How Does That Work?

Resource planning

WHAT IS IT?

In response to Strategic Directive 9, OPPD must periodically assess its Integrated Resource Portfolio, which includes generation assets, purchased power agreements, demand side options and renewable energy resources. This analysis ensures reliable, competitive, affordable and environmentally sensitive energy for customers.

In 2016, an OPPD team worked with Pace Global, a provider of strategic energy consulting services, to analyze OPPD’s current and future generation portfolio. The objective was to consider a broad range of resource options in order to identify the optimum future generation mix for OPPD considering many different market and regulatory conditions.

The analysis considered variable associated costs of production, overhead and capital costs for each facility. As part of the optimization process, only contractually required assets were retained within OPPD’s portfolio. That included wind power purchase agreements and generation agreements related to Nebraska City Unit 2. By performing this analysis, OPPD could measure the relative cost and risk involved in a variety of scenarios and examine economic feasibility of all assets.

HOW DOES IT WORK?

OPPD provided Pace with a list of assets, their costs, operational efficiencies and the current costs of capacity contracts within the Southwest Power Pool (SPP). Pace combined this information with forecasted costs for various new technologies. This allowed the model to create an optimal, rebalanced portfolio.

This portfolio was then compared to the current generation, or baseline, portfolio. Some of the factors accounted for: implementation of the Clean Power Plan (CPP), no implementation of CPP, a rise in natural gas costs, and declining cost of battery storage, among others.

Pace used a three-step process to analyze OPPD’s portfolio options:

• Step 1: Selecting from OPPD’s resource options to determine an optimal generation mix
• Step 2: Simulating the operation and costs of alternative portfolios over the next 20 years
• Step 3: Testing the portfolios under plausible market conditions and risk factors such as fuel and technology costs

WHAT DID THEY DETERMINE?

In the end, baseline scenarios that included all existing generation had substantially higher costs than the rebalanced scenarios that did not include Fort Calhoun Station. OPPD’s access to low-cost capacity contracts through SPP allow the utility to maintain its obligatory capacity requirements during a transition. The rebalanced portfolio allowed renewable resources be a maximum share of up to 50 percent of OPPD’s generation. The rebalanced portfolio added renewables up to this level. This lowered OPPD’s total system costs and reduced the utility’s risk exposure from future fuel price volatility.