Valuation of Renewable and Distributed Resources: Implications for the Integrated Resource Planning Process

Over the last two decades, traditional integrated resource planning (IRP) has proven to be avaluable tool for evaluating the tradeoffs between supply-side generation and demand-sideefficiency resources. However, there has been increasing focus on the incorporation ofrenewable, distributed, and demand-side resources into utility planning, which requires newmethodologies to assess the value of these resources. Traditional IRP is generation-centric andtypically fails to take into account the operational performance and costs and benefits of thedistribution system. Traditional IRP takes a narrow view of reliability as loss of loadprobabilities and can neglect the more subtle issues of power quality. Traditional IRP rarelyquantifies the risk tradeoffs between fossil and renewable resources.In support of the integrated resource plans of Hawaiian Electric Company (HECO) and itssubsidiary companies Maui Electric Company (MECO) and Hawaii Electric Light Company(HELCO), EPRI with leadership from Rocky Mountain Institute (RMI) conducted a series ofworkshops. These workshops provided information to HECO staff on RMI’s methodologies tointegrate risk/benefit analysis of energy resources into the integrated resource planning process.HECO seeks practical methods for their IRP practitioners to integrate these issues into currentand future IRP processes. RMI has codified its insights into incorporating renewable, distributed,and demand-side resources into the integrated planning process with its Energy ResourceInvestment Strategy (ERIS) methodology. This report documents the details of the workshopspresented to the HECO utilities.