Customer-side resources will be critical as rising electricity demand, extreme weather and climate change impact the Northwest power system
In January 2024, extreme cold descended on the Northwest, causing a significant spike in electricity demand. At the same time, there were serious challenges for energy supplies across the region. But first and foremost, we want to acknowledge those personally affected by the severe weather and send a heartfelt thank you to all the utility system workers and operators who toiled in dangerous conditions to keep our region safe and warm.
For the second year in a row, the Northwest has been dry and hydropower this winter is running about 70% of average. Additional challenges in January included a week-long outage of an 800-megawatt (MW) generating unit at the Colstrip coal plant, a one-day reduction in output from a key natural gas underground storage facility, and damage to power lines that caused widespread local outages and derating of some key high voltage transmission. In addition, the DC Intertie with California was down for planned maintenance.
As one would expect, all these factors led to a spike in wholesale gas and power market prices reflecting very tight supply and demand conditions across the Northwest during the coldest weather we have had since January 2017.
But there was good news as well. Although it was by any measure a “near miss,” including declarations of energy emergencies by several utilities, no major grid outages occurred. Utility line crews, including more than 3,000 workers with Portland General Electric (PGE), Pacific Power, Eugene Water & Electric Board (EWEB) and neighboring utilities, restored service under the most difficult conditions in the ice storm that followed the cold wave in Oregon. Wind energy performed superbly ahead of the storm as the cold Arctic air mass raced south through Alberta and into the Pacific Northwest, though dropped off in some areas as the front moved through. Most of all, California and the Southwest delivered significant amounts of power via the AC Intertie with the assistance of the Western Energy Imbalance Market. Over 2,800 megawatts of power flowed on average across the AC Intertie throughout the period from January 12-16, helping make up for the regional hydro deficit. An additional 2,000 megawatts came into the Northwest from the Rocky Mountain region, according to the Western Power Pool’s Resource Adequacy Program Assessment.
However, exacerbated by climate change, these extreme weather events are occurring more frequently. A clear lesson from the January 2024 freeze is the need to accelerate development of our clean energy resources with a portfolio of geographically diverse renewable resources and storage. A new coordinated regional effort is needed to dramatically increase our investments in customer-side resources – energy efficiency, demand response and local renewables and battery storage – to strengthen our energy system’s reliability. It’s not only a matter of better economics, reducing greenhouse gases and affordability – now it’s also about “keeping the lights on.”
Frigid temperatures strained our energy system
Last month’s cold weather, while not record setting, was far below normal. The graph below shows average temperatures from cities across the Northwest (Portland, SeaTac, Boise, and Missoula). January 13th averaged 12 degrees, nearly 20 degrees colder than the previous 10 year average, and lower than the extreme winter storm in 2017.
Temperature alone doesn’t show the full picture of the extreme cold’s impact. In the hard-hit Portland metro area, the weather contributed to at least nine deaths and 600 reportsof downed trees. Along with high winds and freezing temperatures, over 160,000 Portland General Electric customers lost power at the peak of the storm on Saturday, January 13, and over 500,000 out of 830,000 total customers had outages at some time during the week of the cold wave. Things were even more difficult in the Columbia Gorge and the Willamette Valley. For example, over 30,000 of 85,000 Eugene Water and Electric Board customers lost power at the peak of the ice storm, which also took down one segment of the AC Intertie.
These frigid conditions caused peak demand to spike as many turned up the heat to stay safe. As you can see from the graph below, demand far outstripped averages from the past five years. All-time demand records were set across the region from the Seattle area to Montana.
To meet the surge in demand, all available power and the fossil-gas heating system in the Northwest were operating at maximum capacity. Meanwhile, a strong El Nino episode in the equatorial Pacific plus climate change effects on ocean and Arctic weather have decreased precipitation and hydrosystem output far below normal levels – 2023 was bad and the 2024 water year so far, which started last October, is worse.
As the figure below shows, Northwest regional hydropower generation was down 3.6 GW in January 2024 compared to the previous five-year average. In British Columbia, BC Hydro has become a net importer of electricity two years in a row to maintain sufficient hydropower reservoirs for power generation throughout the winter.
As our population and electric demand continue to grow, climate change is an increasing factor. Both winter cold snaps and late summer heat waves will push power demand even higher. At the same time, climate change is already increasing the variability of hydropower, creating uncertainty in its capacity when we need it most. What can we do to help meet the challenge of growing electricity demand and extreme weather systems?
Invest in customer-side resources before the next crisis hits
The first part of the answer is straightforward: accelerate development of appropriately sited and geographically diverse wind, solar and batteries. But to create a truly resilient clean energy system, we need to significantly expand our mix of distributed customer-side resources, like energy efficiency, demand management and response programs, distributed battery storage, and community-based wind and solar. Together, these resources can improve reliability and maintain affordability during peak demand events and help balance variable renewable resources. Some of our utilities are now addressing the opportunity directly and talking about “virtual power plants” – a way of managing customer-side resources coherently as a part of overall grid management.
Energy efficiency continues to be our most affordable climate solution and has helped keep our region’s electricity use stable for the past 40 years. However, utility system planners are chafing under outdated cost effectiveness measures that do not include the full value of energy efficiency as a capacity and resilience resource. As our region and load growth is expected to grow, centering efficiency, updating cost effectiveness, and accelerating investments are critical to lowering peak demand events and the number of new supply resources we need to build. Demand response and peak pricing programs enable utilities to curb enrolled customers’ electricity use during times of peak demand. Northwest utilities and BPA are just getting started with managing customer demand during peak times and there are large opportunities for this resource to reduce purchases from volatile power markets at a more affordable cost. Smoothing demand peaks using targeted energy efficiency and demand response programs can lead to significant savings for customers and utilities.
More distributed and community-scale solar, wind and battery storage are also critical components to a robust energy system. These resources help the region capitalize on the benefits of generation across a broad geographic area without needing scarce high voltage transmission capacity. They can also increase community resilience, allowing individuals or communities to generate and store energy ahead of extreme weather or anticipated peak events. The region needs to apply the full value of avoided costs and resilience to the economics developing these resources.
Finally, as the super-high scarcity pricing of wholesale gas and power in mid-January shows, the economic case for customer-side resources has become much stronger. Customer-side energy efficiency, demand response and storage don’t need to wait for new transmission lines. But they do require more focused attention by utilities and their governing boards and regulators toward what customers want – to be compensated fairly for their actions to keep the lights on and protect energy affordability and reliability for everyone. Rather than waiting for the next crisis to strain our energy system, we should accelerate investing in customer-side resources now to increase the resiliency of our system. With strategic planning and refreshed economic valuation, we can modernize and tailor our energy system to better handle these winter and late summer peaks.