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PSE Undertakes 'Unprecedented' Expansion of Renewables, Zero-Emission Generation by Dan Catchpole Clearing Up, February 16, 2024

The utility is trying to add 640 MW to its wind capacity in the lower Snake River basin
and short-term resources, including 100 MW of hydro from the BPA for 2025 and 2026.

Puget Sound Energy needs to add approximately 6,700 MW of zero-emission resources by 2030 to meet Washington's decarbonization mandate, according to the 2023 update of the utility's 2021 clean-energy implementation plan. That's more than twice its existing installed and contracted capacity, and more renewables and zero-emission resources than the utility has acquired in its 150-year history.

The actual amount could end up higher if demand from transportation electrification and data centers continues to grow at an increasingly faster pace. Nonetheless, PSE leaders are confident that the utility can undergo an unprecedented decarbonization and expansion of its resource portfolio.

Complicating matters, compared to the 2021 CEIP, PSE's load forecast through the end of this decade has increased, a trend that will likely quicken due to transportation electrification and increasing demand from data centers.

PSE already has acquired or announced plans to add hundreds of megawatts of wind, solar, hydro and other zero- emission resources in the next few years -- and it has thousands more to add.

The preferred portfolio in its electric progress report filed last year with the Washington Utilities and Transportation Commission includes 1,500 MW of wind, 1,450 MW of hybrid resources (projects that combine wind, solar or storage), 1,000 MW of stand-alone energy storage, 711 MW of low-emission peaking capacity (either renewable hydrogen or biodiesel fuel), 700 MW of utility-scale solar and nearly 750 MW of distributed energy resources. The portfolio also includes 282 MW of conservation and 336 MW of demand response.

It won't be easy, said Josh Jacobs, vice president of clean energy strategy and planning at PSE, but the company will meet the state's 2030 requirement that its retail portfolio is 100-percent carbon emission-neutral.

After it meets the 2030 goal, PSE's entire retail load will need to be powered from 100-percent zero-emission resources by 2045, as required by Washington's Clean Energy Transformation Act.

The generating portfolio of the state's largest utility is evolving to meet the decarbonization mandate. In 2020, PSE relied on fossil fuel-fired generation for more than half of its annual energy needs. By next year, renewables are expected to make up 60 percent of its portfolio (Clearing Up No. 2103) and by 2030 renewables will account for roughly 80 percent of its portfolio, with carbon offsets used to cover remaining carbon emissions.

PSE has acquired or announced plans to develop 350 MW of NextEra Energy Resources' Clearwater Wind project in Montana, the 248-MW Beaver Creek wind project in Montana, and 90 MW from Invenergy's Vantage Wind Energy Center in central Washington. The utility also is trying to add 640 MW to its wind capacity in the lower Snake River basin (Clearing Up No. 2108).

In 2023, it extended its 25-percent share of Chelan County Public Utility District's hydro output through 2051 (Clearing Up No. 2093).

PSE is also acquiring short-term resources, including 100 MW of hydro from the Bonneville Power Administration. It is currently negotiating a few very short-term deals for between 25 MW and 150 MW for 2025 and 2026 (Clearing Up No. 2126).

Meanwhile, the utility is shifting away from relying on market purchases, Jacobs said.

The market is growing tighter and tighter, which is contributing to growing resource adequacy concerns in the Northwest. Consequently, when the utility does turn to the market, it is looking for products with capacity and zero-emission attributes.

"How far out in the curve do you go to lock up those resources?" Jacobs said. "Five, 10 years? Do you let the energy traders manage up to the next month, week, day? We're more apt to go further out." The utility "is wrapping up negotiations" for the current all-source request for proposals, PSE spokesperson Melanie Coon said in an email. "PSE expects to provide information about the timing of the next utility-scale RFP in the coming months."

In addition, the economics of resources are changing and will likely continue to change as PSE rushes to overhaul its portfolio.

In the past, demand resources "never penciled out because supply side resources were always cheaper," Jacobs said.

With an increasingly constrained grid and tighter power market, flexibility's value is rising, and PSE plans to add 86 MW of demand response by 2025.

Last year, the company added a virtual power plant to coordinate about 25 MW of DR as a single resource.

PSE expects other technologies to mature into commercially viable resources in time to help it meet its 2045 goal.

"We believe that [small modular reactor] nuclear is a part of the future if we want capacity at scale" and to decarbonize, Jacobs said.

In addition to small modular reactors, the utility expects renewable hydrogen and long-duration energy storage to be key parts of providing zero-emission dispatchable capacity in the future. In 2023, it announced a pilot project using Form Energy's 100-hour duration iron-air batteries.

Green hydrogen generation could be commercially viable as soon as 2028, Jacobs said. PSE will be competing with utilities and independent power producers across the West to add renewable energy. The ability for the wind and solar supply chain to keep up with demand is a cause for concern, he said. "We don't know definitively."

Once PSE acquires the resources, it will need to get the energy to demand centers, which will be complicated due to the growing congestion facing the Northwest's power grid.

Nonetheless, Jacobs said, there is a "path for us to acquire resources" using PSE's existing transmission capacity and acquiring additional capacity from BPA. If the federal agency invests in expanding capacity on existing lines, it will greatly help the region, including PSE, he said.

On Feb. 9, the utility released an RFP for non-wires transmission solutions with as much as 450 MW of combined capacity in Kitsap County. These solutions could include energy storage systems, and local Clean Energy Transformation Act-eligible renewable or non-emitting energy resources.

If all that isn't hard enough, PSE projects demand to grow faster than it can add clean-energy generation, it said in the CEIP update, which it filed with the WUTC last November (Clearing Up No. 2131).

Its latest retail electric demand projection for 2025 is nearly 7 percent higher than it was in the 2021 plan.

The projection is the utility's first to include demand from medium- and heavy-duty electric vehicles. That change accounts for 1.5 percentage points of the higher load forecast for 2025, the update says.

"What we tried to acknowledge in the update is that things have changed," Jacobs said. "We have challenges."

All the same, "I feel good," he said. "We're really making progress."