Utility group PacifiCorp is about to open a gusher of opportunity for wind, solar and energy storage developers in the Pacific Northwest and Rocky Mountain regions.
Last year PacifiCorp finalized a landmark integrated resource plan (IRP) that for the first time envisions it relying on large amounts of wind farms and solar backed by energy storage to meet its long-range energy needs.
Now the utility, part of Warren Buffett’s Berkshire Hathaway conglomerate, is preparing a solicitation for projects to meet that plan’s needs through 2024, taking a concrete step toward its vision.
PacifiCorp’s new all-source request for proposals “is a big deal,” said Spencer Gray, executive director of the Northwest & Intermountain Power Producers Coalition, a trade group with members including EDF Renewable Energy, Invenergy, Constellation Exelon, Shell Energy North America and others.
Through its two utility subsidiaries, Pacific Power and Rocky Mountain Power, PacifiCorp claims to be the largest grid operator in the Western U.S., serving 1.9 million customers in six states. PacifiCorp’s utilities have long relied on federally operated hydropower or utility-owned fossil-fueled generation for their electricity.
While many details still need to be worked out before the request for proposal’s anticipated opening in July, “from our perspective, this is a major shift in the region,” Gray said in a Friday interview.
For renewables developers, several things stand out about PacifiCorp’s upcoming solicitation. First and most obviously, “it’s just so large,” Gray said. PacifiCorp’s IRP preferred portfolio includes 1,823 megawatts of new solar resources co-located with 595 megawatts of new battery energy storage system capacity, and 1,920 megawatts of new wind resources — all by the end of 2023.
“There’s a lot of development that’s happened that’s waiting for one of these big [requests for proposals],” Gray said, with developers already working on projects that meet the resource mix identifies in its IRP.
PacifiCorp’s IRP identifies Wyoming as the likely site of most of its new wind power, where new transmission lines are being built to capture the state’s high wind potential, including Rocky Mountain Power’s Gateway West project.
PacifiCorp is targeting Utah for the largest portion of its solar development, followed by Wyoming, Oregon and Washington.
The exact numbers of procured resources may change, said Rick Link, PacifiCorp’s vice president of resource planning. Given the nature of the IRP as a planning document, “the results from the RFP may be different from that, and we may end up with a different mix of different resources from across our system.”
There are still regulatory obstacles to overcome, Link added. The IRP is in the final stages of regulator review, and Utah and Oregon regulators must approve it before it’s ready to go out to bid. “Once that process is done in those jurisdictions, which we’re targeting for late June [or] early July…they will get out to the market,” Link said.
Solar-plus-storage as a replacement for gas plants
Another point about the IRP stands out for renewables developers: PacifiCorp isn’t proposing to build any projects itself that could undermine independent developers’ projects. That stands in contrast to how some utilities are operating in other regions as they grow more comfortable building and owning solar and wind plants.
“The desire of a given utility to build what it wants to build has often overridden the ostensible rules of a competitive solicitation” in the region, Gray said. “That’s not the case here — you’re not competing with the utility itself.”
Instead, PacifiCorp intends to seek out projects that will either build and transfer their assets to PacifiCorp to rate-base them or provide energy and capacity through power-purchase agreements (PPAs), Gray said. “Having a mix is important for retaining the diversity of resources in the region.”
A number of questions remain to be worked out between now and the planned July 6 opening of the request for proposals, including how exactly the competitive bidding process will be handled and how the PPAs will be structured, Gray said. “We’re focused on making sure the competitive bidding process is fair,” and “to make sure there’s an opportunity for PPAs to receive winning bids or to be on the shortlist.”
Link said that the mix of options PacifiCorp will consider are “really up to the bidder, and how the structures fit their business model, and how they might feel they might be best positioned to compete. We’re seeking proposals for either type…and anticipate a robust response and a diversity.”
More coal-fired power plants to close region in the region
PacifiCorp already has a significant amount of wind power on its system, as well as several large-scale solar projects. But this is the first time that it has sought solar power and energy storage as a cost-competitive alternative to natural gas for new resources.
The emphasis on storage-backed solar is driven by two key factors. First, as part of its responsibility for providing reliability across the multistate transmission network it serves, “we did need some incremental flexible capacity across the system…[and] those ended up as battery storage projects.”
Second, batteries paired with solar are eligible for the federal Investment Tax Credit for solar power, making them more cost-effective than standalone storage projects, he said.
The Pacific Northwest region still faces long-range reliability challenges in the years to come. Several of the region’s coal plants are set to retire by mid-decade, including those in Boardman, Oregon, Centralia, Washington and Colstrip, Montana. PacifiCorp’s IRP also calls for early retirement of four of its coal-fired power plants in Wyoming.
“What the RFP doesn’t address — and isn’t intended to address — is the issue of long-term capacity for the region as a whole,” Gray said. “That’s something to keep an eye on” as utilities seek to meet regional carbon-free energy mandates.
In Washington state, which has set a target of 100 percent clean energy by 2045, utility Puget Sound Energy is planning to open an RFP in August to meet a need for about 750 megawatts of new resources by 2026, he noted.
PacifiCorp’s IRP calls for more than 4,600 megawatts of new wind power, more than 6,300 megawatts of solar power, and more than 2,800 megawatts of energy storage by 2038. But it also envisions adding new natural-gas-fired peaker plants starting in 2026, in an amount that will depend on whether enough energy storage, pumped hydro or other “non-emitting capacity resources can be added to provide incremental generating capacity to the system.”