By Morgan Chilson, Kansas Reflector
TOPEKA — Experts at the Southwest Power Pool project energy usage to grow by 96% during the next decade in its 14-state region, and on Friday, federal regulators gave the organization the ability to proactively plan for that growth.
SPP watches the weather, human behavior, energy usage, the growth of artificial intelligence and cryptocurrency along with numerous other factors to determine energy usage in its 14-state region. Lacking a crystal ball, the organization focuses on data.
“Predictions are difficult,” said Casey Cathey, SPP vice president of engineering. “I’ve worked in the industry just over two decades and when I first started, we were excited by 1% load growth year over year. The latest load forecast and demand forecasts we’re seeing 10 years out are over 75% (load increase) at peak levels.”
SPP is a regional transmission organization, one of seven approved by the Federal Energy Regulatory Commission as nonprofit member agencies that oversee transmission infrastructure, ensure utility system reliability and manage the wholesale electricity market.
FERC on Friday ruled that SPP could change its processes when considering new generation resources.
In a letter to FERC, SPP noted that the way previous rules were written, a transmission customer must demonstrate that it has resources to serve the customer’s existing load plus the load request to be added.
The ruling now allows SPP to consider new resources that may come online even if transmission customers currently lack the resources to serve their forecasted load. Such a move will allow SPP and its members to plan for the projected load increases.
Growth in data centers and artificial intelligence receives most of the attention for spiking energy usage, and AI-driven data centers are about 40% of the load addition expected at SPP, Cathey said.
But in the SPP region, organic growth that includes residential and small commercial and industrial businesses is increasing, Cathey said, and factors such as increasing extreme weather events are part of the equation.
The SPP team tracks every factor that might affect electricity usage. For instance, the oil and gas industry is focusing on electrification, the process of replacing combustion engines with electric and reducing the use of fossil fuels.
“Our footprint has two major oil basins, the Bakken Oil basin in the Dakotas and the Permian Basin,” Cathey said. “Even if nothing else — the Panasonic battery (plant) or crypto — you’re still talking about a good 20% increase just in electrifying those pump jacks.”
Every industry change affecting utility use must be considered, he said. The organization relies on its 65 load-responsible member utilities – primarily Evergy in Kansas – to share data.
A real-time prediction engine, which sounds a little like a Marty McFly invention, helps SPP understand human behavior and its effects on electricity use, such as when people wake up and turn on coffee pots, Cathey said.
Weather matters too.
“Recently, we expanded our weather model down to 1980 so we have at least 45 years of weather data,” Cathey said.
Out of the last five winter seasons, four had extreme weather conditions, more than seen in the past 15 years, he said.
“Climate change is real, and it’s not just affecting the warmth of the Earth but it’s also changing the overall weather patterns,” he said.
It’s a balance, though. Overpredicting the effects of climate change will directly impact affordability if a signal is sent to build more power plants than needed, Cathey said.
As SPP considers energy use from all perspectives, it plans for a “cushion,” Cathey said. Machines break, for instance, so planning for system reliability means incorporating resource diversity. The organization has established a winter planning reserve margin, he said.
“We’ve seen in the last few winters that we need more dispatchable resources,” he said. “(We’re) trying to be technology agnostic. We’re trying to send the signal for batteries as well as wind to complement gas during these winter extreme conditions.”
Dispatchable resources are those that can be ramped up as needed, such as natural gas.
The planning reserve margin operates like coaches building bench strength in a case star player gets hurt, Cathey said.
“But there’s a balance where you can’t have too much bench strength, where you’re paying all these people to just sit on the bench,” he said.
In recent years, the SPP has seen a change in its fuel mix and fuel sources projected to connect to the system, Cathey said
“We saw a major uptick in thermal, which is all gas resources, from roughly about three gigs to over 30 gigs — so 10 times more gas is looking to connect in our footprint,” he said. “We still see a very large amount of wind, solar and electric storage resources, batteries, primarily.
“No one’s building coal moving forward,” Cathey added. “Coal is, at least in my mind, really good for now until we have a suitable replacement, and then we can continue to see retirements of coal.”
New generation sources take a long time to build and Cathey said that creates challenges.
“One of the challenges we have is we need to go ahead and make these decisions now with, quite frankly, not 100% assurance that we’re right,” he said.
It’s exactly that uncertainty that worries Andrew French, chairman of the Kansas Corporation Commission, which regulates utilities and determines who will pay for needed system expansions.
In a recent hearing in which the commission pre-approved Evergy’s request to build two natural gas plants and a solar farm to the tune of $1.8 billion, French said he had “complex and competing impressions” of the case and its magnitude.
“We get a lot of very big and impactful cases, but this one was particularly impactful from a customer affordability and customer reliability standpoint,” he said. “Probably the element that caused me the most consternation or frustration is just the uncertainty of the future. You are looking at a range of many different possible futures, and it’s difficult to know what the right choice is at any given point in time.”
While KCC commissioners supported Evergy’s request, French said natural gas plants come with high costs and exposure to unregulated and potentially volatile fuel markets.
French highlighted improvements to the integrated resource planning process, which is basically a guide to projecting resource needs and determining how those will be met. He said the changes will help Evergy consider an even wider range of resources than the company has in previous plans.
He encouraged Evergy to think “flexibly” about things like energy storage and options to mitigate risks for customers.
“The next few years will be extremely important for our electric utilities to think strategically and work with regulators to position customers in the state advantageously for the coming years,” French said. “We need to be ready to seize on economic development opportunities while also being thoughtful and mitigating risks to affordability and reliability. It’s a very challenging time to make those resource decisions, but that’s what Kansans should expect of their utilities.”
