POWER July 2015 - 64

GENERATION TRANSITIONS
Public Power " Big Dog " TVA
Takes Fresh Approach to Resource
Planning
At Tennessee Valley Authority (TVA), repeated generation transitions have
marked the giant public power utility's long history, from hydro, to
coal, to nuclear. The latest resource plan points to natural gas, along
with renewables and energy efficiency, as the basis for the agency's
generating future.
Kennedy Maize
A
t the Tennessee Valley Authority
(TVA), generation transitions are
nothing new. The nation's largest
public power system-with 34 GW of generating
capacity, supplying retail distributors
with nine million customers in seven states
(Alabama, Georgia, Kentucky, Mississippi,
North Carolina, Tennessee, and Virginia) and
about $11 billion in annual sales-TVA has
gone through repeated changes in its generation
profile over its 82-year history.
" For the first 20 years, " TVA President
and CEO Bill Johnson told POWER in an
interview in May, " it was hydro. Then coal.
Then nuclear. Now, it is all-of-the-above plus
energy efficiency, renewables, and demand
response. " And, in a big way, adds Johnson,
natural gas (see sidebar).
A New Sort of Integrated
Resource Plan
TVA released a draft Integrated Resource Plan
(IRP) in the spring that charts the giant powergenerating
utility's likely roadmap for the next
20 years. Johnson is particularly proud of the
draft IRP, which is getting good reviews from
the system's many stakeholders, ranging from
the Sierra Club and its " Beyond Coal " campaign
to the Tennessee Valley Public Power
Association, which represents the 155 municipal
utilities and rural electric cooperatives that
buy TVA's power to sell to retail customers.
" I've been reading IRPs since the mid1990s, "
Johnson said. " This is a unique IRP
because it treats efficiency and renewables
as resources, " not as afterthoughts. The TVA
process creates models to evaluate five scenarios
of demand growth for the future and,
based on least-cost analysis, lets the judgments
flow from that analysis. The IRP draft
states, " We paved new ground by developing
a unique way to measure and model the financial
costs of energy efficiency and re64
newable
resources as if they were traditional
power plants. This method is a more disciplined
approach than ever before that we believe
creates a much better picture of how all
resources can be best utilized to support load
growth in the Valley. "
According to Johnson, TVA is building
its plan on projections of economic growth
of 0.9% annually for the region. " We haven't
seen quite that much this year, " he said. The
Tennessee Valley, Johnson noted, didn't get
hit as hard as much of the rest of the country
by the 2008 " Great Recession, " but it has
been slower in recovering. Johnson attributes
that to " organic efficiency. " While more
things are being plugged into the electric system,
they are increasingly using less power
than predecessor appliances. He cites LED
lighting as an example.
The draft IRP also points to the role of
natural gas in displacing electricity. Because
of the low cost of TVA power, the region has
substantial loads for space and water heating.
The IRP notes, " If consumers can heat their
homes and water cheaper using natural gas or
other energy sources, they may move away
from electricity in the long term. "
According to the draft plan, each of the
scenarios points to the need for new generation.
But baseload generation is not on the
utility's planning radar.
Once the Watts Bar 2 nuclear plant comes
online and the Nuclear Regulatory Commission
(NRC) approves a 450-MW upgrade at
the Browns Ferry nuclear station, TVA needs
no additional baseload generation. Both events
are likely this year. Johnson told POWER,
" We have seen a change in the load shape. The
minimum loads have gotten lower and there is
more volatility in the intermediate range. "
That suggests, Johnson acknowledged,
a move toward gas-fired combined cycle
plants, which TVA has been installing for the
past five years or so. In the years before that,
the power agency was installing combustion
turbines at its coal-fired plants for peaking
needs. TVA expects natural gas prices to
remain low, and the power agency benefits
from easy access to gas from the Marcellus
shale north and east of the Valley and Gulf
resources to the south, as well as good pipeline
capacity in between.
In April, TVA closed on the purchase of a
700-MW combined cycle plant in Ackerman,
Miss., for $340 million, owned by Quantum
Utility Generation. TVA had been buying
power from the plant since 2008. According
to TVA, the purchase " is the sixth combined
cycle gas facility TVA has built or purchased
since 2007, with two more under construction. "
In a press release, Johnson said, " This
was an opportunity to acquire a power plant
" I've been reading IRPs since
the mid-1990s. This is a
unique IRP because it treats
efficiency and renewables as
resources. "
-Bill Johnson, President and CEO, TVA
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POWER July 2015

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