As energy market participants work to keep up with an ever-increasing demand for electricity, asset siting — or the strategic placement of power plants, transmission lines, substations and other energy infrastructure — has become a hot topic. It’s also an extremely complicated process thanks in part to uncertainties and challenges around regulations, permitting, weather, grid capacity, transmission, interconnection and sustainability, all of which can impact the economic success of a project.
Properly sited assets can create a more efficient marketplace and enable owners to effectively monetize that new asset. That’s critical amid the drive to optimize operational efficiency, environmental sustainability, community impact and regulatory compliance. However, poorly sited resources can negatively impact the economic viability of the asset as well as the reliability of the grid.
With so much at stake, energy market participants must rely on digital modeling tools to make smart, data-driven decisions around the construction of new assets. Modeling solutions, such as Energy Exemplar’s PLEXOS platform, simplify the process of designing the electricity grid of the future. These solutions enable customers to create a sandbox in which they can virtually explore the real-world impact of different siting locations, combinations of assets and other factors like weather, congestion and load. As a result, market participants gain visibility into which scenarios will be the most sustainable, efficient and profitable — best integrating with the existing grid and serving load where and when it’s needed.
Leveraging digital solutions for asset siting
Digital solutions simplify and accelerate the asset-siting process by helping decision makers identify where and what to build, as well as how to best mitigate the risks associated with building and operating the asset.
Where to build
Traditionally, once the land, permits and environmental details were worked out, owners would build their new assets and rely on tax credits or market prices to ensure the project was profitable. That mindset has evolved as competition in the market has increased. Today, owners must think strategically about the economic outcomes associated with building a project because, as generous as current tax credits are, they’re not always enough to justify a project. A digital modeling platform such as PLEXOS can provide data on revenue projections, profit maximization and production cost modeling to help owners ensure the project will be financially viable before they build.
Energy assets can be sited in a variety of locations, including open land, repurposed brownfield sites and in cross-sector collaborations such as agrivoltaics. Asset planners, particularly renewables developers, typically aren’t evaluating one, two or even five of these sites at a time; they’re exploring hundreds of potential projects. Full evaluation of these sites is costly. Conducting a complete feasibility analysis on hundreds of project candidates is not economically responsible, especially when many simply won’t pencil out. Stakeholders need to narrow down the list of potential sites quickly so they can focus on the most promising opportunities. Leveraging digital platforms for this task can streamline and simplify decisions around where to build.
Modern digital asset-siting platforms allow decision makers to consider factors such as transmission congestion, weather, the cost of land and the availability of right of way –– all data points that can be visualized in PLEXOS’ highly advanced platform to help decision makers quickly evaluate which sites merit further investigation. Decision makers can then conduct a more robust economic analysis on the most promising sites to see which will likely be optimal when it comes to the desired outcomes.
What to Build
Digital modeling platforms like PLEXOS also facilitate robust cost, reliability and sustainability analyses that enable market participants to determine which assets, or mix of assets, will be most effective on any given site and in their portfolio. For example, digital modeling solutions can inform decisions on the integration of renewable generation resources to support decarbonization goals, provide grid reliability and meet increased demand.
More than just the type of resource best suited for any given site, the data can also help decision makers determine how much wind, solar, hydrogen and energy storage is optimal.
One of the most powerful capabilities a platform such as PLEXOS offers is the ability to evaluate hybrid projects with multiple types of assets, including renewable and traditional generation, new transmission lines, or other types of energy infrastructure. The complex modeling offered by these solutions allows market participants to think holistically about asset planning. In other words, these tools enable asset developers to figure out how different assets best play together to create the most efficient system and the best outcome.
How to mitigate risk
In addition to providing data that informs where and what to build, modern digital asset-siting solutions help owners mitigate the risks associated with building new energy infrastructure assets, particularly those around transmission congestion analysis. Understanding the risks associated with transmission congestion is a critical factor in successfully siting an asset.
With increased competition in the marketplace, asset developers need to understand the impact on their project if another developer builds a project that leverages the same transmission capacity. With a platform like PLEXOS, users can simulate that scenario and understand how much congestion the additional project will create, when the congestion will happen, how long it will last and if there are congestion revenue rights (CRRs) or financial transmission rights (FTRs) available at a reasonable price that will allow them to hedge against the expected transmission congestion costs. Armed with that knowledge, the developer may decide to move to a more viable site, or they may determine it’s worth the risk to proceed with the project.
Modern digital asset-siting tools also allow market participants to mitigate basis risk, or the price differential between the generation point and the market hub. Identifying and understanding potential congestion analysis along specific transmission paths enables participants to better manage and hedge the risks associated with locational marginal price (LMP) differences.
How PLEXOS Can Help
The demand for more electricity, decarbonization of the electric grid and integration of more renewables will continue to complicate the already-complex asset-siting process in the coming years. Energy Exemplar’s PLEXOS features state-of-the-art asset-siting capabilities that allow market participants to model evolving and complex energy systems across the entire energy value chain. The software not only evaluates all assets equally but enables the assessment of assets in light of a portfolio as a whole, allowing users to determine where assets should be built, as well as which combination of assets will produce optimal outcomes and have the lowest risk.
Highly visual, the platform is designed to enable users, even those new to the energy space, to make faster, better-informed decisions around the value of potential sites. PLEXOS also excels at nodal analysis and Monte Carlo stochastic analysis, which means the platform can handle a large variety of hypothetical future states, empowering decision makers to identify which have the best benefit-to-cost ratio.
Learn how the PLEXOS platform can optimize asset siting analysis
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