PacifiCorp 2007 Integrated Resource Plan (May 30, 2007)

PacifiCorp – 2007 IRPChapter 6 – Modeling and Risk Analysis ApproachDetermination of Fixed Resource Investment SchedulesPacifiCorp used the CEM to determine fixed resource investment schedules for certain smallerscaleresource types—wind, demand-side management programs and CHP facilities—in order tolimit resource variability for subsequent CEM optimization studies and in the risk analysis portfoliosthemselves. (Restricting the number of resources is important for managing portfolioanalysis complexity and model run-times. 45 ) These investment schedules constitute set resourcequantities, locations, and in-service dates that are included in all risk analysis portfolios. In thecase of the proxy wind resources, PacifiCorp developed multiple fixed investment schedules forportfolio testing. For DSM and CHP a single investment schedule was developed and used in therisk analysis portfolios.The company determined most of the fixed resource investment schedules by assessing theCEM’s resource selection behavior across the range of alternative future scenarios describedabove. The next chapter describes the investment schedules derived from the alternative futurescenario analysis.Alternative Resource StrategiesPacifiCorp’s resource strategies fall into two categories: (1) those intended to evaluate the impactsof incremental resource changes, and (2) those intended to evaluate a specific resource investmentpolicy. Strategies that fall into the first category typically involve specifying modelconstraints around a single resource, such as forcing selection for a certain year or removing italtogether as an option. The second category encompasses strategies that broadly tackle certainportfolio risks. Such risks include CO 2 regulatory costs, escalation and volatility of wholesaleelectricity and natural gas prices, and potential state restrictions and standards for resource acquisition(e.g., renewable portfolio standards). Examples of such resource strategies include eliminatingor deferring an entire resource type such as coal, gas, or market purchases.Optimization Runs for Risk Analysis Portfolio DevelopmentThe CEM is ready for execution once the fixed resource investment schedules and resourcestrategies have been defined and input into the model. All CEM runs are configured as “MixedInteger Programming” problems. This means that expansion choices can be represented as eitherbuild/not-build binary variables or continuous variables that enable the model to select fractionalresource amounts. The mixed integer solution better characterizes investments where large fixedcapital costs are involved.In certain cases, a single CEM run completely defines the portfolio that is to be simulated usingPaR. In other cases, a group of CEM runs are used to test multiple resource strategies or assumptions.For this later situation, PacifiCorp manually selects the resource investment schedule basedon observations across the set of CEM runs. This approach is typically used to determine themodel’s selection behavior for a specific resource when other resources are constrained in differ-45 A limitation of this modeling strategy is that variable amounts of DSM and CHP resources were not subjected torisk analysis using the PaR model. PacifiCorp will continue to refine its approach to modeling distributed resourcesin concert with the scheduled June 2007 receipt of DSM and CHP supply curve data from the multi-state DSM potentialsstudy.128