the section dedicated to the SPSG.
The scenarios are based on the following key structural elements: (1) An anchoring “focus
question” for all of the scenarios; (2) A set of “key drivers” representing trends and factors that
must be reflected in all of the scenarios; and (3) An organizing matrix structure based on two
highly uncertain and very important key drivers. Each of these is described in this report.
Focus Question for the Scenarios
Scenario planning, as a tool for managing future uncertainty, enables stakeholders to create
and test strategic responses given a diverse range of plausible future conditions. Good
scenarios are based on a clear enunciation of the decisions and uncertainties at play: The
“focus question” that ensures scenarios are developed with a clear sense of the issues at hand.
The SPSG agreed on the focus question detailed below.
1
It should be noted that EPS submissions have been integrated into this version of WECC scenarios. In each scenario, there are a
few underlined blue hyperlinks which link to the relevant EPS submission on the SPSG website. Double-clicking on the EPS link will
take you there.
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Chart 1: Focus Question to Anchor the Revision of the Current WECC
Scenarios
It should be understood that power supply in the context of the focus question of the scenarios
includes approaches other than building new generation, including investment in energy
efficiency and demand-side management.
A Consistent Set of Key Drivers of Change
While scenario analysis does not allow accurate predictions of the future, it does provide a tool
for rigorously imagining alternative possible futures in which important decisions may play out.
The most useful scenarios derive these imagined futures from a studied consideration of factors
and trends (“key drivers”) that will most likely and powerfully influence future conditions.
Key Scenario Drivers, Predetermined Elements and Uncertainty
To imagine and plan for the evolution of electric power markets and related needs for
transmission in the WECC region, the SPSG agreed to develop long-term scenarios using the
following list of key drivers:
1.)
The evolution of regional economic growth in the WECC Regions
2.)
Technological innovation in electric supply technology and distribution systems
3.)
The evolution of electric demand in the WECC Regions
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4.)
The evolution of electric supply in the WECC Regions
5.)
Changes in the regulation of electric power systems in the WECC Regions
6.)
Changes in federal regulation affecting the electric power industry
7.)
Changes in social values related to energy issues
8.)
Changes in society's preferences for sustaining environmental and natural resources
9.)
Shifts in national and global financial markets
10.) Shifts in the availability and price of commodity fuels used in the electricity sector.
After each of the four scenario narratives a table summarizes how each of the ten key drivers
play out in that particular scenario over the twenty-year period. These tables can be used to
compare how the drivers differ between the scenarios. Appendix II in this report provides a more
comprehensive short-form comparative analysis of the scenarios using the driving forces.
Within the key drivers above there are predetermined elements and high degrees of uncertainty.
Predetermined elements are issues that clearly exist in the current environment, which will, by
necessity, have a role in how the future unfolds in any scenario. In the WECC scenarios this
includes things such as: (1) The implementation of FERC Order 1000 and its impact on regional
planning; (2) Ongoing public deliberations and policy formation related to climate change; (3)
Improvements in energy efficiency across the economy driven by the current pace of
technological improvements and government mandated standards; and (4) The meeting of RPS
standards in power generation investments throughout the WECC region.
Those elements and other factors, as they are implemented within the time frame of the
scenarios, remain uncertain. The scenarios are a tool for using imagination and analysis to give
a range of possible roads the key drivers, in combination, may take. Scenarios in this sense are
not, and cannot be, accurate predictions of the future, but serve as useful, diverse and
challenging futures with which to assess uncertainty. With the modeling results, this uncertainty
can be analyzed in depth in terms of their impact on transmission planning in the WECC region.
By thinking through those results, their insights and the additional questions that arise, we
establish a holistic process for managing uncertainty.
The Organizing Scenario Matrix
A “scenario matrix” is a tool for organizing and distinguishing ideas during the creation
scenarios. To create a matrix, the key drivers are first prioritized using the consensus or
majority vote of a team to select the two drivers that are simultaneously most uncertain and
most important. Additionally, the top two drivers should be independent of one another. These
two drivers are then ascribed a range of uncertainty, represented as an arrow with ends pointing
in opposite directions to indicate polar extremes. Crossing these arrows creates four quadrants
that function as “scaffolding” for developing distinctive scenarios.
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After due consideration, the SPSG selected “technological innovation in electric supply and
distribution” and “economic growth in WECC regions” as the two most important and most
uncertain drivers. The resulting matrix and ranges of uncertainty are shown on the next page. It
provides a starting point from which to create distinctly different worlds and a way to integrate
the other drivers into a narrative structure. It has been revised in this report to show the final
narrative titles for the scenarios.
The Organizing Scenario Matrix
Chart 2: WECC Transmission Scenario Matrix
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The revised scenario narratives in this report are the final stories that describe very different
future “worlds” or contexts for future WECC transmission decisions. The organizing scenario
matrix is a conceptual device in which the future can be explored within distinct quadrants as
well as by moving among the quadrants over time. The matrix serves as a sophisticated tool for
distinguishing, at a glance, the major differences and starting assumptions in the imagined
worlds. Movement among the quadrants to represent a plausible evolution of future conditions is
discussed later in this report in the section on Early Indicators.
Point of View of the Scenarios
The scenarios are written from the point of view of a neutral observer (similar to a newspaper
reporter) explaining the future as it is unfolding. In addition to the events and trends playing out
in relation to the key drivers, the observer identifies the actions of four key stakeholder groups:
(1) Regulators and legislators; (2) Companies in the electricity industry (investor-owned utilities,
power plant and transmission system owners, operators and developers); (3) Activists and
advocates for various causes, especially the environment; and (4) Electric energy consumers
(residential, commercial, industrial and agricultural). Since this is an exercise in storytelling,
different stakeholders may be active or dormant in particular timeframes in each of the
scenarios.
Policy Implications for the Scenarios
Three of the key scenario drivers can be considered to be policy changes: (1) Changes in
regulation of the electric power systems in the WECC region; (2) Changes in federal regulation
affecting the power industry; and (3) Changes in society’s preferences for sustaining
environmental and natural resources. Policy is rightly a very broad term so changes in policy
can affect an even wider range of areas. Policies are critical because they set the rules,
regulation, laws, and context for risk assessments affecting decisions about important matters,
especially large capital investments, in the energy business. Policies allow the democratic
process to exert influence on energy industry decisions so as to ensure they align with the
desires and values of society. Clearly, policy shifts over the next decade or more can have a
powerful effect across the electric power industry and thereby heavily influence generation and
transmission investment decisions.
In addition, the SPSG created the Policy Development Task Force (PDTF) to explore further
how other policies might affect the evolution of the WECC scenarios. The work of the PDTF also
has been captured in the scenario narratives, as well as in the scenario modeling metrics.
In order to give additional coherence to such a broad area as policy and to give some indication
of how they might evolve, each scenario attempts to reflect an evolution of events that are
roughly consistent with the overall policy themes. These themes signify the overall context
through which policy changes may arise and also indicate a predominant direction. The policy
themes for each scenario are shown on the next page.
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Chart 3: Policy Themes by Scenario Matrix
Following each of the scenario narratives is a chart, which indicates the general direction of
change in policy areas. This change is consistent with the ideas and trends in the particular
scenario. Those directional indicators of change will also be the basis for making modifications
from a set of common case assumptions used to create quantitative analyses of the scenarios.
Importantly, the overarching policy context of each scenario was used in the planning process
by the Metrics Data Task Force to change quantitative variables in the Reference Case
assumptions used in the 20-year modeling process using the SCDT and NXT. Those changes
in the quantitative variables were best guess and consensus estimates from the MDTF based
on their professional expertise, and in some cases, tied to research analyses referenced in the
EPS system. In light of this work, the policy ideas were given real economic power in the
modeling to change outcomes in transmission plans.
The policies in each scenario have been placed in one of five categories: (1) ‘++’ = Most
aggressive; (2) ‘+’ = Aggressive; (3) ‘0’ = neutral; (4) ‘-’= Aggressive in the opposite direction;
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and (5) ‘– –’ = most aggressive in the opposite direction. Appendix III and Appendix IV provide
further detail on the indicators and their influence within the scenarios.
Modeling and the Transmission Planning Results for the Scenarios
As mentioned earlier, WECC staff will be discussing with stakeholders the results from longterm (20-year) study cases based on these scenarios, as well as the results of other study
cases, as a basis for creating alternative 20-year transmission plans in addition to the WECC
Reference Case. Following each scenario narrative is a placeholder for high-level summary of
those transmission-planning results. A comparative analysis of the transmission planning results
and suggestions about key factors, which impacted the differences, will follow the scenario
narratives. Appendix V of this report includes a comparative analysis of those results.
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Scenario One: Focus on Economic Recovery
Wide-spread Economic Growth in WECC Region with Increasing Standards of Living and
Evolutionary Changes in Electric Supply and Distribution Technology
This is a world in which an initially slow uptick out of recession is followed by rising economic
growth in the WECC region. Happening in concert with a steady pace of incremental rather than
breakthrough technology improvements in the power sector this growth supports the emergence
of the next generation power system for the region—one which is more efficient, flexible,
responsive to customers, and takes full advantage of a spreading smart grid. After a period of
international financial instability, the U.S. economy with more growth is back on a more solid
fiscal foundation with the restructuring of the national debt leading to the implementation of new
tax and fiscal policies. The U.S., with its growing population, entrepreneurial culture, and ability
to develop advanced technologies, helps to bring the global economy back into balance.
A steadily improving economy drives increasing electricity demands from consumers and
expanding businesses and industries—both large and small. In the early years, natural gas
meets this demand as increasing supplies keeps domestic prices low. As the last decade
unfolds however, there is a major shift towards renewables driven by a robust regional electricity
market facilitating the integration of renewables, and increasing environmental concerns about
land and water use and air quality. Continued concern about climate change leads to efforts to
reduce CO2 emissions and culminates in a federal energy policy, which includes a national
carbon tax. These changes contribute to economic growth as they trigger innovation, revitalize
markets and drive new investment.
Even without game-changing breakthroughs, the energy sector is a primary beneficiary of the
prowess of the U.S. in both technology development and entrepreneurial vigor and provides a
solid basis for overall economic growth for the nation. The WECC region, home to some of the
nation’s best educational and financial management institutions, leads the long-term positive
evolution of the nation’s economy.
Key Scenario Metrics in 2032:
Natural Gas Price = $10.00
Cost of Carbon = 2032 Reference Case value: $37.11
Policy Adjusted Peak Load Growth Rate* = 1.9% (2032 Ref Case = 1.5%)
Policy Adjusted Demand Growth Rate* =
1.6% (2032 Ref Case = 1.2%)
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* Adjusted for known electrification, DSM and energy efficiency policies included in the modeling
results
Beginning Years: 2013-2017/The Dark Before the Dawn
The big events and issues shaping the electric power sector in the WECC region in early 2013
can be summarized in six key areas: (1) The impact of and slow recovery from the 2008-2009
credit crunch and follow-on recession; (2) A growing concern among voters and their
representatives about both the short-and-long-term effects of climate change, yet with no
political consensus to act nationally or globally; (3) A rapidly emerging concern about the longterm availability and usage of fresh water; (4) The growing investment in renewable energy
technologies to meet renewable portfolio standards (RPS); (5) Organizing and implementing
energy imbalance markets (EIM); and (6) The impacts of implementing FERC Order 1000.
Those six issues make investor-owned utility managers nervous about their future opportunities
in serving long-term demand growth, as well as where and how to invest in new assets. Activists
and advocates for protection of the environment (including clean-tech investors) promote
balanced financial and regulatory support to sustain and accelerate investment in clean energy
technologies. Even though there is a general acceptance of and some enthusiasm about clean
energy technologies, most are still not quite cost competitive with the traditional sources of
power. Improvements are needed in some of their performance areas. Innovations are coming,
as seen in labs and pilot projects, but further steps will be needed as those new options are
implemented more widely and integrated into existing power systems (See Figure 1.1 below on
the challenges of impactful innovation).
Legislators and regulators have a delicate dilemma on their plate: How to continue progress
toward a cleaner and more sustainable power system without imposing high and quickly
escalating energy costs and unnecessary risks on consumers and industry. Additionally, these
advancements must not harm economic growth or job creation.
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Figure 1.1: Technology: An Economic Growth Driver
“Innovation Pessimism: Has the Machine Broken Down?” The Economist, January 12 2013
Although the boom times are back in Silicon Valley, it may come as a surprise that some in
Silicon Valley think the place is stagnant, and that the rate of innovation has been
slackening for decades. And a small but growing group of economists reckon the economic
impact of the innovations of today may pale in comparison with those of the past. Some
suspect that the rich world’s economic doldrums may be rooted in a long-term
technological stasis.
Economists divide growth into two different types, “extensive” and “intensive”. Extensive
growth is a matter of adding more and/or better labour, capital and resources. Intensive
growth is powered by the discovery of ever better ways to use workers and resources, and
economists label the all-purpose improvement factor responsible for such growth
“technology”.
Technological progress does not require all technologies to move forward in lock step merely that some important technologies are always moving forward. Innovation and
technology, though talked of almost interchangeably, are not the same thing. Innovation is
what people newly know how to do. Technology is what they are actually doing; and that is
what matters to the economy.
Although the economic impacts of technology lag investment in the technology, there may
be reason for optimism as we are just entering the period where the exploitation of recent
technology innovation (e.g., information & communications technology) will begin to have a
significant impact on economic growth.
In these early years, federal and state policies concentrate on economic growth. Though the
U.S. economy continues on the positive growth trajectory that began in 2012, big challenges
must be resolved. The financial crises in the European Union, especially in Greece, Spain, and
Italy, as well as the political battles over how to reduce the U.S. deficit, dominate the headlines.
There are concerns that the European Union could implode from within, as austerity programs
do not prove effective. Pundits, investment analysts, and global finance experts all publish
nightmare scenarios that contribute to the overall sense of gloom.
The optimistic news from the U.S. housing market, increased job growth and lowering rates of
unemployment are all offset with news of conflicts in the Middle East rattling oil markets. Oil
prices, now above $100 per barrel, have only small effects in the U.S. as oil consumption
continues to decline, yet constrains economic growth outside the U.S. as global consumption
increases. Despite ongoing monetary interventions by European Union finance ministers, there
are fears the ongoing debt crises in Portugal, Spain, and Greece look like might lead to further
economic contraction in Western Europe. Europe lags well behind the U.S. and Asia in terms of
economic growth and continues as a drag on the global economy.
President Obama’s re-election in 2012 provided a degree of hope that Congress and the
Obama Administration would collaborate to address the fundamental problems of the U.S.
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economy. This notion of political harmony proves ephemeral as changes in tax policies as well
as debt reduction are spread out over several years. The benefits come slowly, and while
helping parts of the economy, the extended uncertainty about policy restrains broad economic
growth both in the U.S. and globally. Voter frustration with the political gridlock results in an
attitude shift towards candidates running for state or federal office in 2014 and 2016 towards
those more willing to collaborate on solving the nation’s economic ills. However, in general,
policies supporting a balanced approach to economic growth gain wider support.
By 2017, actions for effective regulation and the restructuring of the national debt leads to the
implementation of tax and fiscal policies geared toward reestablishing middle class growth and
supporting small businesses development. Economic growth is the primary focus of
policymakers in Washington, D.C. and the states in the Western Interconnection. These actions
coupled with economic growth in Asia, particularly China, India and Latin America prevents a
return to recession.
Economic growth in the WECC region happens in fits and starts. Those western states and
provinces with strong natural resource and agricultural sectors enjoy higher growth in the early
years than the ones focused on high technology, defense and tourism. California, along with the
Pacific Northwest, British Columbia, and Alberta are more closely tied to the global economy
and need global growth to support their industries. The western states as a whole are able to
take advantage of renewed growth in Asia and Latin America because of their emphasis on
exports and international trade.
Electric power technologies are part of these globally focused industries, and companies in the
WECC region lead the wind and solar power sectors, and are better able to integrate technology
innovations. Companies in the Silicon Valley develop the software and services necessary to
implement and run an optimized/smarter grid. Regulatory policies and state incentives enable
utilities to start to implement innovative products and services. These domestic markets support
companies that can produce and export technologies that will reshape the power business.
Western utilities and other energy companies continue their development of improved solar and
wind technologies, including offshore, dispatchable, and low-speed wind generation. They
pioneer investments and activities leading to more energy efficiency and overall conservation.
Significant potential remains in this space for new and dynamic innovations.
While renewable portfolio standards combined with state and provincial tax incentives have
stimulative impacts, demand growth remains the single largest driver for new investment in the
energy sector. In the short term, due to slowly improving economic conditions and slower power
demand growth because of more energy efficiency, power companies see limited opportunities.
As a result, some new plant construction slows and some planned transmission expansion is
put on hold.
As events unfold, optimism about the long-term potential of the U.S. economy proves to be
accurate—albeit after some really tough early years. Power sector investments centered on
technology eventually come to market. These technologies, which had started with a few utility
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systems both before and during economic stagnation, transform the power sector into a more
efficient, flexible, and customer-responsive business. Previously announced coal plant
retirements proceed without delay as the EPA continues its push for cleaner air quality. New
sources of demand appear on the horizon as economic growth accelerates, companies large
and small expand and consumer spending rebounds (See Figure 1.2, even with growing energy
efficiency, absolute growth in demand is important).
Figure 1.2: Share of Energy Used by Appliances and Consumer Electronics
Increases in U.S. Homes
“Share of Energy Used by Appliances and Consumer Electronics Increases in U.S. Homes,”
Residential Energy Consumption Survey (RECS), U.S. Energy Information Agency
Over the past three decades, the share of residential electricity used by appliances and
electronics in U.S. homes has nearly doubled from 17 percent to 31 percent, growing from 1.77
quadrillion Btu (quads) to 3.25 quads.
This rise has occurred while Federal energy efficiency standards were enacted on every major
appliance, overall household energy consumption actually decreased from 10.58 quads to 10.55
quads, and energy use per household fell 31 percent.
http://www.eia.gov/consumption/residential/reports/electronics.cfm
Long-term planning to meet this potential demand centers on the balance of fuels. Despite
environmental concerns, the U.S. allows increased drilling and production of oil and natural gas
using hydrofracturing (“fracking”)2 driving natural gas prices lower and quickly increasing supply
(with a side benefit of driving electricity demand through the electrification of fracking fields). At
the same time, gas turbine manufacturers continue to improve gas-fired turbine efficiency
adding increased flexibility in following load demand and shaping wind generation.
Variability and uncertainty of wind and solar energy requires flexible and reliable power sources
to maintain reliability standards. Natural gas plants can be brought on line relatively quickly
when demand spikes and can serve as replacements for retiring coal plants. Natural gas is
abundant in the United States, so using it does not hurt the nation’s trade balance and provides
domestic jobs. Natural gas quickly becomes the “fuel of choice” for both new and replacement
generation. The challenges for natural gas include the uncertainty of continued long-term
supply from shale gas, the long-term potential for price volatility, the need for new transmission
and delivery infrastructure, and public concerns about air and water pollution resulting from the
use of fracking technology.
2
The process of using a fluid to create cracks in sedimentary rock and a proppant (small solid) to hold
open the crack, releasing trapped oil and gas.
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Renewable energy and environmental activists and advocates focus on three concerns: (1) The
environmental impacts of fracking used for oil and natural gas production; (2) Curbing
greenhouse gas emissions that contribute to climate change, and (3) The effects of extreme
weather events, particularly the continuing severe drought in the western U.S., which leads to
additional application of dry-cooled generation. These issues become more pressing as the U.S.
moves towards “energy independence” through domestic oil and gas production.
Land use and endangered species are part of the discussions about transmission system
expansion. The public, well informed about these issues, continues to support policies
protecting the natural environment despite continued uncertainty about the economy. When
both technological innovations and careful public involvement in project development are key
aspects of system expansion, there’s support for moving new technological solutions into the
market. Even without federal pressure, some states are continuing to pursue clean energy
solutions in direct response to voters’ demands.
Policy makers understand the long-term planning challenges in this period of economic recovery
period along with changing dynamics within the power system. As part of their responses to
FERC 1000, public utility transmission providers publish a white paper on Balancing Authority
(BA) consolidation, which serves as a framework for institutional changes in the WECC region,
including tighter planning coordination.
As 2017 comes to a close, an uncertain US economy continues to slowly pick up momentum,
while the WECC region maintains an annual economic growth rate of 2.5%. Population growth
within the WECC region’s population coupled with continued economic growth increases energy
demand placing new pressures on the electric grid. As a result, utilities will have to increase
generation and distribution in the coming decade. Most utilities initiate processes to allocate the
capital for the IT infrastructure upgrades necessary to create, implement, and take advantage of
the long-discussed grail—the “smart grid.” (See Figure 1.3 on the challenges of smart grid
growth).
Figure 1.3: The Smart Grid” at a Crossroad
“Many of the smart grid projects that were announced in 2009 through early 2011 were funded
by the Department of Energy, with American Recovery and Reinvestment Act grants. Since
then, the level of activity has slowed down, for a few reasons. First, obviously we went through
a boom phase with federal funding, and that boom is now gone. Decisions to cover costs for
smart grid rollouts lie in the hands of state regulators. A number of states already decided to
approve smart grid investments, and now we have a small trickle of states that are moving
ahead. Illinois is one of them. But state regulators likely will pause and look at the utilities on
the East Coast, Texas, Florida and the West Coast to see if utilities in those areas get the return
on investment they expected, now the technology is working and what lesson are being learned.
That will take 12 to 24 months. After that, we’ll see more states ready to take the jump and
approve investments in smart grid.”
Source: January, 2013, Public Utilities Fortnightly, quote from Jack Azagury, of Accenture Corp.
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“The Challenges of Big Data on the Smart Grid”, MIT Technology Review, July 2011.
Before the smart grid can become a reality, much less leave the infancy stage, utilities need to
prepare for an onslaught of data - and not just a doubling or triple - but an increase of multiple
orders of magnitude.
Currently utilities are hindered by old legacy IT that cannot deal with this data inflow - much less
communicate effectively with each other - and they are upgrading very slowly.
The realization of the smart grid and all of the benefits will be delayed much farther into the
future than most forecasts anticipate.
The technology is there; it only needs to be refined and standardized into easy-to-use
applications so power companies can smoothly integrate them into their operations.
Middle Years: 2018-2022/A New Day Dawning
Pessimism does not last forever—even the Great Depression ended. In the early part of this
period, economic growth in the western U.S. appears to be inconsistent with some areas
accelerating while others still lagging. By 2022, the overall tide has turned with the return of a
solid foundation of consistent, if not spectacular, economic growth—providing a long-needed
boost just as the U.S. begins to rebuild its aging transmission infrastructure. As a whole, the
WECC region is growing at a solid 2.75%. This turnaround’s foundation lies in the sizable
decline of the U.S. federal budget deficit leading to lower long term borrowing cost for business
investment and employment growth as a result of both exports and a more competitive U.S.
manufacturing sector. With the demise of China’s long-term labor cost advantage, the U.S.
accelerates exports of high-quality products that can only be manufactured with a more
educated and productive labor force. These trends support a strong housing market and growth
in consumer spending.
Newer industries, including biotechnology and information services, experience significant
growth rates. The commercialization of three-dimensional computer chip technology kick starts
the next “smart product” generation, which results in the proliferation of chip-based intelligence
in almost every product. Clean energy technologies expand quickly, increasing their economic
impacts as companies based in the WECC region start to produce and export more products
resulting from their recent R&D spending. For these companies, geographic proximity to both
domestic and export markets increases the overall global competitiveness of regional
companies.
The energy sector contributes to job growth by increasing demand for distributed power
systems and energy management services. Utilities start to build out smart-grid systems using
new, more intelligent devices on both the demand and supply sides. Demographics, which are
often underappreciated as an economic driver, start affecting the global economy. As a result of
consistent immigration, the U.S. population grows, as is evidenced in the 2020 U.S. Census.
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The U.S. avoids the continuing population losses seen in Japan and most of the member states
in the European Union. In combination with the ongoing recovery and population growth,
renewed spending returns as consumers start to purchase big-ticket items including
automobiles, appliances and electronics—items that were deferred by many during the last five
years.
While Arab nations in North Africa and the Middle East are moving toward more democratic
forms of government, this process proves to be both contentious and rife with uncertainty. Oil
prices consistently hover above $120 per barrel based largely on global demand. Price spikes
occur regularly because of political disruptions and violent outbreaks in the Middle East.
A combination of renewable energy, readily available domestic natural gas and oil, and energy
efficiency and conservation provides a clear path for steady reductions in U.S. energy imports.
Natural gas prices are only slightly impacted by both environmental regulations on fracking and
increased demand from the electric power sector as production continues to increase.
However, as the push for energy independence continues and new natural gas infrastructure
comes online, there are growing concerns that the distribution system is now even more
vulnerable to both natural disaster and terrorism.
Innovations in both electric supply and distribution systems emerge from renewed R&D
spending—although no game-changing breakthroughs are on the horizon, a number of
innovations are reaching a critical mass, including:

Wave generation technologies make significant strides and are close to being market
ready at competitive costs

The first EGS (Engineered Geothermal System) comes on line in California and
traditional plants experience better efficiencies

Small scale modular nuclear plants are successfully demonstrated

Solar DG at 100 KW scale and larger has reached grid parity (retail cost)

Advanced battery solutions for energy storage and electric vehicles.
Supported by state and provincial energy policies, “grid optimization” emerges at the subregional level, including energy imbalance markets (EIM) and operations/commercial tools.
There are still large gaps in the system, however: After a serious attempt by cyber-terrorists to
collapse the nation’s electric grid and financial system in 2018 was narrowly averted, security of
both the grid and infrastructure becomes paramount as Congress finally enacts a cyber security
bill. The failed attack and the new regulations add momentum to the smart grid build out.
Global financial markets have absorbed and restructured the toxic debt that had so severely
damaged credit markets. There were some significant bankruptcies and mergers, but, by this
time, credit flows support both sound investment and home ownership. Money pours into the
energy sector, as investors perceive it to be a secure industry. Sound economics drive good
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investments: Demand grows and is very likely to rise because of expansion in industrial and
consumer product sectors. After five years of sluggish growth, electric-powered vehicles start to
pick up market share due to lower costs and higher efficiencies of greatly improved battery
systems (See Figure 1.4 on expected shifts in the transportation fleet).
Figure 1.4: Sales of light-duty vehicles using non-gasoline technologies by
fuel type, 2010, 2020, and 2035 (million vehicles sold)
Source: DOE/EIA Energy Outlook 2012 (With Projections to 2035), Page 85, DOE, April 2012
In the WECC region, the reshaping of the electric power systems takes an “inside-out”
approach. Installation of generation close to load now happens before power is shipped in via
transmission lines. This means that forms of distributed generation, demand response, solar
power, natural gas and energy management systems now dominate the market. The challenge
with this approach centers on sudden spikes in demand and guaranteeing reliability. As a result,
these systems remain connected to the grid to ensure reliability. Smart grid investments by early
adopters in communities, high technology companies, and utilities accelerate.
With a steadily improving economy, public pressure on the power industry focuses on climate
change solutions as well as other environmental concerns. Land use impacts of natural gas
production, renewable energy installations and water scarcity lingering from the 2011-2016
drought (evidenced by additional dry-cooled generation) now merit continued public concern. As
the nation grows both in terms of demographics and economics, there are more conflicts about
the use of limited natural resources.
Tourism continues as a sizable industry in the WECC regions and land use, in particular the use
of open and protected areas, sometimes conflict with energy system growth. A balanced
approach in most instances allows important transmission and distribution systems investment
to proceed, especially those bringing in power from renewable sources. State and provincial
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economies pursue environmental agendas, while federal policies are aimed mostly at fostering
economic growth. Moderates and centrists maintain political power in many states and seek to
balance both employment and economic growth with responsible stewardship of natural
resources.
Electric power companies actively adjust to the new more distributed and self-contained power
infrastructure, effectively and efficiently managing the data and information flows coming from
the accelerated build out of the smart grid. Energy services evolve into many submarkets as
consumers are segmented into levels and styles of service that will accommodate their different
needs. Even so, many consumers continue to receive power the old-fashioned way.
There are many new players in the energy market, especially in the information sphere.
Supporting this faster-paced aspect of the electric market are large corporations developing
software and hardware options that allow smart energy businesses to provide quality services.
The technology allows WECC to expand the sub-regional EIM region-wide and leads to more
sophisticated energy trading and more effective cost management. This more connected
system allows Native American Tribes and First Nations to develop and manage their energyproducing assets and activities and, as a result, receive financial benefits.
By the end of 2022, renewed confidence in the economy and financial systems as well as
ongoing technology improvements provides a foundation for an economic renaissance and the
long-overdue transformation of the electric power system in the WECC region.
Final Years: 2023-2033/A Bright New Day
The global recession of 2008-2010 is long forgotten. Global financial markets are completely
restructured and sovereign debt is under control compared against what was the case during
the global recession. With the positive resolution of the European Union’s problems, worldwide
growth outpaces pre-recession rates, yet seems to be managed in ways to prevent a new
“bubble” as lessons learned take effect. By 2032, annual economic growth in the WECC region
has risen to 3.5%, thus recouping jobs lost in the recession. Plus, there are now enough new
jobs to cover the needs from expanding industry sectors and steady population growth. The
long needed national infrastructure rebuild and upgrades continue across the region, adding
new jobs and expanding basic industries. The WECC region is once again the land of
opportunity.
Even as the population ages population growth, though inconsistent across the region, outpaces
the rest of the U.S. It’s strongest among the Northwest and Pacific coast states and provinces.
In addition, retirees decide once again to move to Arizona and Nevada despite increases in
temperature and water constraints.
Relations between the U.S. and Middle Eastern countries remain strained, though some stability
emerges. This stability comes at a price, however, as many of the new democracies created
during the Arab Spring sometimes pursue policies considered antithetical to the global
economic interests of the U.S. Economic growth outside the U.S. is driven by China and India.
This is critical due to the importance of exports to continued U.S. economic growth. Many of
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those exports support growth in the WECC region and thus demand for energy. High technology
exports from companies in the WECC region are a big contributor to the revitalization of the
U.S. economy during these years.
By 2032, the smart grid is spreading across the U.S. and Canada. This was enabled by
standards and interconnection agreements between the two countries supported by states and
provinces. The grid now “…intelligently integrates the actions of all users connected to it—
generators, consumers and those that do both—in order to efficiently deliver sustainable,
economic and secure electricity supplies…”3
Taking advantage of improvements in information and communications technologies, including
a new generation of computer chips, the grid now works in real time gathering and acting on
information effectively. The grid does four things very well: (1) Ensures reliability; (2) Seamlessly
integrates renewables; (3) Improves economics; and (4) Guarantees the sustainability of
generation, distribution and use of electricity across North America.4
Traditional power companies, some of which still serve primarily rural areas, still sustain reliable
service by having access to power resources beyond their peak demand. They maintain backup
reserves that can be put into service quickly. What’s emerging in the improved more
independent power system is one running much closer to its limits, albeit with much higher
productivity.
Running a leaner system also helps to lower costs; however, when the limits are reached, there
are new approaches in the provisions for back-up reserves. These new approaches now drive
markets for energy storage technologies and smaller forms of clean, distributed generation. In
fact, high-density DG areas are now significant enough to be considered “resource areas” for
transmission expansion allowing production to be shipped outside of the DG local area. Over
the past decade, improvements in storage solutions—pumped storage, compressed air, and
advanced batteries—have solved the basic problem of storing electricity generated for both
back-up reserves and off-peak demand. Solar and wind generation are also integrating
improved technologies for energy storage.
The concept of a personal energy portfolio based on features like time-of-use pricing, special
rates for electric vehicle charging, feed-in tariffs for solar power systems, and incentives for load
management creates an array of possibilities for savvy consumers, both large and small. Some
communities in the WECC region sign specialized deals with companies for clean energy
projects for their local utilities.
Consumers quickly adapt to a new power system that provides them with more choices, even if
they sometimes make a bad decision. Because the power system is cleaner and allows for
more options, it’s viewed as a significant improvement in power services. Consumer surveys
3
4
The Global Smart Grid Federation
The U.S. Department of Energy
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find a persistent desire for even cleaner systems and for more information on energy usage and
conservation.
In an effort to spur further technology advances in the power sector and to meet growing
demands to address climate change, a national energy policy focusing on costs, air quality, CO2
emissions and fossil fuel export policies, is enacted. The law has several new aspects: (1) An
increase in energy efficiency standards; (2) Additional renewable energy requirements in utility
generation portfolios; (3) A ($37/ton) carbon tax; and (4) An expansion through the use of
incentives of the market for cleaner, more efficient, and smarter energy technology. At the
national level, this law complements ongoing efforts to further reduce imports of oil.
In mid-decade the U.S. is close to real “energy independence", and as a result is well-protected
against global oil and gas volatility. Driven by global demand and exhaustion of the best shale
plays, natural gas reaches $10 in the U.S. With global demand on the rise and prices high, gas
and coal produced in the WECC region is sent to new shipping facilities on the Pacific Coast for
export to meet increased Asian demand—but with an additional export carbon tax to continue
revenue generation and to be consistent with the new national energy policy.
As economic growth continues, a major shift away from fossil fuel-driven power takes hold. Over
the last decade, as economic growth continues there is increasing public concern about the
ongoing use of natural gas. Combined with the increasingly destructive effects of climate
change, states are now beginning to consider new RPS.
Almost all new generation is renewable as clean energy technology improvements in EE
(Energy Efficiency), EVs (Electrical Vehicles) and DG/DR reach critical mass. 20 years of
continual improvements in solar, wind and geothermal technologies have brought them to cost
parity with natural gas. Wind has displaced coal-fired plants in regions with less-than-ideal solar
conditions, leading to additional coal plant retirements. Solar thermal is highly competitive on
utility scale applications, and EGS is now commonplace where it makes economic sense. Both
renewed efforts to reduce CO2 emissions along with commercial viability of small modular
nuclear plants lead to increased use of nuclear energy. Renewables are the new “fuel of
choice”.
As renewable generation now makes up over 20% of power generation in the WECC region,
power utilities have a need to pursue improved ways to meet their reserves requirements. They
need large amounts of power at the multi-megawatt scale to meet the balancing needs of
intermittent renewable resources. Once again, natural gas-fired generation presents a strong
alternative, in addition to evolving storage options associated with wind and solar power.
Despite all the changes, electric power still cannot be called cheap. Energy efficiency, demandside management and conservation still pay, and consumers still want energy-efficient homes,
buildings and equipment. Since buildings in the U.S. and Canada typically last about 100 years,
retrofitting them becomes a larger segment of the conservation business.
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As a result of the benefits from the movement to energy self-sufficiency, the U.S. reaches a
tipping point in 2032 as the country becomes self-sufficient in all energy sectors, including
transportation fuels. With national energy independence now in place, federal action can now
spur more energy development, including an energy superhighway system in certain parts of
the country. These DC lines connect resources to major load centers in major cities and urban
areas. Cooperation with Canada and Mexico advances to building new interconnections utilizing
the smart grid across the WECC region.
During these years, some Middle Eastern and North African governments, which had seen
internal revolts, have now become working, though fragile, democracies. Individuals who once
led these popular political revolutions have now become nationally-elected leaders within their
societies. They now focus on trying to raise national standards of living while connecting to the
global economy. With the huge natural endowments and capital resources from oil and other
natural resources, several of these nations join the World Trade Organization. As a result, their
citizens become more discerning consumers of global goods. These changes open up export
markets for U.S. goods including many from companies in the WECC region.
Bringing people from developing countries into the global economy creates a “new China” in
terms of boosting global economic activity. India surpasses China in annual rates of GDP
growth, and Indonesia, with its large population, increases its international trading and resource
exports. Companies in the WECC region look to these new markets for exports of their clean
energy technologies.
As 2032 comes to close and the new decade begins, there are four pressing questions facing
WECC energy markets in this world:
1.) Will there be greater ties between the US Interconnections (e.g., WECC/ERCOT, etc.)?
Does that change our electricity costs and prices in the Western Interconnection?
2.) Should energy development be more centrally planned and implemented in the Western
Interconnection and can the smart grid and a leaner system create sufficient economic
benefits in this time frame without such a transformation?
3.) Has the US reached the correct balance between the need for clean energy to address
climate concerns versus the need for continued economic growth?
4.) Will the land use implications of increased oil and natural gas development put
constraints on resource choices?
New scenarios are needed…
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WECC Scenarios
Scenario One - Overview by Key Driver
Key Driver
Scenario Summary
The evolution of electricity
demand in WECC region
The economy begins a slow but steady recovery, and coupled with continued population
growth drives a return to electricity demand growth. High fuel prices drive incremental
electric vehicle adoption.
The evolution of electricity supply
in the WECC region
Renewables struggle to grow in early years, but new investment and coal plant
retirements trigger a resurgence of development, renewable generation takes off in last
decade with increased deployment of on-site generation and storage.
Innovation in electricity supply
technology & distribution systems
Slow and incremental technology innovation in the sector is mirrored in new generation
development and operational and communications improvements. Renewables
innovations pick up in the later years. Increased technology innovation in gas-fired
turbines continues to drive natural gas for new generation.
The course of regional economic
growth in the WECC region
Growth in the early years remains slow, and leads the WECC states and provinces to
enact legislation to support economic development. The economy picks up in the middle
years, followed by growth in the later years.
Changes in the regulation of
electric power systems in the
WECC region
States and provinces continue to drive energy policy in early years. The WECC region
begins to manage the power industry with better optimization of generation and
transmission across the Western Interconnection.
Changes in federal regulation
affecting electric power industry
The U.S. and Canada establish federal national energy policies to drive toward energy
independence. A national energy policy is enacted, including a carbon tax.
Changes in social values related to
energy issues
Consumer demand for customer-centric energy independence drives demands for
energy-efficiency products, onsite generation and storage, etc. The public and investors
begin to implement local community grids with clean generation.
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WECC Scenarios
Key Driver
Scenario Summary
Changes in society’s preferences
for environmental & natural
resources
Impacts of natural gas extraction cause states to look at increasing RPS standards.
Centrist policies support reasonable energy infrastructure development leaning more
towards renewables in the later years.
Shifts in national & global financial
markets
Stabilization of financial markets following changes in deficit spending in the U.S. and
other nations. Global financial markets return to normal credit patterns.
Shifts in the availability & prices of
commodity fuels used in the
electricity sector
Natural gas remains a clear choice for new dispatchable and replacement of coal fired
generation in the early years.
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WECC Scenarios
Scenario One
Description
Direction of Change2
Central Station
Coal/CCS
Large-scale coal-fired power generation in the large megawatt scale needing
transmission connections/with clean carbon sequestration.
-decreasing, no CCS breakthrough
Central Station Gas
Large-scale natural gas-fired generation in the large megawatt scale needing
transmission connections
+increasing due to economic growth
Central Station
Large-scale solar power generation at the megawatt scale needing
transmission connections
+increasing with economic growth
Large-scale wind-powered generation in the megawatt scale needing
transmission connections
+increasing with economic growth
Central Station Nuclear
Large-scale nuclear-powered generation needing transmission connections
-decreasing with plant retirements
Geothermal Power
Central station geothermal needing transmission connections
~relatively same as historic levels
Hydro Power
Expansion/Extension
Continuation or expansion of hydro power generation at existing plants
needing transmission connection
~relatively same as historic levels
Solar Power
Small scale (generally roof top photovoltaic systems) that are located at the
site of consumption
+increasing with economic growth
Distributed Energy
Efficiency
Multiple forms of investment in capital stock which leads to reduced energy
consumption or which support load management
+increasing due to economic growth
Distributed Gas
Small-scale natural gas-fired generation serving loads in a local area which
may or may not require distribution
+increasing with economic growth
Distributed Power
Use of local sources of electric energy storage from stationary or mobile
~relatively same as historic levels
Solar
Central Station
Wind
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WECC Scenarios
Storage
sources
Large Scale Central
Storage
Using a range of technologies and needing transmission connections
~relatively same as historic levels
1
The above listing of sources of power supply options can change over time and with varying degrees depending on conditions in
the scenario. Conditions in the scenario related to changes in economic growth, fuel prices, technological change, industry
regulations (state, provincial, and federal) and public policies will affect the amount of power supplied from the power sources. For
this scenario a sense of the direction of change can be indicated as follows:
2
+ increasing, ++ significant increases, - decreasing, --significant decreases, and ~ no significant change from historical levels.
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WECC Scenarios
Scenario One – Overview of Modeling Parameters
The scenario narrative above is a largely qualitative description of a potential world for the
WECC region over the next 20 years. As part of the TEPPC planning objectives the scenarios
are also to be used to generate alternative transmission plans through modeling study cases
with the Study Case Development Tool and the Network Expansion Model. During 2012 a team
from the SPSG created quantitative modeling inputs to represent the scenarios for use in the
Long-Term Planning Tool (LTPT). Those quantitative representations vary by scenario and the
full detail of this work will be presented to WECC stakeholders during the first quarter of 2013 by
WECC staff. Shown below are some of the key distinguishing model parameters for Scenario
One shown against the Reference Case parameters.
Input Parameters
Units
2032
Reference Value
Scenario 1
Natural Gas
$/MMBtu
$6.58
$10.00
Coal
$/MMBtu
$1.62
$1.62
$/ton
$37.11
$37.11
Geothermal
% below
2012 cost
0%
0%
IGCC w/ CCS
% below
2012 cost
0%
0%
Solar PV
% below
2012 cost
31%
31%
Solar Thermal
% below
2012 cost
25%
25%
Wind
% below
2012 cost
8%
0%
GWh
1,163,526
1,210,159
Fuel & Carbon Costs
Carbon
Capital Cost Reductions
Net Energy for Load
Load
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WECC Scenarios
Input Parameters
Units
2032
Reference Value
Scenario 1
Policy-Driven Load
Reductions
GWh
0
0
Policy-Driven Electrification
GWh
0
0
WECC Net Energy for Load
GWh
1,163,526
1,210,159
Implied Growth Rate,
Unadjusted Load
%/yr
1.5%
1.9%
Implied Growth Rate,
Adjusted Load
%/yr
1.5%
1.9%
Load
MW
198,715
206,685
Policy-Driven Load
Reductions
MW
-4,952
-4,952
Policy-Driven Electrification
MW
0
0
WECC Coincident Peak
MW
193,763
201,733
Implied Growth Rate,
Unadjusted Load
%/yr
1.4%
1.8%
Implied Growth Rate,
Adjusted Load
%/yr
1.2%
1.6%
Coincident Peak Demand
LOAD NUMBERS SHOWN ARE DRAFT AND NEED TO BE REVIEWED ONCE INPUTS
ARE FINALIZED
Renewable Goals
State RPS
% of Load
Energy
Current state
policies
Current state
policies
Federal RPS
% of Load
Energy
none
none
In-state RPS Requirement
% of RPS
Current in-state
requirement preferences
applied to RPS
Page 27 of 109
Current in-state
preferences
applied to RPS
March, 2013
WECC Scenarios
Input Parameters
Units
2032
Reference Value
requirements
Page 28 of 109
Scenario 1
requirements
March, 2013
WECC Scenarios
Scenario One - Policy Themes
The chart below indicates how policy areas might influence the context in which energy related
decisions are to be made within scenario one. The indicators on the charts will also be used to
indicate changes from the common case assumptions, which will be the basis for WECC
quantitative modeling. The common case assumptions should be thought of as a world, which
naturally extrapolates from current conditions with no extraordinary changes.
Key: ‘++’ = Most aggressive; ‘+’=aggressive ; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ =
neutral
Policy Categories
Scenario 1: Focus on
Economic Growth
Notes
High need driven by
economic growth.
+ means:
Greenhouse Gas
Policies
0
more aggressive reduction
targets
Economic Policies
+
pro-growth policies
Capital Investment
Support
+
more investment support
Renewable Energy
Policies
0
more favorable to renewables
Transmission and
Standards
0
more favorable to investment
and coordinated operations
Federal R&D/
Technology Support
0
more support
Transportation
Policies
0
more support for alt. fuel
vehicles and transport.
choices
Demand-side
Policies
0
more support for demandside investments
Energy Security/
Independence
0
more support for domestic
resources
Policy Theme
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WECC Scenarios
Policy Categories
Scenario 1: Focus on
Economic Growth
Notes
Environmental/
Cultural Policies
0
more protection of
environmental/cultural
resources
Consumer Issues
0
more restrictions on cost
recovery
Fuel
0
more support for enhanced
production
Policies
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WECC Scenarios
Scenario Two: Focus on Clean Energy
Wide-spread Economic Growth in WECC Region with Increasing Standards of Living and
Paradigm Changes in Electric Supply and Distribution Technology
This is a world in which the economic gloom from the 2008-2010 recession turns around
because of effective economic policies and a technological rebound that shows the power of
innovation to restructure markets and industries. Initially tough, but ultimately, correct policy
changes address the damage done to financial markets from the credit crisis and lead to a
properly functioning financial industry that invests in real assets. Some of those real assets are
rebuilding and retooling a cleaner, smarter, more energy efficient and flexible energy
infrastructure as new environmental policies encourage investment which will support long-term
competitive advantages for the nation and states in the WECC region.
Positive developments in the global economy, including growth in trade and further economic
expansion in developing nations, benefit the U.S. overall. After an adjustment period, new
policies address concerns about climate change and the costs of economic externalities.
Investment surges into technological innovations in the energy market and other industries,
creating a greener and solid long-term foundation for job growth. However, there is a zigzag
nature to this greening change as policies to protect the jobs in and the economic power of
fossil fuel industry are also enacted, however with care to address emerging environmental
policies. Innovative products shape a more efficient, interconnected, and intelligent business
environment. Companies in the power industry are also revising their business models to
compete with new entrants and provide new information-intensive services using smart-grid
approaches.
With some periods of policy adjustment and adaptation, the WECC region, home to many of the
emerging industries shaping the world, leads the transformation to a more environmentally
responsible marketplace and enters a new period of long-term growth.
This is a story of persistent long-term change toward a greener and more sustainable power
system. However, the path there has some challenges with financial adjustments within the
power industry and periods of internally inconsistent national energy policies.
Key Scenario Metrics in 2032:
Natural Gas Price = 2032 Reference Case value: $6.58
Cost of Carbon = $100
Policy Adjusted Peak Load Growth Rate* = 1.1% (2032 Ref Case = 1.5%)
Policy Adjusted Demand Growth Rate* =
0.1% (2032 Ref Case = 1.2%)
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WECC Scenarios
* Adjusted for known electrification, DSM and energy efficiency policies included in the modeling
results
Beginning Years: 2013-2017/Steps Toward Building a Foundation for a Modernized Electric
Power System
The big events and issues shaping the electric power sector in the WECC region in early 2012
can be summarized in four key areas: (1) The impact of and recovery from the 2008-2009 credit
crunch and follow-on recession; (2) A growing concern among voters and their representatives
about both the short-and-long-term effects of climate change; (3) A rapidly emerging concern
about the long-term availability and usage of freshwater; (4) The growing investment in
renewable energy technologies to meet renewable portfolio standards (RPS); and (5) Assessing
how implementation of the recent FERC Order 1000 addressing regional planning might play
out.
Taken together, those five issues make players in the electric power industry (investors,
developers, regulators, activists and policy makers) anxious about the shape of the business—
especially the shape of long-term demand growth and where and how to invest. Investors,
including investor-owned utilities, private owners of generation and transmission, and public
power companies can envision the emergence of a cleaner, greener and more efficient system.
They are wary of over investing and concerned with problems with cost recovery. Regulators
want to send the right signals to the market, but are wary of putting rising costs onto consumers
who are likely to resist them. Activists and advocates for protection of the environment seek to
promote balanced financial and regulatory support in order to sustain and accelerate investment
in renewable and clean technologies while mitigating climate change impacts and supporting
economic growth (see Figure 2.1 on the growing competitiveness of solar power).
Elected officials and policy makers want guidance on how to enable the emergence of a more
flexible and robust energy infrastructure, which will be the basis for long-term economic growth.
There are a range of views on how FERC Order 1000 may affect power and transmission
investments and cost allocations generally controlled within state bodies. Legislators and
regulators face a complex challenge: How to continue progress toward a cleaner, efficient and
more sustainable power system without imposing high and escalating energy costs on
consumers and industry (see Figure 2.1 below on the increasing cost competitiveness of solar
power). Plus, this must be accomplished without damaging economic growth or job creation.
Within all of these considerations there is also excitement about the prospect of expanding
economic opportunity by seizing a leadership position in the global clean-technology sector.
Over time, smart investments in emerging technologies raise the prospect of reducing power
cost to customers.
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Figure 2.1: Guess What: Falling Solar Costs, Rising Retail Rates
Unsubsidized Solar Electricity Price v. Commercial Retail Electricity Price (Nominal)
Source: Commercial Rooftop Revolution, Institute for Local Self-Reliance (ILSR), Dec. 2012
As this future unfolds, it becomes possible to manage the tough issues of the early years
because of a return to solid economic growth and the emergence of national political leadership
to address the threat of climate change. Innovative new technologies are decreasing costs and
providing new features and options for consumers and businesses. This does not come easy
because new policies take time to implement and industry players experience an adjustment
period. Between 2013 and 2018, key policies and decisions take shape in an atmosphere of
positive, yet nervous feelings for all participants in the industry, especially investors.
During these early years, the U.S. and global economies confront several fearsome challenges,
including: (1) The environmental damage associated with a warming climate and economic
dislocations associated with extreme weather-related events; (2) The European debt, banking,
and currency crises; (3) Turmoil in the Middle East shaking oil markets and increasing prices
(even though there is no shortage of oil in the world); (4) An ongoing concern about potential
sovereign debt defaults by the U.S and certain European nations; and (5) Persistent
unemployment challenges, coupled with a slow recovery in the housing and real estate markets
that stifles consumer spending, which is still the major driver of U.S. economic growth.
Fortunately, regulatory adjustments within the banking sector ensure that lending and banking
activity is now better aligned with public policy and long-term stable growth.
These myriad problems would normally push other legitimate concerns like climate change,
looming water scarcities and utility infrastructure to the bottom of a legislative list. However,
after Hurricane Sandy’s devastation of the U.S. Eastern Seaboard in 2012 as well as the
drought conditions in the Western U.S., citizens voice concern about the safety of cities, valued
natural resources, agriculture and the quality and stability of essential public infrastructure.
There’s now a willingness to pay more to ensure greater security and reliability in these vital
systems. Political leaders feel emboldened to communicate to voters the tough choices required
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to rebalance incentives in order to grow the economy in a more sustainable direction. This
includes addressing greenhouse gas emissions like carbon and expressing a willingness to
invest in technologies, which mitigate the cost of climate change. Regulators recognize these
concerns and focus on sending accurate price signals to the market in order to spur the
necessary investments.
In the WECC region, states, provinces, and local governments develop the fundamental
groundwork that will eventually pay big dividends for long-term growth and environmental
protection; the region bursts with economic activity, especially in the energy sphere. Examples
include:
1.) Maintaining renewable portfolio standards in order to provide a positive climate for
investment in innovative clean-energy technologies;
2.) Taking the lead on policies required to cap carbon emissions (thereby monetizing those
emissions);
3.) With some federal support, providing tax credits and other benefits to spur electric
vehicle adoption;
4.) Creating and enforcing new rules on water use and safety;
5.) Monitoring and regulating the safe use of new natural gas drilling techniques, reducing
fugitive emissions of carbon in drilling and transportation, and enabling that fuel’s
accessibility;
6.) Regulators working with local utility companies to bring increased efficiency and high
technology into the management of their power systems and lower energy costs for
consumers and businesses; and
7.) Working with businesses in the manufacturing sector to develop jobs as U.S.
competitiveness increases due to lower costs of energy and high levels of innovation.
These actions, coupled with the establishment of a region-wide Energy Imbalance Market (EIM)
in the WECC region, eventually coalesce into a solid foundation that will put the electricity sector
on a more sustainable, cleaner and operationally flexible path. Industry experts praise the
leadership role of companies in the WECC region and advocate their actions as a national
model. Protecting citizens and proper price signaling to investors are key inputs into the thinking
of both energy regulators and policy makers.
During these years, the basic components of the emerging electric energy business are in
place. These components include:
1.) Expanding implementation of smart grid and metering technologies;
2.) Building of renewable energy generation—both wind and solar power systems as well as
advanced geothermal systems—supported by sustained R&D;
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3.) Continued evolution of battery technology to serve both the automotive and distributed
generation industries;
4.) Investment in new information, communications, sensor and control technologies that
will bring more efficient management into the power system;
5.) The expansion of pay-for- performance cost recovery regulation in the power sector that
allow for more win-win business models for consumers and investors; and
6.) Continued investment in energy efficiency and opportunities for distributed generation.
Though changes are put in place, not all companies are prepared to quickly adjust. This leads to
some short-term damage in their financial positions and, in some cases, write-downs and writeoffs of sunken obsolete assets. The financial impacts are spread among key stakeholders as
investors take some losses. Some costs are rolled into utility rates with long-term cost recovery
and some price increases hit consumers. Opposition to rate increases is avoided as consumers
are willing to pay more for what they now view as reasonable costs in light of their support for
addressing environmental concerns. The adjustment to a more sustainable energy market
moves ahead without much rancor. On the whole, growing investments in the energy sector
support economic growth.
The electricity sector struggles with what to do about existing coal and natural gas generation.
Some business and political constituencies support extraction of fossil fuels. Supporters in both
the Eastern U.S. coal states (West Virginia, Ohio, and Pennsylvania) and coal-producing states
in the WECC region develop a national alliance meant to save the domestic coal industry. This
coalition is able to delay the impact of EPA rules on the coal industry and advertise the ability of
new technologies—including the development of carbon capture and sequestration—to keep
one of North America’s most abundant fossil energy resources online. Policy proposals for the
long-term survival of the fossil industry lead to the U.S. government approving the development
of export facilities on the West Coast for coal and LNG exports to China and other Asian
nations. Climate advocates see this policy as a zigzag and one that is inconsistent with the spirit
of the policy changes enacted to address climate change. There is frustration among activists
and some investors with policy makers not seeming to understand the growing benefits of
cleaner fuels, market innovations and investments that are supporting optimization of the power
grid.
Natural gas supporters contend that it is much cleaner than coal, has a smaller carbon footprint,
and that it is much easier to build gas-fired power plants in a wide range of sizes to support the
base-load, peaking, and fast-ramping needs of power companies. Domestic gas supplies are
just as abundant, if not more so, than coal. There’s an expectation that increasing supplies will
restrain increases in natural gas prices even while sustaining some level of exports.
The retirement of old, dirty coal plants makes perfect sense to environmental activists and
natural gas enthusiasts (see Figure 2.1 below for one forecast of possible coal retirements).
Advocates for the renewable energy business also view the retirement of coal plants as
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essential to the replacement of dirty capacity with clean capacity. Growth, technological
advances and economies of scale will continue to lower the cost of renewable generation and
increase its competitiveness across the board. Taken together, the battle for market share
among coal, gas, and renewables suggests lower overall energy costs as they each provide
checks and balances on one other. Wind and solar generators find themselves continually on
alert to find ways to lower their costs.
Figure 2.2: Announced and Projected Coal Retirements by NERC Region
Coal plant retirements may be of little consequence in the WECC region and thus most new
generation will be built to meet demand growth.
Source: Potential Coal Plant Retirements: 2012 Update, The Brattle Group, Oct. 2012
During these early years, the nuclear power industry maintains a low public profile with only a
modest level of lobbying for additional R&D funding. Concerns about safety, long-term waste
disposal, and the impact of Japan’s Fukushima Daiichi plant meltdown make investors and
policy makers quite risk averse about nuclear power. Though new plant designs, e.g. thoriumfueled molten salt reactors, appear promising, only investments by power companies in the
Southern U.S. keep the industry in business. Few utility CEOs will publicly commit to nuclear
without significant government guarantees and financial support, including recovery of
investment costs during construction.
In both the 2014 and 2016 national election cycles, polls of American voters show consistent
political support for a more progressive energy future. Job growth potential, export market
opportunities, and private investment in the underlying new energy technologies sustain a
centrist political approach that spurs innovation and commercial development. Federal, state,
and provincial government policies push the expansion of renewable energy investment and
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R&D. Consumers accept a new value proposition based on previously externalized costs being
included in planning, decision making and power rates. With subtle, but strong, reminders from
large damaging storms and other climate related events, the public accepts the proposition that
climate change must be addressed. This is evident in the growing electrification of the
automotive and transport sectors.
By the 2016 U.S. election cycle, economic recovery nationally and in the WECC region is on
solid ground. Growing tax revenues have strengthened state coffers and housing markets are in
full recovery, much of it driven by more urban infill building.
Middle Years: 2018-2022/Tension Passing Through the Inflection Point
Toward Sustainability
Policy change in the energy industry is never a good thing for everyone, especially for those
invested in the past or in maintaining the status quo. Policy makers and, to a growing extent, the
public understand the need to make near-term decisions that support long-term change. The
central question is this: Who is going to pay for it? Or, how do we all pay for it? The solution
turns out to be an approach based on sharing the pain in order to minimize the impact of a
boom-bust cycle.
Investment in new energy infrastructure is needed to support a more efficient (thus cheaper),
reliable, resilient and cleaner base for the economy. At the same time, some large investments
from the past are made obsolete. It is not politically feasible to place the whole cost of making
the transition on those companies that had made legitimate energy investments to serve the
nation. With the boom there is also a bust for some.
State and federal energy policy makers and regulators struggle with how to distribute the cost
and rate impacts of the energy market transition taking place. Federal agencies are careful not
to extend their power too far into local rate setting, but want the expected cost-saving benefits of
a more efficient, coordinated and more regional power system captured. State governors and
regulators also want cost savings, but also wish to capture in-state economic development
opportunities and keep power rates moderate to support job growth. With all of this, comes a lot
of work to manage the financial issues in the energy market transition.
The energy industry manages to muddle through some financial challenges with support from
regulators and policy makers who soften the impact of the adjustments needed. Combinations
of refinancing, long-term rate recovery, tax breaks, and rate increases are used in various states
to make the deals needed to smooth the path toward a sustainable energy sector. In most
cases, rate increases are put in place without shocks.
In contrast to this downward trend, there is expansion in areas such as: (1) Smart meters and
smart-grids; (2) Wind and solar plants (including some CSP plants capable of meeting reliability
needs) with new storage technologies; (3) Flexible natural gas plants used to balance power
systems in meeting reliability; (4) Electric vehicle charging stations; and (5) A transformation of
the power grid that enables more coordination between distribution-level and transmission-level
operations.
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In light of the earlier setbacks for U.S. car manufacturers in the electric vehicle market, most
observers did not anticipate such tremendous success in the hybrid vehicle market. But with the
price of hybrid and all-electric vehicles declining due to ramped-up production and improved
battery systems technology that extend vehicle range, a positive feedback loop of customer
satisfaction accelerates sales and overall market penetration. Hybrids sales achieve 30%
market share for all vehicles sold in North America by 2020. With EPA CAFE standards for lightduty vehicles still expected to come online by 2025, forecasts are that all-electric and gasoline
hybrids will achieve a combined 50% share of the new vehicle market by then.
Electric power companies welcome a new wave of investment in heavy-duty and long distance
vehicles even though few had expected the size of the uptick in demand growth from the
transportation market. Increased profits also help U.S. automakers rebuild both their financial
base and their manufacturing assets for the long term. What’s good for General Motors is once
again good for America.
The U.S. is not alone in pursuing investments that will change electric power markets. Other
nations in Europe and Asia are also on the bandwagon seeking to generate jobs, investments
and competitive exports. Policies to address climate change are common in the largest
economies in line with global commitments to address greenhouse gases. U.S. leadership plays
an encouraging role in a global implementation of clean-tech investments with financial as well
as policy support.
Another trend being shaped by policy and energy realities is the reduction in urban sprawl.
Urban and inner-suburban land development contributes to a more efficient economic structure
for the nation. Lifestyles, which embrace the use of public transportation, car sharing, biking,
and just plain old walking, are no longer seen as exceptional.
The increase in demand growth benefits the power sector and makes the drive toward meeting
renewable portfolio standards easier. It’s putting the “wind in the blades” of wind generators.
Solar companies, builders of distributed power systems, and independent power networks all
experience growth in sales. This leads to a more distributed and smarter power system.
Consumers experience the emergence of a power system in which a wider range of prices are
charged for differing levels of energy services. Prices paid to recharge cars may differ from
location to location or at different times of the day. The unfolding and full deployment of
information, communications, sensor and control technologies allow demand side resources to
play a much larger role in ensuring reliability. Power from greener sources is easier for
consumers to access by choice.
During these years the U.S. economy hits its stride. States and Provinces in the WECC region
are in full recovery mode. States and Provinces with strong positions in mining, timber,
agriculture, and energy lead the way. As incomes rise, consumers start to purchase big-ticket
appliances, televisions (including some relatively energy-intensive 3-D sets), and cars with
greater frequency. Some of these purchases help to put a cleaner and greener U.S. economy
into place, but the prosperity also causes some increased use of electricity.
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Extensive use of rooftop solar systems is key to this movement. Electronic and mechanical
devices are now embedded with smart communications and management technology to allow
various modes of use, many with energy efficiency as a key choice. Making smart choices
becomes a fabric of the social environment as people share and exchange ideas and
experiences. These shifts contribute to job growth in the economy (see potential categories of
new job growth in Table 2.2).
Table 2.2: Description of Brookings-Battelle Clean Economy Categories
(Energy, Energy Efficiency and Renewables)
Category/ Segment Name
Description
Appliances
Energy-efficient appliances used for cooking, heating, cooling
and various consumer and industrial applications
Battery Technologies
Make or develop batteries and other energy storage technologies
Electric Vehicle Tech.
Make electric/hybrid vehicles, or supply them with specialized
parts
Energy-saving Building
Materials
Provide building insulation and weatherization services or make
building materials that save energy
Fuel Cells
Make or develop technologies that convert hydrogen into fuel
Green Architecture &
Construction
Provide architectural or engineering services for building projects
that meet stringent environmental standards
HVAC and Building
Controls
Make energy efficient temperature control equipment or audit
buildings for energy efficiency
Lighting
Make lighting that meets federal Energy Star standards for
efficient lighting
Professional Energy
Services
Provide certified energy efficient professional services or
services related to energy research or energy efficient consulting
and design
Public Mass Transit
Provide multi-passenger transportation to the public or school
children, displacing less efficient single-passenger vehicle travel
Smart Grid
Provide services related to electricity measurement and control
Biofuels/Biomass
Produce or develop energy from biological or agricultural
materials
Geothermal
Generate or develop technologies that convert heat from the
earth’s core into energy or facilitate the use of such energy
Hydropower
Generate or develop power from dammed water
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Category/ Segment Name
Description
Renewable Energy Services
Provide professional or construction-related services to manage
or implement renewable energy projects
Solar Photovoltaic
Produce, develop or install technologies that convert sunlight into
electricity
Solar Thermal
Produce, develop, or install technologies that capture and
distribute heat from the sun
Waste-to-Energy
Produce or develop technologies that convert waste to energy
Wave/Ocean Power
Produce or develop technologies that convert naturally flowing
water into energy
Wind
Produce, develop, or install technologies or specialized
components of those technologies that convert wind into energy
Source: “Sizing the Clean Economy: A National and Regional Green Jobs Assessment,”
The Brookings Institution, Metropolitan Policy Program, July 31, 2011
http://www.brookings.edu/metro/clean_economy.aspx
Breakthroughs in electric vehicle technology contribute to an overall economy driven by
improvements in technology. Technology, particularly information and communications, bores
even deeper into most products and services across the economy. In the power sector, smartgrid technology revolutionizes the energy services market, tying in smarter equipment and
appliances, and allowing for a more efficient and flexible power grid. Unsurprisingly, smart grids
lead to smarter energy customers. This includes industrial companies where energy cost saving
can drop to the bottom line and increase their competitiveness. The variable output from wind
and solar generators becomes much easier to manage and integrate with flexible gas-fired
reserves, efficient regional energy markets, geographically and technologically diverse
renewable energy, and a smarter power grid encompassing both transmission and distribution
systems.
Underlying these consumer choices are a range of institutional changes in the electric industry
in the WECC region. A federal policy for carbon pricing is now in effect along with a renewable
energy portfolio standard for the nation. Federal policy now aligns with internationally agreedupon goals. Carbon prices range from $50 per ton toward of $100 per ton. Incentives for clean
and energy-efficient operations in industry have remade some of the tax code.
The tension and dynamics in the emerging energy market make for a trade-off between costs
and features (with prices now increasingly signaling full life-cycle costs) and more progressive
views of energy. Should some consumers and special groups be protected from some prices
and market effects? Policy, nevertheless, leans toward change. Economic growth allows some
cushioning of impacts on some parties through the use of rebates, tax breaks and financial aid.
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The new long-term model for the power system begins to settle firmly into place during these
years. It provides an effective and efficient mix of elements, including: (1) DC transmission; (2)
Smart grid and metering systems; (3) Integrated distributed and renewable generation with
storage and flexible gas-fired reserves; (4) Independent power networks serving some large
customers, local communities and industrial parks; (5) Load management enabled by
connection to final consumers getting real-time price signals; (6) A WECC-wide EIM system
using sub-hourly scheduling and coordination that is working well despite some occasional
“learning” opportunities when unexpected weather or other demand-related anomalies
conditions occur; and (7) Cyber investments in the power grid that support national security.
Forecasted water and air pollution problems for shale gas development prove mostly misplaced
as monitoring and sensing applications emerge and are backed by strong regulatory
enforcement. Protecting the air and water does reduce the number of sites deemed appropriate
for drilling and strong regulatory enforcement does impose exploration and development costs
that increase the price of natural gas. This increase in price is accepted as it reflects the true
costs of safely developing gas fields. Large integrated oil and gas companies bring rationality to
the gas market after a short-term boom-and-bust cycle wipes out smaller unstable players. On
balance, the reduced need for gas driven by advances in low carbon technologies and the
increased costs of gas exploration and development results in natural gas prices in a moderate
and competitive range. It allows natural gas to maintain its foothold in the power generation
markets where it plays an important balancing function as the amount of intermittent renewable
generation increases.
The evolution of the power system is not without problems. It’s not really carbon free, so the
system fails to completely address long-term climate concerns effectively. Even if it’s easier to
manage, energy does not come cheap for all and protecting low-income customers requires
special attention as the incidence of increased electricity rates is regressive. In addition, large
penetrations of utility-scale wind and solar technologies have some impacts on the environment
even with aggressive mitigation practices. Some wind generation impacts bird migration
adversely while some solar farms disturb delicate desert ecosystems. Electricity generation
must use less water since the security of clean water supplies evolves into a national concern
because of persistent drought conditions, which, incidentally, lower hydro power generation.
Land-use issues make for intense court battles. State, provincial, and tribal governments must
address all of these issues. State and federal courts must decide whether and how to assign
damages to carbon emitters, including electric utilities, in response to climate change class
action suits seeking payments for environmental damages. A rapid expansion of natural gas use
is also restrained by the need for supporting investments in pipelines, storage and other related
infrastructure to deliver the gas. In some cases, there are also challenges with integrating gas
with power generation due to contracting issues and natural gas pricing policies.
With the return to stable economic growth, coal supporters suggest that successful pilot projects
demonstrating the safety and effectiveness of carbon capture and sequestration (CCS) should
slow the phase out of existing coal-fired plants and encourage new plants to be sited and built.
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Environmental advocates show up at public hearings with evidence to the contrary, especially
relating to long-term containment risks of sequestered carbon emissions. Activists argue for the
environmental dispatch of power, which would make coal plants the last resort. Low natural gas
prices challenge coal advocates as they watch power companies add new gas generation,
sometimes to manage peak demand from the transportation sector. Variations in demand from
the transport sector cause peak demand to shift and the need for flexible ramping of resources
to increase, particularly when combined with unanticipated turns in daily weather patterns.
Power companies have a leading role in the electrification of the U.S. economy and make
moves to restructure their companies to remain viable, eyeing expansion of their transmission
grids and power management systems in order to share resources more effectively. New
subsidiaries and service arms now serve growing demand. Finding the right mix of assets while
responding to tighter environmental standards can be problematic.
In addition, rising customer expectations driven by real-time communications increase the
pressure for change on the industry. The power system assimilates Moore’s Law—the long-true
rule of thumb that the number of transistors that can be placed inexpensively on an integrated
circuit doubles approximately every two years—and drives cycles of updating and the turnover
of services and applications. Over time, the standards for smart grid applications developed by
the National Institute of Standards and Technology (NIST) guide a myriad of new investments
as they are reported and implemented by a variety of standards-setting bodies, including
WECC.
A series of persistent weather-related disasters coupled with international pressure to address
greenhouse gas concerns provide the U.S. president and Congress with the political impetus to
develop national climate change adaptation and carbon reduction goals. In following rounds of
global negotiations, developing nations make binding commitments, which they now believe
they can make with improved technologies that will not negatively impact their economic growth
(See Figure 2.3 below for an overview of climate change concerns expressed internationally).
Those commitments contribute to global growth in clean technology investments and potential
export markets for U.S. companies.
Figure 2.3: The World Bank on Climate Change
Despite commitments so far for cutting emissions, the world still needs to adapt to the
unavoidable impacts of climate change

Climate change and increased variability are already affecting many development
sectors –agriculture, water, health, and infrastructure – and will continue to do so in the
coming decades.

Adaptation is at the centre of the World Bank’s support to developing countries as it is
critical to sustaining and furthering development gains in these countries.
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
Poorer nations and communities are likely to suffer the most as they often are
dependent on climate sensitive activities, located in drier and warmer or coastal areas
and have limited institutional and financial capacity.

Despite being widely agreed upon as an important threshold that should not be crossed
in order to avoid dangerous consequences, it now looks increasingly likely that the world
might miss the 2 degree C target.

Research is indicating that there is a significantly higher probability of tipping elements in
the Earth system being activated, with cascading effects around the world. Instead of
incremental change, such (non-linear) dynamics could be disruptive in nature and
inherently difficult to predict.

Adaptation is at the centre of the World Bank’s support to developing countries as it is
critical to sustaining and furthering development gains in these countries.

It will cost an estimated $70-$100 billion per year through 2050 for developing countries
to adapt, according to a World Bank study Economics of Adaptation to Climate Change
(EACC).
Source: http://climatechange.worldbank.org/content/4-degree-warmer-world-we-must-and-canavoid-it-infographic
A coherent U.S. national energy policy translates into legislation with clean energy targets and
renewable portfolio standards. The Canadian government follows suit with its own national
clean energy plan. This Canadian policy change catalyzes research and development in the
renewable energy sector with those companies focused on energy efficiency getting serious
cash injections. Additionally, new environmental agreements ease the siting of generation and
transmission expansion on federal lands. Despite these movements fossil fuel exports from
North America to the rest of the world are at record levels. Natural gas use and prices within
North America also remain moderate with abundant supplies, but used consistent with carbon
reducing policies.
Final Years: 2023-2033/The Lumpy Implementation of the Advanced and
Clean Technology Power Industry
The impacts of some breakthrough technologies in electricity generation make for some
interesting power industry dynamics. The long-awaited, “easy-to-fuel-and-use” fuel cell comes
online, with most now using renewable energy, advanced electrolysis systems, and
occasionally, natural gas as a feedstock for hydrogen. Fuel cells exist in a wide range of sizes
and for numerous applications, including cars. A few states are now building pilots for advanced
coal-fired generation with safe and reliable carbon capture. On the renewables side, superefficient solar cells now harvest 50% of sunlight. Breakthroughs in storage allow large-scale
renewable projects to operate competitively across the power spectrum on cost and
performance bases. The integration of power generation with transmission and distribution
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systems operates smoothly because of the information and communications capabilities now
built in to generation, transmission and distribution technologies.
Managing peak demands on transmission grids now has aspects that look like high-tech video
games with some attendant emotional shocks for managers as weather conditions change. With
all of this there is now clear and unrelenting movement toward a long-term environmentally
sustainable power system, not only in the U.S., but globally. U.S. leadership in developing clean
technologies boosts the national economy as the nation is the world leader in innovation and
exports.
The ongoing electrification of the U.S. economy matures during these latter years. Growing
integration of the automotive sector with the power sector finds people charging their vehicles
during the day or night, but often with sensitivity to prices communicated via smart systems.
Consumers take so much pleasure operating their vehicles, especially when the fuel monitoring
systems in the vehicles show the net use of a gallon of gasoline with over 100 miles traveled.
Oil prices remain above $100 per barrel due to global demand from developing nations.
An American and Chinese partnership on space-based solar power plants for research
purposes represents a huge R&D investment for the future of clean power. While the plant
ostensibly powers the International Space Station, the research eventually leads to promising
applications for ground-based solar power. Advanced battery storage and fuel cell systems for
the home market gain in popularity for drivers of hybrid electric vehicles. Short-distance DC
power lines interconnecting power generation islands support system operations. Coal
supporters advocate for the benefits of cost-competitive in-situ gas derived from coal, which
leaves some of the carbon in place. Natural gas prices, higher than in years past, are expected
to rise as the industry must try to access more difficult-to-recover reserves.
As the full policy support for movement toward a more balanced, cleaner, smarter energy
infrastructure is put in place, defining a “balanced energy portfolio” evolves into a pressing
issue. Power company executives from across the spectrum of services and assets classes
agree that prices and costs must continue to be balanced with stewardship of the natural
environment. An elevated level of information-intensive customer service is considered part of
the basics of the business. Government and regulators leaders agree with power companies on
improved core services. Providing those services results in the emergence of a modern,
cleaner energy system, but with diverse patterns of energy investments in infrastructure at the
state level.
Moving across states, a wide range of integrated power system assets thrive. Some states
become considerable users of renewable generation, while others have more of a balance with
natural gas. Some states have significant numbers of independent power islands, while others
rely more on energy efficiency with most customers still reliant on the grid. Varying levels of
integration with smart grid systems exist with some power companies having large numbers of
tech-savvy consumer and industrial users of the systems, while others primarily use it to
manage loads in the larger system. The slowness of some public power agencies to invest
explains many of these variations across the country.
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Even with some common features, a one-size-fits-all solution doesn’t quite emerge. WECC
member states and provinces take diverse approaches with urban areas in California and British
Columbia being on the high end of power system development, while rural parts of Washington
State take a simpler approach. In many places, one can find a mix of different methods to meet
energy needs. There are zero-energy and green buildings in many areas. Utility rate programs,
which encourage efficient consumption, vary widely. Some programs provide special rates for
certain kinds of equipment. The WECC transmission smart grid evolves to allow easy importing
and exporting of power between states. This contributes to stable rates across the region. Zero
net-energy regulations in some states support a range of technology options and result in new
homes and some entire neighborhoods becoming models of energy efficient living.
Power industry investors and observers in the press argue for a rationalization (or setting of
clear identifying boundaries) of the industry into distinct business models incorporating:
1.) Power generators (both renewable and traditional);
2.) Energy services providers;
3.) Smart systems providers and integrators
4.) Independent power network owners who incorporate distributed generation;
5.) Demand-side management and energy efficiency companies;
6.) Transmission service companies;
7.) Local distribution service companies; and
8.) Regional conglomerates or holding companies.
Regulators seek to rationalize the industry in order to protect consumers, stabilize increases in
customer bills, guide cooperative efforts, and continue enforcement of the regulations now in
place. Investors are seeking to find stable and secure business models and rational reasons
for mergers and acquisitions. Some policy makers are wondering whether there should be a
continued role for public power. And if so, in what form? All parties in the industry are also
concerned about frequent and disturbing cyber-attacks and security breaches in the power
system. None prove catastrophic, but their regularity is an industry headache.
The short-term benefits to the environment of the shift in the electric power industry are
becoming increasingly evident, even though climate change impacts from historical emissions
have yet to run their full course (likely to take hundreds of years). Local air quality is improving
and energy demand growth is mostly flat.
What is most evident as advanced energy technologies are being implemented is how much
smarter and efficiently energy is being used compared to patterns in, for example, the late
1990s. More energy is being produced in an environmentally sound manner and closer to the
point of consumption. People are smarter about energy prices and values.
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WECC Scenarios
As 2032 comes to a close and the new decade begins to take shape, the four major issues face
energy players in the WECC region include:
1.) Should policy pressure supporting preferences for the clean energy industry dissipate
now that many of the dirtier production practices have disappeared and the clean
technologies are the industry’s standard?
2.) What will happen when the nation’s electric generation base moves to over 50%
renewable power? Should the barriers for efficient power transfer and trading be
removed on a nationwide basis despite States’ rights issues?
3.) How should consumers be protected from price and other risks in the more marketoriented power system? What services are now so basic as to be tantamount to a right
for all consumers?
4.) Will there ever be a way to dramatically and further reduce fossil fuel use on a global
basis since greenhouse gas emissions are still accumulating at a rate that risks severe
climate impacts?
5.) What new utility business models will emerge as the transition from the traditional utility
operating paradigm emerges?
6.) With an increasing reliance on digital technologies, smart grids and electrification of the
transportation and industrial sector, how do we continue to increase power quality,
reliability and protect against cyber-attacks?
New scenarios are needed…
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Scenario Two - Overview by Key Driver
Key Driver
Scenario Summary
The evolution of electricity demand in
the WECC region
The economy recovers and electricity demand growth returns. Improving energy
efficiency and energy management systems. New growth comes primarily from the
transportation sector.
The evolution of electricity supply in the
WECC region
Natural gas-fired power generation expands based on cost and the need for flexible
generation capacity, but is limited by higher carbon prices. Renewable resources
expand supported by policy and higher carbon prices. Coal-fired power is reduced
but not eliminated. New advanced nuclear power systems are considered.
Innovation in electricity supply
technology & distribution systems
Continued innovation in all renewable energy forms and energy storage. Carbon
capture successfully demonstrated.
The course of regional economic growth
in the WECC region
Growth in the early years remains slow, with a pickup in the middle years, followed
by solid growth in the latter years. New industries and strength in traditional
industries of mining and commodities spur job growth. Clearer regulatory policy
sending sound signals for investment.
Changes in the regulation of electric
power systems in the WECC region
Policy changes in support of increasing renewable portfolio standards and caps on
carbon emissions.
Changes in federal regulation affecting
electric power industry
Policy changes to support national renewable portfolio standards and building of
energy infrastructure on federal lands with adequate environmental protections.
Changes in social values related to
energy issues
Voters express strong preferences for environmental sustainability. Consumers
become accustomed to more information and choices in their energy services
usage.
Changes in society’s preferences for
environmental & natural resources
Continued support for sustainable environmental development and stewardship of
natural resources.
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Key Driver
Scenario Summary
Shifts in national & global financial
markets
Eventual stabilization of financial markets following based on wiser economic policy
and growth, which reduces deficit spending. U.S. and global financial markets return
to accommodative credit growth patterns.
Shifts in the availability & prices of
commodity fuels used in the electricity
sector
Shale gas development regulated. Renewable energy costs become more
competitive with fossil fuel-fired energy.
Scenario Two: Form of Power5
Description
Direction of Change
TBD by Model Results
Central Station Coal/CCS
Large-scale coal-fired power generation in the
large megawatt scale needing transmission
connections/with clean carbon sequestration.
+increasing, but with CCS only
Central Station Gas
Large-scale natural gas-fired generation in the
large megawatt scale needing transmission
connections
~same as historical levels, competing
with renewables
Central Station Solar
Large-scale solar power generation at the
megawatt scale needing transmission
connections
+increasing with technology
breakthroughs
5
The above listing of sources of power supply options can change over time and with varying degrees depending on conditions in the scenario.
Conditions in the scenario related to changes in economic growth, fuel prices, technological change, industry regulations (state, provincial, and
federal) and public policies will affect the amount of power supplied from the power sources. For this scenario a sense of the direction of
change can be indicated as follows:
+ increasing, ++ significant increases, - decreasing, --significant decreases, and ~ no significant change from historical levels.
Page 48 of 109
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WECC Scenarios
Scenario Two: Form of Power5
Description
Direction of Change
TBD by Model Results
Central Station Wind
Large-scale wind-powered generation in the
megawatt scale needing transmission
connections
+increasing with economic growth and
new technology
Central Station Nuclear
Large-scale nuclear-powered generation
needing transmission connections
--fast decline due to clean alternatives
Geothermal Power
Central station geothermal needing transmission
connections
+increasing with new technology
Hydro Power
Expansion/Extension
Continuation or expansion of hydro power
generation at existing plants needing
transmission connections
~same as historical levels
Distributed Solar
Small scale (generally roof top photovoltaic
systems) that are located at the site of
consumption
++increasing with new technology and
economic growth
Distributed Energy Efficiency
Multiple forms of investment in capital stock
which leads to reduced energy consumption or
which support load management
++increasing with new technology and
economic growth
Distributed Gas
Small-scale natural gas-fired generation serving
loads in a local area which may or may not
require distribution
+increasing with economic growth
Distributed Power Storage
Use of local sources of electric energy storage
from stationary or mobile sources
++increasing with new technology and
economic growth
Large Scale Central Storage
Using a range of technologies and needing
transmission connections
+increasing with new technology
Page 49 of 109
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WECC Scenarios
Scenario Two – Overview of Modeling Parameters
The scenario narrative above is a largely qualitative description of a potential world for the
WECC region over the next 20 years. As part of the TEPPC planning objectives the scenarios
are also to be used to generate alternative transmission plans through modeling study cases
with the Study Case Development Tool and the Network Expansion Model. During 2012 a team
from the SPSG created quantitative modeling inputs to represent the scenarios for use in the
Long-Term Planning Tool (LTPT). Those quantitative representations vary by scenario and the
full detail of this work will be presented to WECC stakeholders during the first quarter of 2013 by
WECC staff. Shown below are some of the key distinguishing model parameters for Scenario
Two shown against the Reference Case parameters.
Units
2032
Reference Value
Scenario 2
Natural Gas
$/MMBtu
$6.58
$6.58
Coal
$/MMBtu
$1.62
$1.62
$/ton
$37.11
$100.00
Geothermal
% below
2012 cost
0%
10%
IGCC w/ CCS
% below
2012 cost
0%
40%
Solar PV
% below
2012 cost
31%
55%
Solar Thermal
% below
2012 cost
25%
45%
Wind
% below
2012 cost
8%
17%
Load
GWh
1,163,526
1,210,159
Policy-Driven Load Reductions
GWh
0
-250,171
Policy-Driven Electrification
GWh
0
+160,000
Input Parameters
Fuel & Carbon Costs
Carbon
Capital Cost Reductions
Net Energy for Load
Page 50 of 109
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WECC Scenarios
Input Parameters
Units
2032
Reference Value
Scenario 2
WECC Net Energy for Load
GWh
1,163,526
1,119,988
Implied Growth Rate,
Unadjusted Load
%/yr
1.5%
1.9%
Implied Growth Rate, Adjusted
Load
%/yr
1.5%
1.1%
Load
MW
198,715
206,685
Policy-Driven Load Reductions
MW
-4,952
-50,365
Policy-Driven Electrification
MW
0
+18,265
WECC Coincident Peak
MW
193,763
174,585
Implied Growth Rate,
Unadjusted Load
%/yr
1.4%
1.8%
Implied Growth Rate, Adjusted
Load
%/yr
1.2%
0.1%
Coincident Peak Demand
LOAD NUMBERS SHOWN ARE DRAFT AND NEED TO BE REVIEWED ONCE INPUTS ARE FINALIZED
Renewable Goals
State RPS
% of Load
Energy
Current state
policies
Current state
policies, increased
by 50%
Federal RPS
% of Load
Energy
none
15% minimum RPS
In-state RPS Requirement
% of RPS
Current in-state
requirement preferences
applied to RPS
requirements
Page 51 of 109
No preferences for
in-state resources
March, 2013
WECC Scenarios
Scenario Two - Policy Themes
The chart below indicates how policy areas might influence the context in which energy related
decisions are to be made within scenario two. The indicators on the charts will also be used to
indicate changes from the common case assumptions, which will be the basis for WECC
quantitative modeling. The common case assumptions should be thought of as a world, which
naturally extrapolates from current conditions with no extraordinary changes.
Key: ‘++’ = Most aggressive; ‘+’=aggressive ; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ =
neutral
Policy
Categories
Policy
Theme
Scenario 2:
Focus on Clean Energy
Deep, binding GHG
reduction targets in
response
Notes
+ means:
to int’l treaty.
Greenhouse Gas
Policies
++
more aggressive reduction
targets
Economic
+
pro-growth policies
Capital Investment
Support
+
more investment support
Renewable Energy
Policies
+
more favorable to renewables
Transmission and
Standards
+
more favorable to investment
and coordinated operations
Federal R&D/
Technology
Support
+
more support
Transportation
Policies
++
more support for alt. fuel
vehicles and transport.
choices
Demand-side
Policies
++
more support for demandside investments
0
more support for domestic
resources
Policies
Energy Security/
Independence
Page 52 of 109
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WECC Scenarios
Policy
Categories
Policies
Environmental/
Scenario 2:
Focus on Clean Energy
0
more protection of
environmental/cultural
resources
–
more restrictions on cost
recovery
Cultural Policies
Consumer Issues
Fuel
Notes
––
Page 53 of 109
more support for enhanced
production
March, 2013
WECC Scenarios
Scenario Three: Focus on Short-Term Consumer Costs
Narrow and Slow Economic Growth in the WECC region with Stagnating Standards of
Living/Evolutionary Changes in Electric Supply and Distribution Technology
This is a world in which the failure to regulate the financial sector coupled with inadequate policy
choices exacerbate the detrimental impacts of the 2008-2009 trifecta of a credit crisis, the burst
housing bubble, and massive government deficits. Economic growth in the United States,
including the Western region, is restrained for two decades. Similar to the long-term doldrums,
which hit the Japanese economy starting in the 1990s, a large overhang of debt constrains both
lending in the broader economy and government investment initiatives to spur growth. Increases
in taxes, failure to invest in the future and worsening wealth disparities also play a role in
slowing growth. Societal values are shaken by a loss of confidence in financial institutions and
in the regulation of these institutions. Even as values like protection of natural resources remain,
they are balanced against economic costs in times when scarcity is felt in society.
States hit particularly hard by the housing crisis in the Western region are very slow to recover
as they dig out of years of real estate overcapacity. Unemployment remains above historical
levels, keeping consumer spending on a slow growth trajectory. Within the electricity sector, the
slower economic growth discourages power companies in all sectors from taking large risks and
causes most companies to be cautious when investing in and implementing new technologies
and continues delays in transmission investment.
Those technologies that are low risk, proven, and assured of cost recovery proceed at a steady
pace. Low natural gas prices encourage the continued use of traditional power generation
technologies in concert with improving renewable technologies that meet portfolio standards
required by legislators and regulators. Expansion of transmission systems occurs mostly within
states as states focus on self-sufficiency and minimal voluntary power exchanges occurs to
meet system reliability.
Key Scenario Metrics in 2032:
Natural Gas Price = 2032 Reference Case value: $6.58
Cost of Carbon = $0.00
Policy Adjusted Peak Load Growth Rate* = 1.1% (2032 Ref Case = 1.5%)
Policy Adjusted Demand Growth Rate* =
0.8% (2032 Ref Case = 1.2%)
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WECC Scenarios
* Adjusted for known electrification, DSM and energy efficiency policies included in the modeling
results
Beginning Years: 2013-2017/The Doldrums Don’t End
The big events and issues shaping the electric power sector in the WECC region in these years
can be summarized in four key areas: (1) The impact of and recovery from the 2008-2009 credit
crunch and follow-on recession; (2) A growing concern among voters and their representatives
about both the short-and-long-term effects of climate change; (3) A rapidly emerging concern
about the long-term availability and usage of freshwater; (4) The growing investment in
renewable energy technologies to meet renewable portfolio standards (RPS) and (5) Assessing
how implementation of FERC Order 1000 might play out
All together these five issues make investor-owned utility managers nervous about their future
growth opportunities (long-term demand growth, and where and how to invest in new
resources). Activists and advocates for protection of the environment see an ongoing need to
lobby for balanced financial and regulatory support to sustain and accelerate investment in
renewable and clean technologies.
Legislators and regulators are being pushed from two sides: (1) How to continue progress
toward a cleaner and more sustainable power system; and (2) How to mitigate rate impacts for
consumers and industry and prevent slowing economic growth and job creation. As the future
unfolds in this world, low levels of economic growth and a lack of paradigm-changing
technological innovation do not provide much wiggle room to share the benefits normally
available with a more productive economy. Over the longer term societal values will lean toward
protecting and sustaining natural resources and absorbing some costs in order to get the
benefits. RPS requirements are maintained in the power industry, but not increased, as
environmental concerns are tempered in light of ongoing economic difficulties.
A strong signal of the slow pace at which economic growth recovers in the WECC region
emerges from assessments of the recovery in the hardest-hit housing markets. In California,
Arizona, and Nevada, large-scale overinvestment in housing leads to significant price declines
in home values. Unemployment in those states remains several points above the national
average, hovering around the +10% range. Immigration into the region continues to decline. In
light of declining incomes, consumers must retrench, rebuild savings, and focus on “deleveraging,” much as U.S banks had done. Businesses in many areas of the region cut back as
their sales remain stagnant.
There’s a general sense of cautiousness about long-term investments as the economic
uncertainty persists. Electricity demand growth is flat or barely inching upwards across the
region after steep declines during the deepest part of the recession. States view energy policy
as a tool for stimulating their economies and thus pursue their energy resources with the goal of
facilitating job growth. This pursuit stimulates competition among the states and a preference for
in-state self-sufficiency, and thus many of these growth policies prove ineffective in the long run.
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WECC Scenarios
Despite the dismal economic conditions, activity stirs in the power sector in two key areas: (1) A
limited roll out of smart grid technologies at both the transmission and distribution levels of the
industry; and (2) The steady expansion in cost competitive distributed solar power systems and
wind energy farms. Both regulatory mandates and tax incentives encourage these two
developments. Each one also provides real value in meeting demands for a cleaner and more
efficient (and intelligent) power system. Benefits are real as air quality improves in some areas
and consumers begin to understand how to consume energy more intelligently to save money.
The expanding availability of low-cost natural gas driven by new drilling technology continues
(see Figure 3.1 below). Though there is ongoing apprehension that natural gas fracking
impacts are not completely understood and that natural gas remains a producer of greenhouse
gases when used in power generation, it is much cleaner and has a smaller carbon footprint
than coal. In addition, the current economics encourage use of more gas-fired generation to
replace coal-fired plants. EPA regulations dealing with the cleanup of coal-fired plant emissions
prompt owners of those plants to consider early retirement and reinvestment in natural gas
plants. Though such big investments don’t occur instantly, the emerging trend could lead to a
significant shift in the fossil fuel mix in the power system over the long term. FERC rulings on
cost allocations in the transmission sector also point toward more competition and lower costs.
Certain states, like Montana, because of their access to low-cost natural gas, do become
manufacturing hubs for energy-intensive industries.
Figure 3.1: Long Term Prospects for Natural Gas with Fracking Technology”
“Special Future Energy Issue: Natural Gas,” Popular Science, July, 2011:
With advances in a drilling technique called hydraulic fracturing, or “fracking,” companies can
now profitably extract gas from previously hard-to-reach shale formations. Worldwide gas
reserves of shale gas currently stand at 6,662 trillion cubic feet, the energy equivalent of 827
billion barrels of oil (about 10 times annual global consumption). And that doesn’t include the
gas that is routinely discovered alongside oil in oil fields and that is sure to be found in some of
those yet-to-be-explored deep water basins.
Gas is so plentiful that, in energy-equivalent terms, its price is a quarter that of oil. A gaspowered future could still have some high external costs, though. Fracking can be extremely
hazardous to the local environment. The method uses high-pressure fluids to break open deep
formation in which gas is trapped, and these fluids often contain toxins that might contaminate
ground water supplies.
As rate increases are kept purposely low and with limited ability to innovate, utilities strive to use
the grid more efficiently through low-cost operational enhancements. The cheaper the solution
the better it is for utilities that are focused on short-term costs by their regulators. Coupled with
more stringent reliability standards, utilities choose to extend maintenance cycles. Despite initial
resistance from consumer-owned utilities, the mounting cost pressures associated with reliability
compliance requirements point toward further grid coordination and consolidation of system
management practices.
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WECC Scenarios
Expanding availability, managing costs, and assuring reliability are the touchstones of power
system management, despite the desires of some activists to add to these goals in order to
encourage the movement to a cleaner, and in their view, more sustainable power system.
Shrinking tax revenues and the possibility of higher costs to consumers and businesses during
slow economic times, make some legislators and regulators nervous. However, the majority of
voters consistently support long-term preferences for the conservation and protection of the
natural environment. Cleaner air, in particular, retains high levels of public support even if
somewhat higher costs are required.
Power company managers and investors in power infrastructure seem resigned to a mode of
“back to basics” and getting more use out of existing assets. Managers prefer to defer
investment, taking a wait-and-see mode due to the economic conditions. They want to avoid a
negative downward spiral that could be caused by higher costs from investment and shrinking
demand growth. They prefer to make smart and relatively small investments that allow flexibility
in balancing and trading power.
Wildly unpredictable oil prices due to tensions in the Middle East make conditions for economic
recovery difficult to forecast. Pending political decisions regarding the U.S. federal deficit,
particularly those dealing with long-term debt reduction and tax policy, make for an uncertain
situation. Financial pressures encourage more mergers and consolidation among renewable
energy developers. It’s unclear when either higher growth in power demand will return or
conditions will ripen for further investment, thus arguing for reducing financial risks. Moderate to
low gas prices promote real competition for the expansion of renewables despite portfolio
standards, which can be lowered (as done in New Jersey in 2012 with the approval of new gas
generation in that state). Small-scale and on-site options for energy efficiency, whether in
lighting systems, load management, or improved equipment, also shave tenths of a point off of
long-term energy demand growth.
Middle Years: 2018-2022/Struggling to Get on Track
During this period, with the continued drag on the economy coming from an overhang of debt
and contractions in government spending, growth in energy demand goes completely flat in the
WECC region. This restrains investment across the energy sector and leads to consolidation
and contraction in the clean energy sector. Some states review their RPS standards and reduce
them going forward while accommodating past investments. Power systems in the WECC
region don’t go brown, but the pace of greening is dramatically slowed. Fossil fuel
developments, especially those that support export markets and job creation, are given broad
support. Policy makers are unclear on their policy priorities as a result of the long-term evolution
of the power system. Policy seems to be going slowly in both directions—address climate
concerns when affordable, but develop fossil fuels where profitable.
Electric power providers are getting one consistent message from their customers—cheaper is
better. Any new bells and whistles had better pay off quickly and easily; otherwise they are not
interested. Companies slow their investment in smart-grid applications, especially as
straightforward and easy-to-use applications are not forthcoming. The integration of renewable
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WECC Scenarios
energy technology is also being done with cost factors in mind. This slows development in some
areas as agreements to share the full-systems cost slow regulatory approvals. While this is
occurring, utilities extend the lives of existing facilities as a least-cost option. They are comforted
by national policies that move away from pricing carbon and do not more heavily regulate
greenhouse gas emissions. Policies put in place during the earlier decade are allowed to stand,
but are not added to or aggressively enforced.
The dominant feature defining power markets in the WECC region continues to be stagnant
economic growth. The underlying factors of a slow housing market, state government budgets in
the red, and significantly reduced federal spending continue in this period. High unemployment
restrains consumer spending. Uneven improvements in living standards across the region
persist, as purchases of big-ticket items for the home remain especially low. Pockets of extreme
poverty emerge in the U.S. and Canada, triggering programs to provide low-cost energy, water
and food for the poor. Adverse changes in hydro conditions increase the risks of seasonal
energy shortages as well as price shocks.
Any real progress on reducing carbon emissions happens as a result of more efficient and less
carbon-intensive power systems coming online. Low-cost natural gas is playing an important
competitive role with renewables and serving to put a check on rising power prices. There’s also
increased cooperation and coordination between the natural gas industry and the electricity
transmission sector on both planning and operations. Regulators and politicians remain
sensitive to keeping near-term energy price increases at a moderate level so as not to worsen
economic conditions.
Several states and provinces in the WECC region now show balanced budgets, though with
significantly reduced overall spending. Some states also experience slow, but moderately
improving, job growth; especially those with industries focused on mining and energy
development for exporting power within the region. None of this growth, however, echoes the
employment boom seen between the late 1990s and early 2000s. Much of it is driven by various
types of state support in the energy sector.
Investment capital remains difficult to secure because of fluctuating interest rates (especially
during some years with spikes in inflation), shrinking federal loan supports, or the perceived
credit quality of some investments. Companies defer capital investments until the last possible
moment when conditions assure cost recovery. Since growth in overall power demand is limited,
the pressure to merge and consolidate some parts of the power industry persists.
A limited source of new investment results from the retirement of the very-oldest and mostpolluting coal-fired plants that cannot cost-effectively meet new air quality and emission
standards. Often, regulators seeking to achieve policy goals approve these investments in new
sources of supply. There is hope these investments will provide a stimulus to the economy.
Resource planners, however, look at all options to replace that power including new local or
central station generation and energy efficiency, but what they primarily desire is assured cost
recovery. Other issues like water (with intermittent droughts in the region) and land use also
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affect those decisions. Advocates in those areas remain vigilant in monitoring regulatory
decisions.
Homeowners and small businesses begin to see a small light at the end of the tunnel by 2023.
Household debt loads decline and federal spending increases on a limited basis. A general
belief among consumers that there are ways in which “having less can mean having more”
emerges. Less stuff might equal more personal time. Less personal debt coupled with fewer
credit cards may mean more personal and family financial wellbeing. Less energy use may
mean stable energy bills. Less income for some households means an inadequate diet as well
as an increase in long-term illness. Despite the harsh consequences for some, the “less can be
more” philosophy does find an expression in local and national voting patterns as some people
voice a pronounced preference to cut federal and state spending and to “live within our means.”
This ethic serves to constrain overall economic growth.
Final Years: 2023-2033/Same as it Ever Was
These ten years might be the most historically lackluster for the power industry in the WECC
region. Very little seems significantly different or unrecognizable from what existed a decade
ago. Things seem to be just “rolling along.” This can happen when economic growth rates
range between 1% and 2% and are coupled with sufficient capacity to meet that level of growth
without significant expansion. By 2032, the electric power business remains in standard patterns
of business owing transmission, distribution and generation. Utility managers are operating fairly
low-risk businesses if they control costs. Grid optimization drives transmission decisions.
Centralized decision making about the grid becomes the industry standard. Coordinated
operations become business as usual as there is less overall balkanization within the grid.
Global financial markets remain dangerous for power companies seeking investment capital as
interconnected, sophisticated, and fast-trading capital markets appear difficult to navigate.
Country-level banking crises continue since international standards remain elusive and largely
unenforceable. Derivative-based instruments make financial markets appear unstable and
opaque despite attempts by federal regulators to prevent abuse. Stable and coordinated
economic growth in the global economy exists for short periods, though there is little continuity.
Because of both reliability requirements and compliance concerns, utilities must ensure that
transmission is not underutilized. Generally speaking, there’s now more situational awareness
within the grid. For regulators, a persistent fear of a cyber attack on the grid encourages
focused public investment in technologies that enhance this grid knowledge. There’s also an
increased adoption of load-shifting and demand response enabled by the smart grid and driven
by the integration of renewables. Utilities are pushed to increase coordination and centralize
management of the power grid. Eventually, this leads to the voluntary formation of an Energy
Imbalance Market.
There are now fewer major players in the traditional electric power sector. Large areas of the
grid have been consolidated large areas via mergers. Large investment holding companies also
play a big role as they can manage risk across large portfolios. Public power companies remain,
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WECC Scenarios
but, in many cases, have merged into regional-scale organizations focused on reducing costs.
Foreign owners hold some renewable power companies through significant equity investments.
None of this matters much to the average consumer since they view the industry as rather
unglamorous and staid. Unit prices for power are higher, but usage, in most instances, remains
either lower or manageable and is of little concern to most consumers.
Power prices continue in a stable zone with small but predictable increases, but the focus on
short-term costs has run its course. Deferred maintenance and failure to invest in infrastructure
that would have improved long-term cost reduction opportunities now come to a head.
Consumers face the situation of accepting increased bills to finance long-term investment or
permanently damaging U.S. competitiveness in the world market.
The off-grid or informal power sector offers some interesting, though uncomplicated, lessons.
Distributed generation models shift risks and slowly increase customer participation. These
models consist of using proven and reliable distributed generation systems in isolated grids that
have well-engineered back-up systems. DG users are positioned in activities—small office parks
and vacation properties—where short-term outages do not have catastrophic impacts. DG
systems now compete on a cost basis with grid-connected power.
Fossil fuel use in the energy sector, including electric power and transportation, is
proportionately lower than two decades earlier. The growing usage of hybrid-electric vehicles in
the automotive market leads to a fall in gasoline demand. Legislators continue to use energy
policy as a means of stimulating state economies. They mandate energy efficiency measures
and demand response.
Coal-fired generation has shrunk to a smaller share of U.S. power generation, especially in the
WECC region, as natural gas and renewables enlarge their market shares. The more noticeable
capital investments in the industry are in the few large power systems (some wind, some natural
gas, and some solar-powered) replacing retired coal plants. In many cases, the plants have
been built on the old coal plant sites to make use of existing transmission connections.
With the stability of operations in the power sector, state leaders call for a pullback of federal
regulation to allow states to manage their power systems illustrate the emergent belief that there
can be regional cooperation without a federal role. State regulators continue to balance cost
versus reliability as utilities desire the most efficient ways to meet service requirements. Only
those stakeholders suggesting a nationalized power grid see the need for a substantial and
continuing federal role. Increased coordination among balancing authorities is starting to
happen.
During these years American society is in the midst of retooling and reinvesting in its people
resources. The failure to invest during the previous decade coupled with the deferral of essential
maintenance can no longer be ignored. Significant investment is needed to keep the West
competitive. Long-term high unemployment is on the decline as local and national government
policies support re-educating people for the jobs of the future. The value of taking personal
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responsibility for one's life and the environment shared by all is influencing policies in many
areas. Local solutions to many problems are highly valued.
Public pressure on the power sector continues to come from advocates and activists concerned
about the long-term impacts of climate change. The U.S. remains a leading global emitter of
greenhouse gases due to industry and the continued use of natural gas in the power generation
sector. A much larger biofuels sector faces scrutiny as full life-cycle analyses start to question
the sector’s purported carbon neutrality and overall impact on water usage.
Investors in the remaining coal-fired and gas-fired plants consistently highlight the low cost of
fossil fuel generation as well as the use of the best available technologies that result in less air
pollution (see Figure 3.2 below on long term progress in making coal less polluting). They also
point out that lower power costs support economic growth and help the U.S. and Canada
maintain energy-intensive industries like automobile manufacturing, which is returning to North
America from BRIC6 countries because of rising energy costs globally.
Figure 3.2: “Defying the Odds: Virginia Brings a New Coal-Fired Plant
Online”
Source: “Defying the Odds: Virginia Brings a New Coal-Fired Plant Online,”
Public Utilities Fortnightly, December 2012
As 2032 comes to a close and the new decade officially begins to take shape, there are four
pressing questions facing WECC energy markets in this world:
1.) What’s the right balance between reliability and cost?
2.) How much longer can concerns about cost and reliability be more important than
concerns about climate change?
6
Brazil, Russia, India and China
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3.) When and how quickly should the U.S. retire natural gas plants that are now the largest
emitters of greenhouse gases in the power sectors (having now equaled or surpassed
the declining coal market)?
4.) What kinds of generation should be built to support the next build out of the power
system? Are carbon sequestration or other technologies mature and reliable enough to
address climate change?
New scenarios are needed….
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Scenario Three - Overview by Key Driver
Key Driver
Scenario Summary
The evolution of electricity demand
in WECC region
Combination of high unemployment and decline in incomes means that electricity demand
remains stagnant over the 20-year period.
The evolution of electricity supply
in the WECC region
Coal-fired plants phased out over the duration of the scenario with natural gas taking its place. A
balanced, portfolio approach to energy supply takes hold.
Innovation in electricity supply
technology & distribution systems
Smart grid technology developed in order to support industry goals of managing costs and
assuring reliability.
The course of regional economic
growth in the WECC region
WECC states and provinces suffer from high unemployment and decline in incomes. Most still
feeling the long-terms effects of the credit crunch and the housing crisis. Increased pockets of
poverty.
Changes in the regulation of lectric
power systems in the WECC region
With reductions in the overall electricity demand, regulatory bodies take a hands-off approach to
the power industry. Tax breaks and financial incentives for renewables eliminated due to
maturation of the sector.
Changes in federal regulation
affecting electric power industry
Both FERC and EPA develop policies that encourage the industry to transition from coal to
natural gas and other renewables.
Changes in social values related to
energy issues
Political unrest in the Middle East drives public’s desire to reduce exposure to Middle Eastern oil
and find other, more secure, sources of power.
Changes in society’s preferences
for environmental & natural
resources
Public pressure on the power industry forces companies to deal with carbon emissions in a proactive manner. With little capital available, companies must use low-cost efficiencies to reduce
emissions from coal-fired plants.
Shifts in national & global financial
markets
Credit at a premium as small and mid-sized enterprises cannot access capital through the
banks. Highly volatile financial and banking sectors across the globe.
Shifts in the availability & prices of
commodity fuels used in the
electricity sector
By 2031, fossil fuel usage much lower. Increase in the number of electric vehicles means
decrease in gas usage. Coal prices decline due to plant retirements. Lowered natural gas prices
spur increased use.
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Scenario Three: Form of
Power
Description
Direction of Change
Central Station Coal/CCS
Large-scale coal-fired power generation in the large megawatt scale needing
transmission connections/with clean carbon sequestration.
~no change from historic levels due to
economic conditions
Central Station Gas
Large-scale natural gas-fired generation in the large megawatt scale needing
transmission connections
++increasing as cheapest source of
power
Central Station
Large-scale solar power generation at the megawatt scale needing transmission
connections
-decreasing due to lack of new
technology and slow economy
Large-scale wind-powered generation in the megawatt scale needing
transmission connections
~maintains relative position
Large-scale nuclear-powered generation needing transmission connections
~maintains relative position with
extensions
Central station geothermal needing transmission connections
~maintains relative position
Hydro Power
Expansion/Extension
Continuation or expansion of hydro power generation at existing plants needing
transmission connections
~maintains relative position with
extensions
Distributed Solar
Small scale (generally roof-top photovoltaic systems) that are located at the site
of consumption
+increases due to local initiatives
Distributed
Multiple forms of investment in capital stock which leads to reduced energy
consumption or which support load management
+increases due to local initiatives
Small-scale natural gas-fired generation serving loads in a local area which may
or may not require distribution
+increases due to local initiatives
Use of local sources of electric energy storage from stationary or mobile sources
+increases due to local initiatives
Solar
Central Station
Wind
Central Station
Nuclear
Geothermal
Power
Energy Efficiency
Distributed
Gas
Distributed
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Power Storage
Large Scale
Using a range of technologies and needing transmission connections
~relatively same with no innovation
Central Storage
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Scenario Three – Overview of Modeling Parameters
The scenario narrative above is a largely qualitative description of a potential world for the
WECC region over the next 20 years. As part of the TEPPC planning objectives the scenarios
are also to be used to generate alternative transmission plans through modeling study cases
with the Study Case Development Tool and the Network Expansion Model. During 2012 a team
from the SPSG created quantitative modeling inputs to represent the scenarios for use in the
Long-Term Planning Tool (LTPT). Those quantitative representations vary by scenario and the
full detail of this work will be presented to WECC stakeholders during the first quarter of 2013 by
WECC staff. Shown below are some of the key distinguishing model parameters for Scenario
Three shown against the Reference Case parameters.
Units
2032
Reference Value
Scenario 3
Natural Gas
$/MMBtu
$6.58
$6.58
Coal
$/MMBtu
$1.62
$1.62
$/ton
$37.11
$0.00
Geothermal
% below 2012
cost
0%
0%
IGCC w/ CCS
% below 2012
cost
0%
0%
Solar PV
% below 2012
cost
31%
15%
Solar Thermal
% below 2012
cost
25%
12%
Wind
% below 2012
cost
8%
0%
GWh
1,163,526
1,118,518
Input Parameters
Fuel & Carbon Costs
Carbon
Capital Cost Reductions
Net Energy for Load
Load
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Input Parameters
Units
2032
Reference Value
Scenario 3
Policy-Driven Load Reductions
GWh
0
0
Policy-Driven Electrification
GWh
0
0
WECC Net Energy for Load
GWh
1,163,526
1,118,518
Implied Growth Rate, Unadjusted
Load
%/yr
1.5%
1.1%
Implied Growth Rate, Adjusted Load
%/yr
1.5%
1.1%
Load
MW
198,715
191,023
Policy-Driven Load Reductions
MW
-4,952
-4,952
Policy-Driven Electrification
MW
0
0
WECC Coincident Peak
MW
193,763
186,070
Implied Growth Rate, Unadjusted
Load
%/yr
1.4%
1.0%
Implied Growth Rate, Adjusted Load
%/yr
1.2%
0.8%
Coincident Peak Demand
LOAD NUMBERS SHOWN ARE DRAFT AND NEED TO BE REVIEWED ONCE INPUTS ARE
FINALIZED
Renewable Goals
State RPS
% of Load
Energy
Federal RPS
% of Load
Energy
In-state RPS Requirement
% of RPS
requirement
Current state
Current state policies policies, reduced by
50%
none
none
Current in-state
Current in-state
preferences applied preferences applied
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Input Parameters
Units
2032
Reference Value
Scenario 3
to RPS requirements to RPS requirements
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Scenario Three – Policy Themes
The chart below indicates how policy areas might influence the context in which energy related
decisions are to be made within scenario three. The indicators on the charts will also be used to
indicate changes from the common case assumptions, which will be the basis for WECC
quantitative modeling. The common case assumptions should be thought of as a world, which
naturally extrapolates from current conditions with no extraordinary changes.
Key: ‘++’ = Most aggressive; ‘+’=aggressive ; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ =
neutral
Policy
Categories
Scenario 3:
Focus on Short-Term
Consumer Costs
Notes
Slow growth leads to hard
choices about policy goals.
+ means:
Greenhouse Gas
Policies
–
more aggressive reduction
targets
Economic
0
pro-growth policies
Capital Investment
Support
0
more investment support
Renewable Energy
Policies
–
more favorable to renewables
Transmission and
Standards
0
more favorable to investment
and coordinated operations
Federal R&D/
Technology Support
–
more support
Transportation
–
more support for alt. fuel
vehicles and transport.
choices
Demand-side
Policies
0
more support for demandside investments
Energy Security/
Independence
Policies
0
more support for domestic
resources
Environmental/
–
more protection of
Policy
Theme
Policies
Policies
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Policy
Categories
Scenario 3:
Focus on Short-Term
Consumer Costs
Notes
environmental/cultural
resources
Cultural Policies
Consumer Issues
+
more restrictions on cost
recovery
Fuel
+
more support for enhanced
production
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Scenario Four: Focus on Long-Term Societal Costs
Narrow and Slow Economic Growth in the WECC region with Stagnating Standards of
Living/Paradigm Changes in Electric Supply and Distribution Technology
Despite uneven economic growth across the western Unites States and Canada, this world
experiences a fundamental shift in the usage and generation of electricity. Economic growth is
slowed by constraints on government spending and persistent problems in the capital markets.
Sufficient government support for developing new energy technologies encourages further
private investment that lead to significant breakthroughs. Technological advances in areas
indirectly related to electric energy, such as information and communications, material science,
robotics nevertheless feed change in the power industry. The new technology picks up
momentum because of innovative features and lower costs, which drive growing rates of
adoption. Energy Efficiency as well as Demand-Side Management help to drive the shifts seen
in this world. States and companies in the WECC region play a leading role in this
transformation demonstrating the effectiveness of the new applications. Support for this
transition also comes from voters consistently expressing values in support of a cleaner and
healthier environment.
Consumers are willing to pay for cleaner and more environmentally sustainable products
because they see the benefits in improved health and lifestyles, which don’t require
exceptionally higher spending as many new technologies are very cost competitive and highly
efficient. The lagging effects from the 2008-2009 credit crises and housing bubble, higher and
more volatile oil prices, and some poor national policy choices plague the U.S and the global
economy, allowing only short periods of sporadic growth. Despite these economic troubles, the
transformation of the U.S. energy industry, through the leadership of western states, becomes a
bright spot for the nation over the ensuing two decades.
Key Scenario Metrics in 2032:
Natural Gas Price = $5.00
Cost of Carbon = $75.00
Policy Adjusted Peak Load Growth Rate* = 0.4% (2032 Ref Case = 1.5%)
Policy Adjusted Demand Growth Rate* =
0.0% (2032 Ref Case = 1.2%)
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* Adjusted for known electrification, DSM and energy efficiency policies included in the modeling
results
Beginning Years: 2013-2017/The Rise of Smart Energy
The big events and issues shaping the electric power sector in the WECC region in early-2013
happen in four key areas: (1) The impact of and recovery from the 2008-2009 credit crunch and
follow-on recession; (2) A growing concern among voters and their representatives about both
the short-term and long-term effects of climate change; (3) A rapidly emerging concern about
the long-term availability and usage of freshwater because of serious and sustained drought
conditions; and (4) The expanding investment in renewable energy technologies to meet
renewable portfolio standards (RPS)and; (5) Assessing how the implementation of FERC Order
1000 may play out.
The global economy is slowly recovering from the recession (or even depression, some say)
that began in 2008. Debt problems in the United States and Japan, a slowdown in China, and
the ongoing Eurozone crisis remain unresolved and converge in these early years. There is no
reason to hope for or expect a short-term turnaround as policy confusion and conflicts reign.
Investors are risk averse and postpone new hires in the early years, and the recession settles
deeper into the American psyche as about 15% of Americans live in sustained poverty by the
mid-to-late years of this decade.
At the same time, Mother Nature seems as relentless as the economic downturn. What
Hurricane Katrina started in 2005 and Hurricane Sandy repeated in 2012 gains momentum in
2013 and beyond, as North Americans struggle through ever more devastating hurricanes,
floods, and droughts. Desperation turns to cries for action. Movements for the protection of the
environment expand in strength and diversity, gradually forcing the federal government to
accelerate investment in renewable and clean technologies. This provides policy support for
increased R&D investment from government which in turn encourages private investment.
Investor-owned utility managers are nervous about their future opportunities—long-term
demand growth and where and how to invest in new assets. Legislators and regulators
encounter a related and substantial dilemma: how to progress toward a cleaner and more
sustainable power system without concurrently overburdening consumers and industry.
Potential harm to economic growth and job creation makes this challenge complex.
A smart choice for the entire nation is investment that focuses on renewables and carbon-free
solutions. It stimulates economic development and addresses growing concerns about climate
change and, relatedly, energy independence. Even in a depressed economy, investment and
policy that leans toward renewable and carbon-free energy solutions seems prudent and
hopeful.
Most politicians, be they federal, state, or municipal, seek out opportunities to publicize their
support for policies that they believe their constituents view as beneficial to the public good. This
is especially true when the proposed policy promises both well-paying jobs and viable business
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opportunities. Sometimes these policies, however well intentioned, don’t lead to the predicted
outcomes despite significant upfront public expenditures. Over the long term, unintended
consequences lead to budget and cost overruns that often alienate political constituencies and
restrain further risky investments.
On the other hand, federal investment combined with private resources creates initiatives like
the U.S. Department of Defense’s funding of the initial phases of the “networked computer”
experiment in the 1960s. This effort eventually led to what the public would come to know as the
Internet. There were comparable periods of slow economic growth in that period as well, though
not enough to deter investment. This pattern reasserts itself in the energy sector during this
period.
Politicians push public policies funding research and development that advance renewable
energy solutions as well as catalyze both job creation and economic expansion. Energy saving
thermostats, appliances, lighting, and “apps” that allow consumers to monitor their energy
usage and savings with smart and portable devices gain a small, but significant, foothold.
Utilities follow suit, aggressively marketing tools and upgrades that promise future savings or
risk mitigation for ratepayers. Early adopters think it trendy to know their household’s “Energy
Efficiency Scorecard.” Elsewhere in the energy sector, there are advances in small modular
nuclear technology in regions where nuclear energy is politically acceptable.
High and fluctuating oil prices harm economic growth and, in turn, provide a powerful political
impetus for new energy policies—even though the public appetite for change usually wanes
somewhat during periods of economic recession. Companies with sufficient private funding take
financial risks in the energy and clean technology sectors. More often than not, the capital
markets and consumer uptake reward their boldness. Smart grid and energy service companies
deliver tools to lower and manage costs, resulting in decreased energy bills.
Through strategic investments in smart grid technologies and in concert with the expanding
wind and solar sectors, large investor-owned utilities and other players lay the foundation for the
emergence of a more technologically advanced power sector. Large-scale generation generally
focuses on replacing carbon-intensive resources with carbon-free and renewable energy.
Consumers also demand flexibility in both rates and services from state PUCs and utilities in
order to accommodate and drive cost-effective distributed renewable energy innovations.
During these years, natural gas availability rises and prices decline as the energy market
experiences a flood of new supply driven by improved drilling and fracturing technology. Energy
industry veterans joke about being “present at the creation” of the “Birth of Natural Gas.” Some
industry players warn of an emerging pattern of boom-and-bust cycles, which will adversely
affect investors. Companies in the power generation business, however, argue forcefully for
new investment to keep the cost of power low in order to spur long-term economic growth (See
Figure 4.1 below on the possible long term supply of natural gas in the U.S). There is serious
talk of building out domestic infrastructure to export domestic gas to Asian markets. Rural areas
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within the WECC region experience load growth because ongoing gas exploration efforts are
increasingly supplied by electricity from the grid.
Figure 4.1: Shale Gas Technically Recoverable Resources and Cumulative
Production
Source: “Review of Emerging Resources: U.S. Shale Gas and Shale Oil Plays,” U.S. EIA, July
2011
With a slow-growing economy constrained by both the aftershocks of the housing bust and high
unemployment, new energy demand is not available to sustain profits and growth in the electric
power industry. However, because of growing public and regulatory pressure to confront climate
change and reduce carbon emissions, coal-fired generation is on an accelerated downward
trajectory. The output of those plants must be replaced, providing a compelling case for
increased investment by the electric power sector despite low economic growth. Only the most
efficient and cleanest coal-fired plants or those whose owners can handle the costs of
environmental upgrades can survive tighter national emissions regulations put forth by the EPA.
Even during slow economic times, the political consensus sustains the demand to move toward
a cleaner power sector—one that does not pollute the air or produce wastes that foul water.
Severe weather-related events and smog-filled scorching summer days in major North
American cities, though not conclusively tied to climate change, raise interest and concern
about long-term resilience among a growing number of voters and citizens—including, but not
limited to, those who care deeply about environmental issues. In some cases, severe storms
wreak such havoc with aging energy infrastructure that politicians and utilities begin to explore
significant investments and innovation—like burying lines to reduce exposure to severe
weather—that will minimize repair costs and reduce power outages. Drought also exacerbates
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water shortages in the Colorado River System and in both Northern and Southern California. In
many cases, state and provincial governments take the lead from the federal government to
push for more innovation and cooperation across the industry. California and Colorado raise
their RPS to 40%.
Coupled with the above factors and declines in coal-fired power, other drivers propel a shift in
electric power generation. Information, communications, and sensor technologies expand
aggressively into the power business, pointing the way toward new approaches to energy
efficiency, load management, and cost reduction. Distributed power systems—many based on a
variety of improving solar energy technologies—small-scale storage technology using advanced
battery systems, and two-way communication demonstrate new possibilities for reliable electric
service (see Figure 4.2 below for a view of investment activity in solar energy).
Figure 4.2: 2010 Annual Solar Megawatts Ranking by Utility Company
2010 Annual Solar Megawatts Ranking by Utility Company
Company
Installed Megawatts of Solar Power
Pacific Gas & Electric
157.3
Florida Power & Light
87.2
Public Service Electric & Gas (NJ)
74.7
Southern California Edison
68.4
Xcel Energy (CO)
42.0
Tri-State G&T Co-op Assoc. (CO)
30.2
Arizona Public Service
29.9
San Diego Gas & Electric
27.1
Jersey Central Power & Light (NJ)
22.9
Duke Energy Carolinas (NC)
20.8
Source: “The 2010 Solar Electric Power Association Ranking,” The Public Utilities Fortnightly,
July 2011
Since the late 1980s, electricity industry researchers at places like the Electric Power Research
Institute (EPRI) have experimented with smart grid technologies. Their research proves useful
as it establishes a widely accepted understanding of the components of a smart-grid
infrastructure. These components begin to combine to provide better service to end-users.
Better service results from an increase in energy management options for all players in the
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industry structure working backwards and forward (see Figure 4.3 for a high level model of the
many aspects of the emerging smart grid)).
An integrated vision for the industry includes demand-side management, energy efficiency, load
management, price signaling, support for electric vehicles, variable-power generation,
distributed systems, and storage. Utilities design new business models to replace revenues lost
because of stagnant economic growth and the emergence of distributed generation and energy
efficiency. Decoupling electricity supply from the full-range of energy services becomes more
prominent across the West. A regional electricity market, facilitated by both technology and IT
advances, lowers costs, increases renewables, and reduces carbon emissions.
Figure 4.3: High Level Smart Grids Domains
Source: “Securing Tomorrow’s Grid Part 1,” Public Utilities Fortnightly, July 2011
States and provinces based in WECC undertake limited policy actions to spur economic growth.
These actions often support emerging energy technologies that create new industries and wellpaying jobs. Within the region, there are attempts to implement polices to limit carbon and
greenhouse gas emissions via caps. Significant, if not widely followed, changes in federal
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regulations, such as requiring planning for variable electric resources, enable companies to
develop new power storage and battery technologies.
Middle Years: 2018-2022/The Age of Self-Sufficiency
A national policy shift occurs, one for which political and technological progressives had
advocated: carbon-based taxes coupled with the elimination of tax subsidies for the oil industry.
The tax revenue is funneled into substantial investments in both the smart grid and renewables
technologies. Because of storage breakthroughs as well as efficient and reliable distributed
power systems, micro grids emerge. Smart technology and operations enable the maximum use
of existing infrastructure (grid and generation), the efficient integration of limited new assets with
old assets, and the retrofitting of aging assets.
Gallup polling data identifies a majority of Americans unnerved by ongoing political instability in
the Middle East. Geopolitical uncertainty leads to wildly fluctuating and sometimes abnormally
high oil prices. In turn, this unpredictability threatens U.S. economic growth and drives public
support for active disengagement from the region. News media coverage of the Middle East
turmoil reinforces the notion that higher rates in the short term will lead to a sustainable and
independent energy future in the long term.
As a way to achieve more energy independence, the U.S. doubles investments focused on
electric system infrastructure. At the same time, annual increases in the federal defense budget
are capped. Forced to do more with less, a number of U.S. military bases are completely off the
grid by 2022. This military demonstration yields commercial applications that lead to innovations
in technology and infrastructure. There’s now a greater reliance on modular, distributed
resources that are low risk, have fast payback, and are situated in strategic, high-value
locations.
Parallel to these developments, encouraging the growth of new power industry models becomes
government policy. As a result, new utility business models and regulatory incentives gain
momentum. The Energy Imbalance Market is increasingly operational and enables the
integration of renewables while more efficiently utilizing gas. Some consumers invest in power
systems providing an unprecedented level of self-sufficiency. These systems, which are often
commercialized versions of military innovations, combine distributed generation, energy
storage, advanced batteries emerging from the electric vehicle sector, information systems to
enable energy efficiency and sophisticated load management, and other smart tools offered by
emerging smaller players.
As more consumers become familiar with the possibilities and benefits of the changes described
above, they now view energy efficiency and distributed generation as effective tools for lowering
their energy costs. Public polls show a willingness to accept new rate structures necessary to
accommodate the shift to energy efficiency and distributed generation as well as the entry of
third party devices.
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At the same time, ongoing extreme weather events focus more attention and investment on
collaborative solutions. Maintaining infrastructure and support systems by means of climatefriendly, environmentally-efficiently actions take precedence. Utilities decide to bury both new
and existing power lines in an effort to lower maintenance and repair costs. While hydro
generation declines in parts of the U.S., increases in wind and solar power along with more gas
generation balance the system.
These many innovations accelerate policy changes centered on clean energy solutions. There’s
now acceptance of a Clean Energy Standard. California increases the RPS to 50%, while
Colorado also boosts the RPS to 50%. Among other states, debates center on implementing a
carbon tax or a cap and trade system as a way to raise revenue. The U.S. signs an international
climate change treaty and agrees to enact policies to reduce greenhouse gas emissions. U.S.
leaders in both government and business support these policies because they realize that
innovation in the energy sector creates new jobs and industries. For example, a market for
Concentrated Solar Power (CSP) with molten salt storage emerges. It becomes cost
competitive and helps to balance both wind and photovoltaic power.
With the Chinese economy rebounding, American and Chinese companies sign joint-venture
agreements to sell products and services in both developed and developing nation. Companies
headquartered in California, other western states, and Canada lead the way through related
investments. The U.S. and those European nations that remain on a slow growth path because
of their fiscal austerity measures compete for highly valued sources of economic vitality.
Government efforts to reduce deficits force them to target spending in a strategic fashion to spur
economic development.
Technological innovations in the energy supply and distribution parts of the electric power
industry accelerate because of what is happening in industries like IT (software and data
storage), materials, communications, manufacturing, and nanotechnology. Cell phone
applications for remotely monitoring and controlling energy management systems in the home
and at offices become more widely available. Consumers know how to manage their power
consumption, and, in a growing number of cases, live with grid-independent power systems.
Smart grid system applications now penetrate the distribution system of utilities creating new
options for further use of distributed generation and energy conservation. Smart appliances and
space conditioning systems develop into industry standards. Analytic tools needed to plan and
operate distributed generation also improve. Additionally, advancements in supercomputing and
big data management lead to improved weather modeling and forecasting while providing costsaving benefits. Overall electricity demand growth in the WECC region goes flat.
During this time, the warnings of a boom-and-bust cycle in the natural gas sector are validated,
albeit in partial fashion. It’s not so much a lack of resource supply, but rather the rapidly rising
costs due to stricter air and water quality requirements that hinder the sector’s expansion.
Because of the enactment of state laws to protect air and water quality from shale gas
development, a slowdown in exploration occurs. Many small independent exploration
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companies collapse and are bought up by the traditional large oil and gas companies at
substantial discounts. This consolidation takes several years to rationalize the industry, close
down poor performing projects, and stabilize prices. As this consolidation process evolves,
greenhouse gas restrictions tighten, further restricting the use of natural gas and leading to
further price declines.
Efforts to introduce natural gas into the transportation sector don’t really succeed because
hybrid electric vehicles already use gasoline very efficiently. Drivers decide that the costs of
switching from an electric hybrid to a natural gas vehicle are prohibitive. Natural gas-fired
generation used for peaking purposes is the single best way that the fuel can serve the
transportation market. Natural gas is the cleanest short-term alternative in the event that new
base-load or peaking generation is needed. Some utilities seriously consider options for new
gas-fired base-load generation as a replacement for nuclear plants close to retirement.
Natural gas does serve as a transition fuel in a specific circumstance: coal-fired generation is
destined for a complete phase out in all but a few limited instances in the WECC region. The
historical cost advantages of coal as a cheap and abundant fuel for generation disappear
because of the high costs of reducing or capturing greenhouse gas emissions. Sequestering
carbon emissions turns out to be far more technically difficult and expensive than had been
expected.
Ending Years: 2023 to 2033/The Re-Optimization of Electric Power
Business leaders and even some politicians think that the ongoing low and moderate levels of
economic growth in the U.S. and other advanced nations must be part of the natural evolution of
the global economy. Developing nations monopolize low-wage and low-skilled jobs through
efficient means, so the U.S. must continue its transition to a more technologically-advanced
economy needing less human labor overall.
This causes higher levels of unemployment as the U.S. education system lags behind other
industrialized nations. Given the country’s large consumer-driven economy, higher levels of
unemployment constrain long-term growth rates in the U.S. As a result, there are persistent
cycles of high unemployment during which workers have to retool their skills. Large gaps in
income and overall economic inequality grow over time as well.
Despite being stuck on a slow economic path, the U.S. continues to invest in transitioning the
electric power infrastructure. Future hopes for U.S. economic growth are now pinned to high
technology. Improvements in electricity transmission technologies lead to a national plan to both
upgrade and rebuild parts of the nation’s transmission grid by incorporating more DC lines in
combination with wireless information processing systems. This work is part of the full roll out of
smart grid technology and the “informationalizing” of energy use.
The three legs of the electricity transmission stool are optimization, efficiency, and innovation.
As these mature in the late years, electricity flows seamlessly across geographically diverse
areas with costs allocated across all of society. Most power generation is now done close to
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load centers with the emphasis on photovoltaic solar and community generation. A robust grid
continues to capture opportunities in markets across the U.S. The newly optimized power
system is advanced, efficient, and information-intensive while the demand side is coupled with
the deployment of distributed technology in load centers.
Political and business leaders agree that these innovations will support long-term economic and
job growth. At the same time, environmental advocates continue to be concerned that both new
transmission and large utility-scale generation have land-use issues and impact endangered
species and these concerns persist even in the presence of a new energy business model.
Siting new power lines must be done in an inclusive manner. Activists push for new regulations
to address microclimate impacts of both wind and solar plants as dense installations make them
more noticeable.
Climate change is now accepted as reality after a decade of extreme weather events. An
effective national energy plan supports investment in a more robust grid needed to minimize
weather-related outages. Coastal power plants are shuttered due to projected rises in sea level
as well as storm concerns. Population shifts occur as states restrict housing development
within certain coastal areas. Climate conditions, especially shifting levels of rainfall, impact
hydroelectric conditions. In parts of WECC, debates center around abandoning some
hydropower because of a lack of water in the hydrologic basins behind the dams. Ongoing
drought leads to difficult tradeoffs for utilities: (1) Competition for water usage prevents CCS
technology and nuclear from taking off; and (2) A lack of water slows wildcat natural gas
development.
The continuing climate crisis encourages collaboration in the development of low-cost,
environmentally acceptable carbon reduction solutions and private sector investments.
Renewable energy deployment is tailored to the needs of specific regions—what works in
California may not work in Wyoming. Pursuing a diversity of approaches is a key aspect of the
process.
The solar and wind power sectors suffer directly because of a larger issue during these years—
a logjam of electric supply technologies trying to find a place in a market of low-energy demand
growth. Breakthroughs proceed ahead of the market’s ability to absorb them as new
applications. Innovations occur on both the demand and supply side and so the rollout of many
technological capabilities gets delayed. In some cases, good ideas collect dust on the shelf.
Overall per capita electric energy consumption stays flat. Natural gas is being used for base
load, balancing, and reliability.
Much of the controversy in the energy policy arena occurs at the local level where people must
deal with both the pros and cons of a more distributed energy system. Energy-related issues
find their way to the forefront of civic agendas in local elections. In these instances, concerns
focus on siting distributed-generation facilities. Hydrogen-powered fuel cells become part of
distributed generation systems along with more advanced solar panels. Reasonably priced
home fuel cells become available.
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Most traditional power utilities have evolved into different organizations over the past twenty
years. Energy services, especially those related to information systems, constitute a large part
of their businesses. In many cases, they provide services to power system networks owned by
other companies. For only some of their customers do utilities have ultimate responsibility for
reliability, as some types of customers become wholly self-sufficient. Back-up power, provided
as a service in general, uses distributed power systems—advanced batteries, fuel cells and
solar arrays—and not connections to the power grid.
The large conglomerate power companies maintain portfolios of assets including ownership of
power plants, transmission lines, data management services, integration and portfolio
management services, and manufacturing plants that build distributed power systems. Utilities
with new business models become more responsive to consumers needing support for their
distributed generation. Some companies diversify into the growing water management business,
as water efficiency and purification become more closely related to energy use. These larger
companies participate in regional planning processes and lobby for regulations that ease
regional development to reduce the costs of new investments.
As 2032 comes to a close and the new decade begins to unfold, the four major issues in the
WECC energy markets in this scenario are:
1.) How can new technologies sitting on the shelf be brought to market in profitable ways
despite slow growth in energy demand? Is the likely retirement of some old power
systems like nuclear power and hydro systems premature?
2.) What clean technology should be the choice for new base-load generation for the U.S.?
Despite the now much cleaner and smarter power system in the U.S., the need for
further reductions in greenhouse gas emissions remains in place. The remaining coal
and gas-fired plants, as well as the increased size of the U.S. economy, still lead to
higher emissions.
3.) How will utilities meet the steady need for upgrading the performance of an informationintensive energy industry?
4.) How can concentrations of market power in this scenario be prevented?
New scenarios are needed…
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Scenario Four - Overview by Key Driver
Key Driver
Scenario Summary
The evolution of electricity
demand in WECC region
Stagnant growth rates keep demand low. Little to no sign of a quick turnaround in demand over
the long term.
The evolution of electricity supply
in the WECC region
Regulatory pressure on shale-gas development leads to a slowdown in natural gas exploration.
Coal remains on a retirement trajectory. Renewables viewed as viable alternative because of
climate change impacts. Renewables now more cost-competitive with conventional resources.
Innovation in electricity supply
technology & distribution
systems
Smart grid technology is widely commercialized as the industry develops an integrated vision,
which includes demand-side energy, EE, load management, DR and variable-power generation.
The course of regional economic
growth in the WECC region
Sustained, lower economic growth rates in North America, Europe, and Japan lead to a belief
that structural unemployment will be permanent aspects of these economies.
Changes in the regulation of
electric power systems in the
WECC region
U.S. and Canadian governments willing to fund renewables demonstrations in order to spur
innovation.
Changes in federal regulation
affecting electric power industry
Federal policymakers implement tax increases and eliminate subsidies for the oil industry. The
resulting windfall in revenue becomes the catalyst for a sustained increase in federal funding for
renewables research, development, and deployment.
Changes in social values related
to energy issues
Informed energy consumers expect power companies to empower them to manage their
individual energy portfolios. Strong emphasis on conservation. Consumers willing to pay higher
rates in return for lower overall bills.
Changes in society’s preferences
for environmental & natural
resources
The harmful effects of climate change lead the U.S. to sign onto an international climate change
treaty. Serious public concern about the power industry’s impact on water quality.
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WECC Scenarios
Key Driver
Scenario Summary
Shifts in national & global
financial markets
The long-term effects of the housing bust and the credit crunch ensure that financial markets
prefer to fund low-risk projects . Private capital makes limited investments in the power industry.
Shifts in the availability & prices
of commodity fuels used in the
electricity sector
Coal and natural gas considered problematic due to emissions concerns and worries about
shale-oil development. Carbon tax increases and higher energy bills enable the transition to
renewables.
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WECC Scenarios
Scenario Four - Overview of Generation Portfolio
Scenario Four:
Form of Power
Central Station Coal/CCS
Central Station Gas
Central Station
Solar
Central Station
Wind
Central Station
Nuclear
Description
Direction of Change
Large-scale coal-fired power
generation in the large megawatt
scale needing transmission
connections/with clean carbon
sequestration or recycling
~maintains long-term position
Large-scale natural gas-fired
generation in the large megawatt
scale needing transmission
connections.
+increasing as cost competitive
with CCS technology
option
Large-scale solar power generation at -decreasing, unable to compete
the megawatt scale needing
with other options
transmission connections
Large-scale wind-powered generation +increasing with technology
in the megawatt scale needing
innovations
transmission connections
Large-scale nuclear-powered
generation needing transmission
connections
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-decreasing as clean, cheaper
options exist
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WECC Scenarios
Geothermal Power
Central station geothermal needing
transmission connections
~holds position
Hydro Power Expansion/Extension
Decline in hydro power generation at
as a result of ongoing droughts
~holds position
Distributed Solar
Small scale (generally roof top
+increasing with technology
photovoltaic systems) that are located innovations and cost decreases
at the site of consumption
Distributed
Multiple forms of investment in capital
stock which leads to reduced energy
consumption or which support load
management
+increasing with technology
Small-scale natural gas-fired
generation serving loads in a local
area which may or may not require
distribution
+increasing with technology
Use of local sources of electric
energy storage from stationary or
mobile sources
+increasing with technology
Using a range of technologies and
needing transmission connections
+increases with innovation
Energy Efficiency
Distributed
Gas
Distributed
Power Storage
Large Scale
Central Storage
Page 85 of 109
innovations and cost decreases
innovations and cost decreases
innovations and cost decreases
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WECC Scenarios
Scenario Four – Overview of Modeling Parameters
The scenario narrative above is a largely qualitative description of a potential world for the
WECC region over the next 20 years. As part of the TEPPC planning objectives the scenarios
are also to be used to generate alternative transmission plans through modeling study cases
with the Study Case Development Tool and the Network Expansion Model. During 2012 a team
from the SPSG created quantitative modeling inputs to represent the scenarios for use in the
Long-Term Planning Tool (LTPT). Those quantitative representations vary by scenario and the
full detail of this work will be presented to WECC stakeholders during the first quarter of 2013 by
WECC staff. Shown below are some of the key distinguishing model parameters for Scenario
Four shown against the Reference Case parameters.7
Input Parameters
Fuel & Carbon Costs
Natural Gas
Coal
Carbon
Capital Cost Reductions
Geothermal
IGCC w/ CCS
Solar PV
Solar Thermal
Wind
Net Energy for Load
Load
Policy-Driven Load
Reductions
Policy-Driven Electrification
Units
2032
Reference Value
Scenario 4
$/MMBtu
$/MMBtu
$/ton
$6.58
$1.62
$37.11
$5.00
$1.62
$75.00
0%
0%
% below
2012 cost
% below
2012 cost
% below
2012 cost
% below
2012 cost
% below
2012 cost
0%
0%
31%
31%
25%
25%
8%
12%
GWh
1,163,526
1,118,518
GWh
0
-125,085
GWh
0
+50,000
7
The above listing of sources of power supply options can change over time and with varying degrees
depending on conditions in the scenario. Conditions in the scenario related to changes in economic
growth, fuel prices, technological change, industry regulations (state, provincial, and federal) and public
policies will affect the amount of power supplied from the power sources. For this scenario a sense of the
direction of change can be indicated as follows:
+ increasing, ++ significant increases, - decreasing, --significant decreases, and ~ no significant
change from historical levels.
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Input Parameters
Units
2032
Reference Value
1,163,526
Scenario 4
WECC Net Energy for Load
GWh
1,043,433
Implied Growth Rate,
%/yr
1.5%
1.1%
Unadjusted Load
Implied Growth Rate,
%/yr
1.5%
0.4%
Adjusted Load
Coincident Peak Demand
Load
MW
198,715
191,023
Policy-Driven Load
MW
-4,952
-25,182
Reductions
Policy-Driven Electrification
MW
0
+5,708
WECC Coincident Peak
MW
193,763
171,548
Implied Growth Rate,
%/yr
1.4%
1.0%
Unadjusted Load
Implied Growth Rate,
%/yr
1.2%
0.0%
Adjusted Load
LOAD NUMBERS SHOWN ARE DRAFT AND NEED TO BE REVIEWED ONCE INPUTS
ARE FINALIZED
Renewable Goals
Current state
% of Load
Current state
State RPS
policies,
Energy
policies
increased by 50%
% of Load
15% minimum
Federal RPS
none
Energy
RPS
In-state RPS Requirement
% of RPS
Current in-state
Current in-state
requirement preferences
preferences
applied to RPS
applied to current
requirements
policy RPS
requirements; no
preference for instate resources to
meet increase in
RPS targets
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WECC Scenarios
Scenario Four - Policy Themes
The chart below indicates how policy areas might influence the context in which energy related
decisions are to be made within scenario four. The indicators on the charts will also be used to
indicate changes from the common case assumptions, which will be the basis for WECC
quantitative modeling. The common case assumptions should be thought of as a world, which
naturally extrapolates from current conditions with no extraordinary changes.
Key: ‘++’ = Most aggressive; ‘+’=aggressive; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ =
neutral
Scenario 4: Focus on Long-Term Societal Costs
Policy
Categories
Policy
Theme
Notes
“Low-hanging fruit”
investment in clean,
+ means:
domestic resources.
Greenhouse Gas
Policies
+
Economic
0
pro-growth policies
Capital Investment
Support
0
more investment support
Renewable Energy
Policies
+
more favorable to renewables
Transmission and
Standards
+
more favorable to investment
and coordinated operations
Federal R&D/
Technology Support
+
more support
Transportation
+
more support for alt. fuel
vehicles and transport. choices
Demand-side
Policies
++
more support for
Energy Security/
Independence
Policies
++
Environmental/
+
more aggressive
reduction targets
Policies
Policies
demand-side investments
more support for
domestic resources
more protection of
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WECC Scenarios
Policy
Categories
Notes
environmental/cultural
resources
Cultural Policies
Consumer Issues
0
more restrictions
on cost recovery
Fuel
++
more support for
enhanced production
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WECC Scenarios
Using the Scenarios for Long Term Thinking and Early Indicators
The draft scenarios are written as if the entire twenty-year period unfolds in one quadrant.
Remaining in one quadrant was a necessary step for creating distinctly different worlds and as a
way to provide clear alternatives to drive the transmission planning results. Since scenarios are
tools for thinking and learning they can also be combined in imaginative ways.
Long-Term Use of the Scenarios
The WECC scenarios can be seen as “archetypes” or states of play for periods of time
(generally shorter than 20 years). It is in this light that one can imagine pathways through the
archetypal spaces over longer periods. Here are some suggestions from the pathways shown in
Chart 4 below. We use directional designations for the four scenario quadrants: (1) Scenario
One is the Northwest (NW) Quadrant; (2) Scenario Two is the Northeast (NE) Quadrant; (3)
Scenario Three is the Southwest (SW) Quadrant; and (4) Scenario Four is the Southeast (SE)
Quadrant.
Chart 4: Long-Term Movement
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WECC Scenarios
From SW to NW
Here we can imagine the U.S. and the WECC region emerging from the 2008-2010 recession
and steadily returning to stable economic growth. If technology in the power industry evolves
steadily (with no big breakthroughs), then it is possible for the WECC region to stay in this world
for five to ten years. Supported by global economic growth, good demographics and effective
economic policies, this world could even extend out for the majority of the 20 years. For
transmission investment, this path would call for new transmission to tie in the new generation
being built to meet growing demand.
From NW to NE
Movement here would be caused by a ramp up in technological innovation in the power sector
combined with investments across the industry to implement a new paradigm. These
investments would contribute to sustaining economic growth. This could be a 10-year boom (like
the 1990s) with have a soft landing that essentially characterizes a long period of time. For
transmission investment, this path may indicate that interstate transmission may already be
sufficient and that most of the action could be in the distribution system and in limited in-state
transmission. The transmission added during the period in Scenario One might prove sufficient.
From NE back to NW
The movement back to the NW after a period in the NE could be plausible as the direct result of
a period of implementing a new energy infrastructure that then becomes the norm.
Technological innovation returns to a stable pattern following the changes put in place for a
decade or less. The NW to NE and back to NW could happen over two decades. In this
pathway, the transmission and distribution built during the earlier period may be sufficient for a
long time. If distributed resources, energy efficiency and smart grid technologies are used to
manage and meet demand and reliability, transmission assets may not be needed for a long
time.
From SW to SE
This pattern might be plausible if economic growth proved difficult to generate. The long-term
overhang of the global debt bubble, a lack political cooperation with regards to economic
policies as well as other factors could lead to this being the norm for another decade. For
transmission investments, this path may demand more from distribution systems than from
transmission systems. If distributed generation, energy efficiency, and smart grid systems
characterize the nature of the innovation, the amount of investment in transmission may be
driven by the normal cycles of maintenance and the sustaining the core facilities.
From SE to NE
Following on the above, it’s plausible that after a decade in the SE quadrant, technological
innovation along with improved economic and political policies reinvigorate economic growth. It
is plausible to imagine a steady climb up to the NE over a decade as confidence and experience
builds momentum. This results in a long-term pathway to a re-modernized energy infrastructure.
If this emerges, a wave of new investment for transmission may be required just to keep up with
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WECC Scenarios
the return of economic growth and the rise of both new infrastructure and technological
capabilities. This path suggests that over time, as the economy recovers, the world might shift to
conditions similar to those described in Scenario Two, and that an improved economic climate
leads to investment in R&D and eventually to technological breakthroughs.
Early Indicators for Long-Term Transmission Planning
The descriptions of movement above have within them indicators that conditions are changing.
A primary benefit of scenario-based planning is the generation of early indicators of change so
that decisions might be better managed to reduce risks and also take advantage of emerging
opportunities. Short-to-medium term risks in transmission planning are generally related to
meeting both reliability and congestion management requirements.
Over longer periods of time, concepts like resilience, adaptability and flexibility are important for
long-term capital investments in transmission systems. Resilience and adaptability in
transmission planning might be helpful for dealing with unexpected operating conditions, i.e.,
weather conditions or emergencies, or with rare unanticipated changes in energy supply or
demand, i.e., a long-term plant outage affecting supply or changes in economic conditions
impacting demand.
The WECC Reference Case will be the starting point for information and analysis provided by
WECC to its members in order to guide transmission expansion plans. Early indicators
emerging from these scenarios could assist WECC members involved in the planning for,
investing in, or managing of transmission assets. These indicators could help to improve realtime decisions if events diverge from conditions in the Reference Case.
From an overarching standpoint, the key indicators will oftentimes pinpoint the emergence of
conditions similar to a specific scenario. They can be related to the major axis drivers of
economic growth and the pattern of technological advances in the electric power industry. In
addition, indicators can be valuable tools for perceiving changes at a more targeted level.
Depending on the point of view of an observer, there can be a limitless number of early
indicators, so there can never a complete list. Early indicators can fit within the list of key drivers
are the foundation of the scenarios or could or extend beyond them.
Listed below by each scenario are some more targeted early indicators proposed by SPSG
members Readers are welcome to add more from their specific perspective. Most importantly,
early indicators should be connected to potential decisions and used for further learning and
inquiry.
Early Indicators for Scenario 1: Focus on Economic Growth
1.) Efforts to form new business models in the power industry fail and leading companies
back to traditional positions in the marketplace.
2.) Consumers largely reject flexible pricing options in new energy service offerings.
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WECC Scenarios
3.) Climate change-related events diminish and the momentum for strong GHG policies by
government leaders dies.
4.) New technological options in the power industry prove too expensive for customers and
this lead to limited adoption rates.
5.) Problems with fracking as well as unexpected declines in gas supply lead to higher gas
prices and a return to a more traditional generation portfolio for power companies.
6.) Mergers and the concentration of market share in the power industry suppress rates of
innovation.
7.) Market factors result in high wholesale electricity prices forcing power companies to
make investments to serve local needs in a traditional manner.
8.) The growth of smart-grid technology and installations is uneven and scattered with no
standard emerging.
Early Indicators for Scenario 2: Focus on Clean Energy
1.) Both political will and public/voter support for strong climate change regulation impose
costs on carbon emissions in a manner that leads to positive a transformation of the
economy.
2.) Breakthrough technology that addresses GHG emissions combined with faster than
anticipated rates of adoption.
3.) A long-term commitment to tax and other policy preferences for renewable technology
investments at the federal level.
4.) New innovative firms in the power industry survive and prosper and are therefor able to
offer services and products beyond the traditional package.
5.) Quantum leap level breakthroughs in energy storage that extend the applicability of
renewable technologies and greatly increase their competitiveness.
6.) Consolidation of balancing authorities that increases reliability and coordination in the
power grid and also enables new products and services to emerge.
7.) Federally-supported R&D, including research funded by the U.S. Department of
Defense, successfully demonstrates new technological options for micro-grids and other
power supply options.
8.) Surprisingly cheap and effective big data applications in the power sector ease the way
for provision of new services.
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WECC Scenarios
Early Indicators for Scenario 3: Focus on Short-Term Consumer Costs
1.) Poor and ineffective economic policy development and implementation in the U.S. and
Europe stifles economic growth over the long term.
2.) A devastating physical or cyber-attack which massively harms the U.S. power grid and,
in turn, the economy for an extended period.
3.) The cost to fully implement current state RPSs are much higher than anticipated and
lead to voter backlash.
4.) The unexpected return of high inflation rates within in the general economy.
5.) The fracking-related boom in gas proves short-lived, while coal prices fall to historicallylow levels.
6.) The pace and cost of adding sufficient gas pipeline and other infrastructure needed to
expand natural gas use in the power sector proves to be more challenging than
expected.
7.) Another (or the old unresolved one from 2008) financial bubble damages the global
economy.
8.) War in the Middle East or with Iran distracts politicians from energy issues.
Early Indicators for Scenario 4: Focus on Long-Term Societal Costs
1.) A powerful climate-related event that provides the public with the strongest possible
evidence of the need to quickly address the issue regardless of short-term costs.
2.) The U.S. takes a strong energy security stance with a preference for domestic resources
and fuel price stability.
3.) Renewable energy resources quickly advance competitively and can prosper with lower
levels of tax and policy preferences (perhaps supported by effective storage technology).
4.) U.S.-based and international insurers impose costs on high GHG-emitting technologies
to cover the financial impacts of climate change.
5.) Persistent volatility in natural gas prices magnifies the risks to the economy.
6.) A substantial and long-term jump in oil prices driven by global demand (above $150 per
barrel for the foreseeable future).
7.) A workable and effective cap and trade process is implemented and achieves early
success in the U.S.
8.) A more distributed power system, which is anchored in solar energy, load control and
energy efficiency, expands rapidly due to its cost competitiveness.
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WECC Scenarios
Appendix I: Scenario Narrative EPS
In each scenario there are underlined blue hyperlinks directing the reader to relevant EPS
submissions on the SPSG website. Below are all the EPS links listed by scenario with the page
numbers from the scenario narrative section.
Scenario 1:
P. 13
Technology as a Growth Engine
P. 13
Will There be a Silver Bullet for the U.S. Economy?
P. 15
Risk Aware Planning for the Electric Utility Sector
P. 16
Oil Boom Counterpoint: Shale Oil Everywhere…For a While
P. 16
U.S. to Be World’s Top Oil Producer in 5 Years, IEA Report Says
P. 16
GLOBAL ECONOMY-U.S. looks best of 2013 economic runners
P. 16
MIT Study on the Future of the Electric Grid
P. 17
Big data on the Smart Grid
P. 17
Weather Extremes Changing Patterns of Energy Use and Infrastructure
P. 18
U.S. to add 93 Million to Population by 2050
P. 18
U.S. to Be World’s Top Oil Producer in 5 Years, IEA Report Says
P. 18
SecDef Panetta Warns of Dire Threat of Cyberattack on U.S.
P. 19
New DOE Innovation Hub Aims to Cut Battery Costs by 80 Percent
Scenario 2:
P. 33
CERES Publishes "Practicing Risk Aware Electric Regulation
P. 33
Global Economy: Fork in the Road as U.S. Outstrips Europe
P. 33
Bringing Big Data to Smart Meters
P. 33
New DOE Innovation Hub Aims to Cut Battery Costs by 80 Percent
p. 33
Big Boost in Utility Capital Spending Must Pivot to Reflect New Realities
p. 35
US Housing Rebound Story Intact
p. 37
Bringing Big Data to Smart Meters
P. 39
New DOE Innovation Hub Aims to Cut Battery Costs by 80 Percent
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WECC Scenarios
P. 39
Prudent Development of Natural Gas and Oil
P. 39
GE's New Natural-Gas Turbines Could Help Renewables
P. 42
The Technology Path to Deep Greenhouse Gas Emissions Cuts by 2050:
The Pivotal Role of Electricity
P. 43
Risk Aware Planning for the Electric Utility Sector
P. 43
Declassified Report: Terrorist Attack on Power Grid Could Cause Broad
Hardship
P. 43
House Committee Members Release a New Report on Climate Change
Scenario 3:
P. 53
Why a Global Economic Rebound MAY be short-lived
P. 53
Coal Plants Disproportionate Impacts on Minorities and the Poor
P. 54
North Dakota Electrical Demand to Triple in Oil Patch
P. 54
Bipartisan Group Proposes a Centralized Energy Policy Council
P. 55
A Powerful Thirst: Energy, Water and Drought
P. 55
US Energy Independence Within View - Implications and Consequences
P. 57
IMF Slashes Growth Forecast, Economy Fragile thru 2018
P. 57
Tech’s New Wave, Driven by Data
P. 57
Declassified Report: Terrorist Attack on Power Grid Could Cause Broad
Hardship
P. 57
Risk Aware Planning for the Electric Utility Sector
P. 57
DG - Environment Concerns Driving Co-Generation Equipment Market
P. 58
A 20-Year Low in U.S. Carbon Emissions
P. 58
Natural Gas Sets Record by Matching Coal's Electric Power Output
P. 53
A 20-Year Low in U.S. Carbon Emissions
P. 54
Natural Gas Sets Record by Matching Coal's Electric Power Output
Scenario 4:
P. 66
IMF Slashes Growth Forecast, Economy Fragile thru 2018
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WECC Scenarios
P. 66
Fearing an Impasse in Congress, Industry Cuts Spending
P. 67
Electricity Innovation Lab Launched to Drive Transformation of the U.S.
Electricity Sector
p. 67
LEDs Emerge as a Popular ‘Green’ Lighting
P. 68
Coal Plants Disproportionate Impacts on Minorities and the Poor
P. 68
Yale Survey Shows Increasing Awareness of Climate Change and Extreme
Weather
P. 71
Senate Gives Green Light to Pentagon Green Energy
P. 71
California Company to Bring Solar to Military Housing
P. 72
Storage, Auto DR and Grid Flexibility Critical in Wind and Solar Penetration
P. 72
Bringing Big Data to Smart Meters
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Appendix II: Comparative Scenario Summary
See attached spreadsheet
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Appendix III: Policy Theme Table
This appendix contains a comparative analysis chart, which shows in one place how the policy areas might influence the policy
arena in which energy related decision might be make within the context of the scenarios. These charts are useful in that they
allow readers to see and compare the significant differences between the scenarios in one place.
Key; ‘++’ = Most aggressive; ‘+’=aggressive; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral
Policy
Scenario 1:
Scenario 2:
Scenario 3:
Scenario 4:
Focus on
Economic Growth
Focus on Clean
Energy
Focus on ShortTerm Consumer
Costs
Focus on LongTerm Societal Costs
Notes
High need driven
by economic
growth.
Deep, binding GHG
reduction targets in
response to int’l
treaty.
Slow growth leads to
hard choices about
policy goals.
“Low-hanging fruit”
investment in clean,
domestic resources.
+ means:
Greenhouse Gas
Policies
0
++
–
+
more aggressive
Economic
+
+
0
0
pro-growth policies
Capital
Investment
Support
+
+
0
0
more investment
support
Renewable
Energy Policies
0
+
–
+
more favorable to
renewables
Transmission and
Standards
0
+
0
+
more favorable to
investment and
Categories
Policy
Theme
reduction targets
Policies
Page 99 of 109
March, 2013
WECC Scenarios
Policy
Categories
Scenario 1:
Scenario 2:
Scenario 3:
Scenario 4:
Focus on
Economic Growth
Focus on Clean
Energy
Focus on ShortTerm Consumer
Costs
Focus on LongTerm Societal Costs
Notes
coordinated operations
Federal R&D/
Technology
Support
0
+
–
+
more support
Transportation
0
++
–
+
more support for alt. fuel
vehicles and transport
choices
Demand-side
Policies
0
++
0
++
more support for
demand-side
investments
Energy Security/
Independence
Policies
0
0
0
++
more support for
Environmental/
0
Policies
domestic resources
–
0
+
Cultural Policies
more protection of
environmental/
cultural resources
Consumer Issues
0
–
+
0
more restrictions
on cost recovery
Fuel
0
––
+
++
more support for
enhanced production
Page 100 of 109
March, 2013
WECC Scenarios
Appendix IV: Annotated Policy Theme Table
Key; ‘++’ = Most aggressive; ‘+’=aggressive; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral
Policy
Scenario 1:
Scenario 2:
Scenario 3:
Scenario 4:
Categories
Focus on
Focus on
Focus on Long-Term
Economic Growth
Clean Energy
Focus on Short-Term
Consumer Costs
High need driven by
Deep, binding GHG
reduction targets in
response to international
treaty.
Slow growth leads to hard
choices about policy
goals.
“Low-hanging fruit”
investment in clean,
0
++
–
+
No new GHG policies, but
continued use of GHG
adders
Strong new GHG policies
with aggressive reduction
targets
No new GHG policies and
reduced concern about
GHGs in resource
planning relative to today
GHG reduction targets, but
less aggressive and with
more “outs” than in Scenario
2
+
+
0
0
“Pro-growth” policies may
lead to higher economic
growth and electric loads
“Pro-growth” policies may
lead to higher economic
growth and electric loads
Neutral policies with
respect
Neutral policies with respect
+
+
0
0
“Pro-investment” policies
may lead to reduced cost
and risk in capitalintensive investments
“Pro-investment” policies
may lead to reduced cost
and risk in capitalintensive investments
Neutral policies with
respect to investment
support
Neutral policies with respect
to investment support
Policy theme
economic growth.
Greenhouse gas
policies
in resource planning
Economic policies
Capital investment
support
Page 101 of 109
Societal Costs
domestic resources.
to growth
to growth
March, 2013
WECC Scenarios
Policy
Scenario 1:
Scenario 2:
Scenario 3:
Scenario 4:
Categories
Focus on
Focus on
Focus on Long-Term
Economic Growth
Clean Energy
Focus on Short-Term
Consumer Costs
Renewable energy
policies
0
+
–
+
No new RPS mandates or
incentives, but no
retrenchment from
existing policies
Strong policies to support
renewables as carbonfree resources
Existing incentives
allowed to expire and
current RPS targets are
relaxed or delayed due to
concerns about cost
Strong policies to support
renewables as clean,
secure, domestic resources
Transmission and
standards
0
+
0
+
No major initiatives to
increase transmission
investment or coordinated
operations
New initiatives to increase
transmission investment
and enhance coordinated
operations and planning
as part of GHG reduction
plan
No major initiatives to
increase transmission
investment or coordinated
operations
New initiatives to increase
transmission investment and
enhance coordinated
operations and planning to
increase use
0
+
–
No major federal
Major new federal
initiatives to jump-start
technologies needed to
transition away from fossil
energy
Reduced budgets for R&D Major new federal initiatives
due to lower tax revenues to increase our ability to
and federal spending cuts cost-effectively utilize clean,
0
++
–
+
No major initiatives to
increase
Strong policies to
increase use of electric
vehicles as GHG
Reduction of existing
efforts to increase use of
alternative fuels
Moderate new policies to
increase use of electric and
Federal R&D/
technology
support
R&D initiatives
Transportation
policies
use of alternative fuels
Page 102 of 109
Societal Costs
of domestic resources
+
domestic resources
natural gas vehicles
March, 2013
WECC Scenarios
Policy
Scenario 1:
Scenario 2:
Scenario 3:
Scenario 4:
Categories
Focus on
Focus on
Focus on Long-Term
Economic Growth
Clean Energy
Focus on Short-Term
Consumer Costs
Societal Costs
reduction strategy
Demand-side
policies
0
++
0
++
No major initiatives to
increase energy efficiency
and demand response
Strong policies to
increase use of energy
efficiency as GHG
reduction strategy
No major initiatives to
increase energy efficiency
and demand response
Strong policies to increase
use of energy efficiency as
cost-effective, secure
domestic resource
Energy Security/
Independence
policies
0
0
0
++
No major initiatives to
increase use of domestic
energy resources
No major initiatives to
increase use of domestic
energy resources
No major initiatives to
increase use of domestic
energy resources
Major new initiatives to
increase use of domestic
energy resources to reduce
dependence on imported oil
Environmental/
Cultural policies
0
0
–
+
No major initiatives to
increase or decrease
land/cultural protections,
criteria pollutant
emissions
or water
consumption
All-out effort to reduce
GHG emissions may
require some compromise
with respect to land use
and water consumption
policies
Existing emissions
reduction and land &
cultural- protection
initiatives are delayed or
weakened due to
concerns about cost
Increased focus on land-use,
cultural protections & water
use and emissions
reductions as self-interested
investments in clean,
domestic resources
Consumer issues
0
–
+
0
No major initiatives to
increase consumer
protections in
Focus on GHG reductions
may require increased
incentives such as equity
Rollback of existing
incentives for
transmission investments
No major initiatives to
increase consumer
protections in
Page 103 of 109
March, 2013
WECC Scenarios
Policy
Scenario 1:
Scenario 2:
Scenario 3:
Scenario 4:
Categories
Focus on
Focus on
Focus on Long-Term
Economic Growth
electric utility sector
Clean Energy
adders or early recovery
to encourage capitalintensive investments
Focus on Short-Term
Consumer Costs
0
––
Fuel
and increased scrutiny of
new investments by state
commissions in order to
keep rates low
+
No major initiatives to
Significant efforts to
New initiatives to increase
increase or decrease
reduce drilling in order to
drilling in an effort to keep
ability to extract fuels from reduce GHG emissions
fuel prices down
domestic lands or waters
Key; ‘++’ = Most aggressive; ‘+’=aggressive; ‘-’= less aggressive; ‘– –’ = least aggressive; ‘0’ = neutral
Page 104 of 109
Societal Costs
electric utility sector
++
Major new initiatives to
increase drilling, particularly
for gas, in order to reduce
dependence on imported oil
March, 2013