Long‑Term Power Procurement in an Era of Rapid Market and Technology Changes

How are utilities supposed to do it well—locking up hundreds of millions of dollars in generation assets designed to run for decades—when the breakneck changes in technology, policy, and climate politics can turn those investments into stranded assets well before their time?

We expect utilities to make 20+ year decisions as if it was still 20 years ago, with stable rules and predictable technology roadmaps. But how do they make the optimal multi-decade resource commitments when technology, regulation, and energy markets are evolving so rapidly—for example, with changing energy storage technology, falling battery storage costs, expanding regional markets, new transmission pathsPhoto by John Middleton, and changing capacity

accreditation across technologies?

The key is to structure flexible, risk‑managed decisions rather than trying to make a single, perfect procurement portfolio at one moment in time. Long‑lived commitments—whether power purchase agreements or new build assets—should embed optionality, allow for regular recalibration, and stay aligned with evolving policy and reliability requirements.

Structuring flexibility and optionality into the process

Using scenario planning is pivotal to building multiple internally consistent futures (high BESS penetration, slow EDAM evolution, tighter QCC rules, etc.) along with testing portfolios against all of them versus a single or small set of base cases.

The focus should be on robustness of the portfolio and preferencing portfolios that perform acceptably across several scenarios over ones that are optimal in only a single forecast but fragile to change.

It's important to lock in only what must be long‑term (e.g., some capacity/renewables contracts) and keep the rest of the agreements shorter in tenor or with options for change. Where possible, combine shorter (5–10‑year) PPAs, tolling agreements, and capacity contracts with a smaller number of 20–25‑year commitments.

Design contracts with flexibility, including re‑opener clauses, technology refresh options, and indexation tied to evolving QCC rules or market constructs where feasible.

Favor modular storage projects and renewables that can be expanded or repowered, instead of single, large, non‑scalable assets.

Flexibility is where Demand Response programs shine. They are often structured as short-term contracts of 3, 5, or 7 years. These programs have built-in ability to pivot and change as scenarios change and/or as assumptions are tested out via the program design.

Navigating regional markets and portfolio model changes

In addition to considering technology changes, design for market agnosticism. Build portfolios that can function under EDAM, Markets+, bilateral structures, or adjusted resource adequacy/QCC frameworks.

Give weight to resources that are likely to retain RA / QCC value under evolving counting rules (e.g., firm interties, high ELCC resources in constrained areas).

Finally, explicitly model changes in RA rules, QCC methods, and carbon policy as risk factors.

Performance Monitoring

Performance monitoring turns a long-term procurement into a series of controlled, evidence‑based course corrections. Instead of a one‑time decision that's over upon contract execution, it links what was planned (cost, reliability, decarbonization, flexibility) to what is actually happening in markets, on the system, and in contracts.

The key is to develop triggers, metrics and reporting on the procurement decisions. These help the organization measure, learn, and re‑steer as technology, markets, and models evolve.

Define clear triggers such as market shifts and cost breakthroughs for adjusting the contract terms to the extent possible, based on the flexibility builtinto the contracts.

For each major resource type (BESS, solar, wind, thermal) define metrics to monitor – e.g., availability, forced outage rates, real vs expected ELCC, actual vs contracted output, and market revenue by product.

Assign responsibility for market and policy changes to be summarized periodically and mapped back to portfolio impacts and potential procurement pivots. Develop a concise scorecard to leadership and regulators (where applicable) showing how the portfolio is tracking against cost and reliability expectationswhat corrective actions are planned where there are deviations.

Evaluate portfolios against the triggers and defined metrics to course-correct. Use each procurement cycle as a way to iterate and improve the decision-making process.

The best long-term decisions in a rapidly changing environment are those that leave room to be wrong about technology specifics while still keeping the portfolio reliable, compliant, and reasonably priced under changing technical, market and regulatory landscapes.