As multiple states and municipalities drive toward 100% renewable energy, the Pacific Northwest may be in the most unique position to answer the questions that generally arise despite geographic, economic and climate differences with the rest of the country.
Such questions include: What is the right mix of wind, solar, storage, nuclear and hydropower to provide carbon-free energy at an affordable and reliable level? How much should natural gas be relied on as a "bridge fuel," if at all?
The Columbia River provides the Pacific Northwest with the largest source of hydropower found anywhere on the continent. The river’s 31 hydroelectric dams can produce 22 GW of power, and this natural bounty of carbon-free energy takes care of a big chunk of the path to 100% renewable energy. Hydroelectricity meets 30% of the Northwest’s electricity needs, according to the Bonneville Power Administration, the federal agency that markets the river’s hydroelectricity.
But even with these built-in advantages, utilities and policymakers in the Northwest are facing uncertainty about how easy it will be to completely move away from fossil fuels for electricity generation.
The Northwest Power and Conservation Council (NWPCC), a regional organization created by Congress, is preparing its 2021 Northwest Power Plan, the first overarching plan in five years for how to meet long-term electricity needs with new power resources, energy efficiency, demand response and more. The governments of Washington state and Oregon and public and investor-owned utilities, working together through the Northwest Power Pool, are in the process of figuring out how to implement strategies for the Northwest’s power supply that involve little to no new natural gas.
Several factors have made it "highly unlikely that new natural gas will be built in Washington and Oregon in the near term, and with proper planning and regional coordination, we are confident we can limit our reliance on gas in years to come," according to Nicole Hughes, executive director of Renewable Northwest, a renewable energy advocacy group. Renewable Northwest is currently developing, in partnership with other groups, an “electricity sector deep decarbonization” pathway analysis for the state of Oregon, due early in 2021, Hughes said. The state of Washington has already completed a similar analysis, which found that greenhouse gas reduction targets can be met at a reasonable cost.
Olson is one of the authors of an E3 study that modeled the most efficient energy pathways for the Pacific Northwest to maintain reliability while reducing emissions. It found that "deep decarbonization of the Northwest grid is feasible without sacrificing reliable electric load service," but that "absent technological breakthroughs, achieving 100% [greenhouse gas] reductions using only wind, solar, hydro, and energy storage is both impractical and prohibitively expensive."
A regulatory void
The Washington Clean Energy Transformation Act requires all electricity sold in that state to be greenhouse gas neutral by 2030, meaning utilities can still generate power from sources like natural gas as long as those emissions are offset elsewhere. But by 2045, offsets are no longer sufficient, and all retail electricity must come from renewable or non-CO2-emitting sources.
Oregon does not have as stringent of a clean energy standard as Washington’s. But there is a strong perception in the state that it is only a matter of time before Oregon regulations phase out CO2-emitting sources of energy, according to Hughes. Portland General Electric, the largest investor-owned utility in the state, recently adopted a goal of net-zero emissions by 2040.
This regulatory landscape, whether through perception or not, makes financing a new natural gas-fired plant unlikely because of the uncertainty that there will be a long-term market for electricity that is not carbon-free. "It’s this regulatory void that makes it difficult to invest in these long-term assets," Olson said.
The E3 study found that without at least some new natural gas plants to run at peak times, the costs of cutting emissions across the Northwest increase dramatically. Reducing emissions by 90% by 2050 — which retains less than 20 GW of natural gas capacity in the regional portfolio — would cost around $5 billion, but a 100% reduction by 2050, with no natural gas, would cost nearly $30 billion. That study was commissioned by several utilities in the region such as Puget Sound Energy and Avista, and is one of the primary pieces of research guiding utilities and regional agencies as they work to avoid resource constraints and blackouts, as recently happened in California.
The costs spike, the E3 study found, because natural gas plants are the cheapest form of last-in-line defense against power shortages on peak days with low renewable production. The natural gas plants used in projected scenarios are only run 3% of their time, but that small contribution makes a big difference to the bottom line costs, according to the study. While the rich hydropower base is a "massive advantage" for the Pacific Northwest that allows it to require less natural gas backup for renewables than other regions, Olson said, hydro is not the be-all-end-all, especially given that hydro production can be variable from year to year.
Reaching 100% reduction in greenhouse gases by 2050 would require a colossal amount of new renewable energy projects — 97 GW of wind power, which is nearly as much as all current wind capacity across the entire U.S., and over 45 GW of solar power. "You run out of the ability of the system to absorb renewable energy," Olson said, even with large buildouts of lithium-ion battery storage. The study assumed storage durations of up to 4 to 6 hours, so the ongoing search for a "holy grail" of long duration storage over 24 hours could change the picture.
The notion that new natural gas must be part of the solution, however, is not universal among experts who have looked at the Northwest’s energy system. A 2019 study completed by Energy Strategies for the Western Interstate Energy Board found that wind energy imported from Montana, long duration storage of at least 12 hours and more market purchases are all reasonable alternatives to natural gas as effective sources of firm capacity for the Northwest.
According to Hughes, instead of worrying about whether gas can be built right now, policymakers should start looking for ways to cooperate across the region so resources can be shared to develop firm capacity to back up renewables. "If we start looking on a regional basis instead of utility by utility, state by state… [there will be] less of a need for new natural gas," she said.
According to Hughes, instead of worrying about whether we should build gas right now, policymakers need to take a regional approach to ensuring adequate capacity resources are available to balance renewable generation. "If we start looking on a regional basis instead of utility by utility, state by state… [there will be] less of a need for new natural gas,” she said.
Pacific Northwest utilities are watching the economics of storage relative to gas to determine how close their power supply will be to 100% renewable in coming years. In its 2020 integrated resource plan, Avista, based in Spokane, Washington, and a provider of electric service for utility customers in eastern Washington and northern Idaho, nixed plans for gas-fired peakers that had been identified as economic options in an earlier IRP.
Avista’s new plans traded the peakers out "in exchange for long duration energy storage, additional demand response, 500 MW of new wind resources, and upgrades to thermal and hydroelectric facilities," according to the 2020 IRP. Much of that long duration storage comes in the form of more pumped hydro facilities, which function like a large natural battery by releasing water from an upper reservoir to a lower reservoir when power is in high demand and pumping the water back to higher ground when demand is low.
But for its 2021 integrated resource plan, which is in the works, Avista has found that "the cost and availability of long duration storage has become less favorable, which potentially brings natural gas generation back into the mix of resources," according to Avista’s Senior Vice President of Energy Resources Jason Thackston. The forecasts the company has made thus far for the new IRP use a capacity cost for pumped storage of $22.97 per kW-month, up from $12.50 in the 2020 IRP, he said. The costs of short-duration storage are up as well, making lithium-ion batteries somewhat less competitive compared to gas as a way to fill in the gaps of wind and solar energy.
In a technical advisory committee hearing in June, the company presented initial findings for the IRP, including data that the estimated costs for natural gas simple combustion turbines and combined-cycle turbines were up 4.4% and 5.8%, respectively, since the last IRP, but that lithium-ion storage costs were up 8%.
Thackston said the IRP process is ongoing and more specific numbers cannot be shared at this time. "We continue to evaluate various scenarios and will select a preferred resource strategy with the intent to balance cost and reliability with our clean energy goals," he said.
In its most recent IRP, filed in 2017, Seattle’s Puget Sound Energy found no need for new baseload natural gas plants through 2037 in most projections. "The Pacific Northwest appears flush with renewable energy — hydro power, wind power and surplus solar power from California," the plan said. "Building additional baseload gas plants in PSE’s service territory appears cost effective under only a few unlikely scenarios."
But the plan did find a need for peaking units that can fire on natural gas, fuel oil or a blend of the two to act as a "low cost insurance policy" in potential reliability crisis situations, such as times when other power plants unexpectedly go offline or extremely cold weather events occur. The resource plan called for 717 MW of new peakers by 2027 and 1,912 MW by 2037, compared to 1,300 MW and 1,600 MW, respectively, in those years from a combination of conservation, demand response, solar, energy storage and redirected transmission.
Puget Sound Energy is working on its next integrated resource plan, a draft of which will be filed Jan. 4, according to a spokesman.