Document name wecc scenarios

Introduction

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 23^rd, 2011, July 11^th-12^th, 2011 and December 12^th-13^th, 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

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 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.

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
   
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.

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