MONTHLY SPOTLIGHT
From Demand to Despatch: Defining the Boundaries of Resource ADEQUACY
Electricity systems always ensure access to reliable power. The idea is simple: lights should come on whenever a consumer flips the switch. Resource adequacy tests whether the available capacity can honour that promise with an acceptably low probability of shortage. When RA fails, there is insufficient power supply. But how do we find the cause of a resource adequate system (or not)? The primary question would be: where does resource adequacy start or end?
Traditionally, RA assessment began by studying the annual peak demand periods with the available supply. The available supply often came from traditional sources such as coal or natural gas. RA measured the level of generating capacity required from traditional sources to meet the peak demand.
The peak demand forecast is usually based on historical demand data. On the supply side, operators plan for reserves such as the planning reserve margin (PRM). This measures the difference between the total available installed capacity and peak load as a proportion of the peak load.
PRM helps assess reserve needs beyond available conventional capacity. But as renewables grow, supply becomes intermittent. Weather is harder to predict, backup reliance on conventional plants increases, and extreme events can cause shocks. Unlike coal or gas, renewables are hard to store; batteries help but remain costly. As a result, both generation and storage capacity vary with weather.
RA must consider how different resources contribute to peak demand, using indices beyond PRM. But reliable generation alone is not enough. Delivery through transmission, distribution, and operations also matters. A complete assessment must balance the entire supply chain against demand, starting with demand assessment as the first building block.
The aim of this article is simple: to highlight the importance of demand assessment, fuel availability and generation in RA. The idea is to enlighten the reader on why adequacy planning will have to be holistic. This begins by understanding the need for generation, i.e., demand. The article then explores the importance of fuel and resource-mix required for generation.
The role of electricity demand assessment
Electricity demand assessment is important to measure resource adequacy. By studying demand patterns, supply can be matched effectively to maintain system stability. Since demand fluctuates in real-time, it becomes the central factor in balancing the grid. Generation can be more or less relative to the level of demand at a given time. Thus, understanding total and peak demand across real-time, short-term, and long-term is essential.
Assessing demand also reveals how consumption patterns vary across regions and sectors. For example, rural farmlands experience peak loads at different times compared to industrial hubs or urban centres. Robust demand assessment methodologies help capture this variation and provide deeper insights into regional differences.
In the medium to long term, demand assessment supports investment planning and capacity expansion. Factors such as demographics, migration, and rising incomes shape future demand and guide grid expansion strategies.
As the time horizon shortens to the near term or real time, the focus shifts to identifying supply shortfalls. Short-term forecasts highlight gaps between peak demand and available capacity. These forecasts also inform reserve requirements, which are critical for maintaining real-time system balance.
Conventional methods of demand assessment, based on past data and broad assumptions, often overestimated demand and created surplus capacity. They lacked baseline corrections and relied on long forecast cycles, which reduced accuracy. To address this, newer approaches combine bottom-up and top-down methods. Bottom-up forecasts use data from sectors like households, agriculture, and industry. Top-down forecasts depend on wider economic indicators such as GDP, income, and demographics. Together, they give a clearer and more reliable picture of future demand. Demand assessment is the first step towards ensuring resource adequacy. This is followed by matching generation and planning the right fuel mix.
Fuel availability as a cornerstone
RA begins by mapping electricity demand, followed by ensuring generation capacity to meet it. Central to generation is the availability of fuel; it influences the ability of power plants to produce electricity. Plants operating on coal, natural gas and oil need robust supply chains and adequate reserves to prevent disruptions. The logistics of fuel procurement, storage and transportation are critical for fuel availability. Renewable energy sources rely on sources like sunlight and wind. Their intermittency introduces uncertainty in generation output. Hence, the following are key to maintaining generation and mitigating supply risks:
- Access to primary, secondary, and alternative fuels
- Logistics through pipelines, rail or shipping
- Effective fuel management strategies during shocks.
Fuel availability should also account for the following attributes :
- Resource potential
- Logistics
- Storage
- Seasonality
- Import channels
Fuel availability is only one part of the broader challenge in securing generation adequacy. Equally important is how these fuels are converted into electricity through a diverse mix of generation assets. Together, the generation mix meet varying demand patterns efficiently and reliably.
The importance of a diverse generation mix
Composition of resource-mix is as important as fuel availability for generation. A reliable power system balances various generation sources to meet the varying demand. Baseload plants, such as coal and nuclear, provide steady, continuous power crucial for system stability. Peaking plants, often gas turbines, offer the rapid ramp-up capability to manage sudden demand spikes.
Renewable energy sources provide low-cost power but need flexibility to manage their variability. Technologies like pumped hydro and batteries help add flexibility. But their capacity for long-term balance is evolving. Some of the reliability metrics for generation include PRM, Loss of Load Probability (LOLP), and Expected Unserved Energy (EUE). LOLP is the likelihood of encountering insufficient generation capacity to meet electricity demand. EUE is the total expected amount of unserved energy in a given study horizon. An ideal generation mix combines different types of plants to meet the demand reliably. This not only ensures enough capacity but also the flexibility to respond to changing conditions.
Resource Adequacy starts with demand, but where does it end?
Resource adequacy starts with a clear understanding of electricity demand – the exact load that must be served. The next critical step is assessing generation, beginning with the availability of fuel. This ensures that resources are sufficient in quantity, quality, and timing to reliably meet demand. Generation adequacy ensures that the combination of resources can always meet the demand. This includes extreme or unexpected events, such as weather disruptions or equipment failures. By having a diverse and flexible mix of generation, the power system adapts to outage and/or supply shocks.
However, resource adequacy does not end with generation. Beyond this lies the essential role of networks, including transmission and distribution systems. The following layers are useful in measuring RA:
- Demand Assessment
- Fuel Adequacy
- Generation Adequacy
- Network Adequacy (Transmission, Distribution, and Operations)
Together, these form the core of the Integrated Resource Adequacy Assessment (I-RAA) Framework. This framework also incorporates electricity markets, where capacity, reserve, and flexibility signals guide investment and procurement decisions. These market signals are crucial in translating adequacy concepts into practical actions.
Balancing resources involves more than managing supply chains. RA assessments must also incorporate market and price signals. From a policy perspective, these assessments should support stakeholders in making informed and effective decisions.
A resource adequate system cannot be complete without network and transmission reliability. These aspects form the backbone that delivers power to end-users and manage system stability under stress. The other article, “Resource Adequacy: Why Delivery Is the New Challenge?” delves into these critical layers, highlighting how network adequacy is equally vital to keeping the lights on. These perspectives emphasise that RA is multi-dimensional. It requires coordinated techno-policy and market approaches to ensure reliable electricity supply for all.