Game Changer: RMI's Reimaging Resource Planning

Our future electricity system can be shaped by resource plans. Over the next three years, utilities will file IRPs representing about 40% of total US energy sales. Over $300 billion will be invested in utility resource plans by 2035, which will affect affordability, health, jobs, and carbon reduction.

104 utilities' resource plans for September 2022, show that by 2035 they plan on:

• Build 200 gigawatts (GW) of renewable energy, including solar, wind, and geothermal
• Install 44 GW of batteries and pumped hydro
• Implement demand-side management for 11 GW
• Put 61 GW of gas plants on the grid
• Shut down 74 GW of fossil fuel-fired plants, such as coal, gas, and oil
• Retire 6 GW of nuclear and build over 2 GW of new reactors

Resource Planning: Key Players

Resource plans are usually owned by utilities since it's their job to make sure the electricity system meets state and federal performance standards. It's usually a dedicated team within the utility that develops and publishes the IRP. It includes analyzing data, engaging with stakeholders, and writing the plan. It's also done by other departments in the utility, like regulatory affairs, financial planning, engineering, and operations.

Resource planning guidelines are outlined by the public utility commission (PUC). The plan typically addresses procedural requirements (like who is involved, how often the plan is filed, how the plan is evaluated, and how it's evaluated) as well as substantive requirements.

Resource planners may also involve consultants, public commenters, advisory groups, intervenors, consumer advocates, and other state agencies. Utility companies hire consultants for things like modeling, stakeholder engagement, and supporting studies. Utility commissions may require specific types of engagement from public commenters or advisory groups. IRP intervenors can submit comments in most states that ask for more information from the utility, criticize the process, or say what their constituents want from the resource plan. In a formal, contested proceeding, comments are supplemented with testimony and can help get additional information and input on the record for the commission to consider in its IRP decision.

A new way to think about resource planning

For utilities and regulators to use IRPs as effective tools for evaluating resource decisions, they must have three things:

1. Trusted: Stakeholder input and transparency make the IRP great.
2. Comprehensive: An IRP can represent costs, capabilities, system impacts, and values of resources that might be available within a planning horizon; it can take into account actions across transmission and distribution systems.
3. Aligned: The plan keeps state and federal policies and customer priorities, like reducing emissions and advancing environmental justice, in mind when evaluating options.

In planning processes, utilities and regulators have to keep in mind a few major trends, including:

Technologies are changing fast and resource costs are shifting

• Policy changes that go beyond affordability, reliability, and safety to include emissions reductions, advancing environmental justice, economic development, and Supporting electrification of buildings, transportation, and industry
• Recognizing that distribution and transmission decisions affect resource planning
• Educate stakeholders about how resource planning decisions affect air quality, health, jobs, energy bills, and climate change

Yet, if an IRP does not achieve these three qualities, its credibility, accuracy, and effectiveness may be eroded. The risks of unanticipated costs for ratepayers, disallowed future investments, dissatisfied

customers, and failure to meet public policy objectives will increase.

Summary of Options to Enhance Resource Planning

To build trust in resource plans, regulators and utilities are:

• Prioritizing transparency, by updating rules that assess what information may be held as confidential or proprietary — and applying those rules to ensure that stakeholders have the information they need to engage effectively in the IRP process
• Meaningfully engaging stakeholders, with an inclusive and substantive process for input before and during the plan’s development

To make plans more comprehensive, regulators and utilities are:

• Integrating resource, transmission, and distribution system planning, to better understand how decisions at one level of the grid might affect others
• Using all-source solicitations in the planning process, to bring in timely market data as a basis for making procurement decisions
• ?Updating assumptions and modeling tools for DER adoption and value, to more accurately forecast DER growth patterns and impacts and assess DERs’ costs and benefits
• Accurately representing emerging resources and their value, by including all options that may be commercially available in the planning horizon and using models with a level of spatial and temporal granularity needed to reveal values

To align resource plans with evolving objectives and understand the impacts of plans on people, regulators and utilities are:

• Updating approaches to planning for reliability, to better understand the risks, vulnerabilities, and types of solutions that can contribute to reliability, including resource adequacy and resilience
• Accounting for carbon emissions and decarbonization targets, to assess progress and alignment toward climate goals or better understand the risk of future climate policy
• Analyzing health and air quality impacts across resource options and portfolios
• Including affordability, jobs, and environmental justice, to make the human impacts of planning clearer

Reimagining Resource Planning. RMI. (2023, January 23). Retrieved January 30, 2023, from https://rmi.org/insight/reimagining-resource-planning/?