ABSTRACT
This chapter introduces three questions that utility resource planning must always answer: (i) when (in what year) does the utility need to add new resources, (ii) what is the magnitude (MW) of the needed new resources, and (iii) what is the best new resource(s) to add. The first two questions address the reliability of the utility system. Two perspectives of evaluating utility reliability are discussed: reserve margin and probabilistic. The third question addresses how to determine which resource option(s) is the best selection for the utility's customers. A discussion of the two types of resource options, Supply options and demand side management (DSM) options, is provided. Next, two types of economic evaluations, preliminary and final (or system), are discussed. Included in this discussion is an explanation of why one type of preliminary economic evaluation, levelized cost of electricity, is fundamentally flawed and why it should only be used if each of four characteristics of the resource options being evaluated is identical or at least very similar. The chapter closes with a discussion of various types of non-economic evaluations that may be performed. A definition of “integrated resource planning” and the second fundamental principle of utility resource planning, are also provided.
