By: Ben Inskeep

Utilities are planning to add unprecedented levels of new solar and wind capacity, diminish or altogether forgo new natural gas combined cycle generation (NGCC), test out or deploy large-scale battery storage, and retire gigawatts of coal-fired generation. That’s according to recent long-term resource plans filed by electric utilities across the United States.

These integrated resource plans (IRPs), which are required in many states, demonstrate how a utility plans to cost-effectively meet its expected energy resource needs in the future, based on extensive modeling. Utilities are now contending that clean-energy resources – including solar, wind, energy efficiency, demand response and energy storage – are expected to be cheaper, to be less risky, and to provide a better portfolio of resources than fossil-fuel alternatives.

IRPs (or similar long-term resource plans) filed by PacifiCorp, Dominion Energy, NV Energy, Xcel Energy and Consumers Energy during the past two months are a microcosm of the larger transformation underway in the U.S. electric sector. As Table 1 indicates, four of these utilities are proposing at least 1,000 MW of solar each. All of the utilities are retiring substantial quantities of coal generation, with PacifiCorp, Dominion Energy[1] and Consumers Energy also stating they foresee no need to build any new NGCC plants. And three of the IRPs listed below found that at least 100 MW of energy storage should be added in the foreseeable future.

Table 1. Five Recent Electric Utility Resource Plans

* Required by SB 966.

** NV Energy’s IRP covers a longer period, but the solar/storage additions and coal retirements are proposed per the Energy Action Plan, which only covers the next three years. NV Energy’s solar/storage additions have already been procured via an RFP and are pending PUCN approval.

Source: EQ Research Policy Vista™ database

The clean-energy industry, however, should be aware of more than just these stunning headings when considering the implications of these and other IRPs. Yes, IRPs can lead to future RFPs for new resources, and so can be indicative of future market opportunities. But they can also pose a regulatory risk, as several of the IRPs listed above also propose major policy changes. For example, both PacifiCorp and Consumers Energy advocated in their IRP filings for substantial changes to their avoided-cost methodologies, claiming that since their IRPs do not include NGCC plant additions, their avoided-cost rates should be based on (lower-cost) clean-energy technologies instead.

Consumers Energy is also proposing to competitively bid up to 5,000 MW of solar by 2030, and to set the avoided-cost rate for PURPA Qualifying Facilities based on the winning bid from the most-recent RFP process, which could result in a significant reduction in prices paid to new solar and wind facilities for capacity and energy (compared to current avoided-cost prices). In addition, Consumers Energy is requesting permission to recover its costs plus an authorized rate of return (10.0% currently) on the PPAs arising from its competitive bids.

As utilities continue to forecast ever-increasing amounts of clean energy to replace the dirtier generation resources of yesteryear, we’re likely to see proposed new policy frameworks to accommodate this rapidly changing sector, underscoring the importance of the technocratic – but vitally relevant – IRP regulatory process.

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[1] Dominion Energy did not identify a preferred portfolio in its IRP, but only one out of five of the “Alternative Plans” it provided included the addition of a new NGCC facility. A Dominion Energy official subsequently said it was no longer pursuing NGCC facilities in the long term.