TVA’s Integrated Resource Plan – What it Means

Recently the Tennessee Valley Authority (TVA) Board of Directors approved an updated Integrated Resource Plan (IRP). That sounds great! But what does it really mean?

What is an Integrated Resource Plan (IRP)?

Most simply, an IRP is a common planning tool in the electricity sector. This planning tool helps utilities look into the future to weigh a variety of different possible scenarios and strategies. Utilities do this in order to determine pathways in which they can meet their goal of providing electricity to their customers. Scenarios are things that are outside of the utility’s control like general economic conditions such as a recession. Strategies are inside the utility’s control and provide ways the utility can meet its goals given external scenarios.

Goals will vary from utility to utility but most have a few in common. They are:

  • Providing electricity to its customers at the lowest cost possible
  • Maintaining or improving reliability of the electric system

Some utilities also have environmental goals such as an emissions target.

Why have an IRP?

The world changes, and it changes fast. In TVA’s case, they produced the most recent IRP sooner than they originally anticipated. They did this because the world, or the external scenarios, changed significantly since the last time the IRP was completed.

We’ve all seen what these are in our every day lives. Solar and wind prices are dropping at an extremely fast pace. The advent of fracking is driving down the cost of natural gas. Policy changes at state and federal levels have also changed with the Clean Power Plan and others. The factors significantly change how utilities can meet their goals, many of which they may not have foreseen.

What does TVA’s new Integrated Resource Plan say?

Good question! There isn’t a true single answer for this question. The reason is, by the nature of the document, it says a whole lot of things are possible. For instance, if the United States goes into a recession TVA must make significantly different choices than if we experience sustained economic growth.

However there ARE some generalizations that can be drawn from the document. By looking across all the scenarios and strategies you can see some patterns emerge. These are:

  1. Increased use of natural gas
  2. Decreased use of coal
  3. Use of energy efficiency as a generation resource
    1. Note: There are two ways to meet electricity demand. Traditionally we build power plants to supply whatever people need. However, saving electricity acts just like building a power plant. Studies have shown that energy efficiency is the cheapest source of electricity.
  4. Increased use of solar
  5. Increased use of wind
  6. No additional “base load” power needed
  7. Increased diversity of electricity sources

The scenario and the strategy determines exactly how much of the above you might expect to see. However these generalizations hold true.

Of course the devil is in the details as they say. For instance the use of solar varies widely from scenario to scenario.

The IRP was approved. What happens next?

You ask really good questions! Now that the IRP is approved by the Board of Directors it serves as the official plan of TVA to chart its electricity future to 2033. However the IRP is just a plan. It isn’t a document that says anyone has to do anything. After all the world changes fast. TVA itself has recommended an update to this plan in no later than 5 years from now.

Think of the IRP as merely a guide to help frame electricity decisions as time goes on. Things will change but the collective decisions made by TVA and its board should reflect the overall direction of this document.

Lastly, we must note two things. First, TVA should be commended for an extremely open public engagement process when they were preparing the IRP. They listened to regular folks, businesses, environmental groups, industry groups, local power companies and more. Second, you too can take part in this process to make your voice heard. Next time around, make sure you are engaged throughout the process to help TVA be the TVA you wish to see!

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