Demand for power is growing more quickly than many US utilities had forecast. Planners worry that parts of the country could face another round of California-style rolling blackouts and rate spikes. In many states, political leaders say wind power is their first choice (after efficiency) to meet new power needs. But can wind power be deployed quickly enough? Elisa Wood looks at the problem and the innovative fixes under debate.Homes in the US are bigger and cooler and use more electricity than energy planners could ever have imagined a few decades ago. The average new house, 150 m2 in 1970, is now over 240 m2, and 89% of these homes have central air conditioning, up from a mere 34% in 1970, according to the National Home Builders Association. If this weren’t enough to keep a utility executive awake at night, today’s homes contain an array of new power-hungry gadgets. The increasingly popular plasma televisions, for example, use three to five times the energy of a TV with a conventional tube. As a result, US customers now buy more electricity than ever before and are likely to keep increasing their consumption for the foreseeable future. The US Energy Information Administration (EIA) forecasts that electricity sales could swell by as much as 54% in roughly the next two decades.
This escalation has industry leaders asking: ‘Can the US build power plants quickly enough to keep up, and how can the it meet consumer and political demand that the new power be green?’
Trimont wind farm ppm energy
‘There is going to be fierce competition for resources,’ says Stephen Wright, Administrator of federal agency Bonneville Power Administration, which operates an extensive transmission system and wholesale marketing operation in the Pacific Northwest. ‘The fundamental fear I have is: are we going to be able to meet load?’
Demand for green power comes from several sources: consumer desire for environmentally friendly alternatives, preparation for likely carbon restrictions and, most of all, renewable portfolio standards (RPSs). Nearly half the states now have an RPS, a rule that requires a percentage of power to come from green sources. Moreover, Congress appears to be getting serious about enacting the standard for all 50 states. As this issue of Renewable Energy World was going to press, the House of Representatives had passed a comprehensive energy bill with a national RPS that requires 15% of power supply to be renewable by 2020. The bill is expected to go to conference committee, where differences from a Senate version will be bashed out.
But even if the RPS does not become law, many governors and lawmakers have vowed over the last year to make clean energy a significant swathe of their new supply. As more states add mandates for renewables, pressure builds for the renewable energy certificates – the currency often used to meet state RPS rules. In some parts of the country, where green power development is not keeping up with demand, prices for RECs are escalating. A prime example is Massachusetts, where REC prices are bumping up against a state cap, in the mid-US$50/MW range.The transmission bottleneck
Just how much green energy might the US pursue? The American Council On Renewable Energy said in its in its March 2007 report The Outlook on Renewable Energy in America Volume II: Joint Summary Report that it sees potential for the US to produce more than 600 GW of renewables by 2025. Of that, 248 GW will be wind power, 164 GW solar, 23 GW hydro, 100 GW geothermal and 100 GW biomass energy, power and fuel. Meanwhile, President Bush has floated a target for wind power of 20% by 2020, a goal the American Wind Energy Association (AWEA) and the US Department of Energy is seeking ways to meet.
The gap is wide between these proposals and where the US stands now in renewables production. Power from renewables totalled about 98 GW in 2005 (see Figure 1), with most of that – 77 GW – from hydroelectric sources, according to the EIA’s most recent report on the country’s net capacity. Wind power, which accounted for 8.7 GW, is the fastest growing renewable generation source, and has nudged up the overall total for renewables somewhat since 2005. But still, as of June 2007, wind was providing only 12.6 GW, according to the AWEA.
Figure 1. Amount of renewable energy consumed in the US in 2005 as a fraction of the total energy supply Source: EIA
The goals set for renewable energy are ambitious. But then, a great deal of opportunity exists for new generation, particularly since 70% of the power plants that will be operating in 30 years have yet to be built, according to Vic Abate, General Electric’s Vice-President for Renewable Energy, who spoke at the American Wind Energy Association’s annual conference in June.
Still, Abate says he sees huge challenges ahead for the renewables industry because it faces ‘political complexity never seen before’. For one thing, the industry must overcome an image still held by some politicians that ‘wind power is for hippies on mountain tops smoking marijuana [while] real energy comes from coal’, says Montana Governor Brian Schweitzer.
‘Transmission is the emerging bottleneck’ warren gretz/nrel
But the overriding problem isn’t building the wind generation, it is constructing the massive new transmission needed to push the wind power from windy and often remote locations to load centres on the east and west coasts. ‘We need new transmission. It ain’t popular, but it needs to be part of this popular product of wind,’ says Pat Wood, Chairman of Airtricity and former Chairman of the Federal Energy Regulatory Commission. Or, as explained by Paul Bonavia, President of Xcel Energy, one of the biggest US utility players in wind: ‘If you love wind, you have to at least like transmission.’ He adds: ‘That is where, as a utility, we start to see risk. We worry we could get bogged down with a big commitment to wind and have no way to bring it to market.’ Robert Lukefahr, President of Power Americas, BP Alternative Energy, says, ‘Transmission is the emerging bottleneck.’Big coal pairs with wind
Wind energy advocates acknowledge that any significant national expansion of transmission will require immense political support, most readily obtained through industry alliances. Unusual partnerships are likely to form – in fact be necessary – in pursuit of the transmission overhaul.
For example, the coal industry, the country’s largest single source of electric power, also stands to benefit from transmission expansion. Indeed, American Electric Power, a major owner of coal-fired generation, stepped forward this year to lend the AWEA a hand in transmission planning. Of AEP’s 36 GW of power plants, 73% use coal as fuel. AEP is also one of the largest utilities and the owner of 62,000 km of transmission lines. Using its transmission know-how, the company prepared a high-level, conceptual outline of a national transmission system that could accommodate wind energy growth. The plan creates a 30,000 km extra high voltage (EHV) interstate AC transmission system with a 765 kV backbone overlaying the existing system. The EHV transmission system provides an additional 200-400 GW of bulk transmission capacity at a cost of about $60 billion in 2007 money.
Figure 2. Proposal for a robust interstate transmission line system for interconnection between wind energy and regions, states and communities
Need for the project goes beyond just wind integration. In its accompanying white paper Interstate Transmission Vision for Wind Integration, AEP envisions the US developing a robust interstate system ‘much like the nation’s highways, to connect regions, states and communities’ (see Figure 2). In contrast, today’s system continues to experience ‘transmission bottlenecks that compel the excessive use of older, less efficient power plants’. Constraints ‘must be eliminated to ensure a fair, vibrant and open market that gives us the flexibility to deliver economic and environmentally friendly energy to consumers’, the utility says.
The recent entry into the wind market of leading farm equipment manufacturer John Deere shows the agricultural industry has become aware it may share a common future with the wind industry john deere
The company is not proposing that it will undertake the massive plan but that it created the map to ‘provide an example that encourages the type of thinking and, most importantly, consensus and action necessary to bring transmission and wind generation together on a national scale’.
AEP favours an AC line because DC technology is generally limited to point-to-point transmission, and it would be expensive to encompass wind energy’s broad geographic scale with multiple connections to a DC line. Furthermore, the 765 kV backbone frees up capacity on lower voltage systems such as 500 kV, 345 kV and 230 kV.
Finally, AEP says the use of 765 kV lines carries less environmental consequence than other options, given that they can carry much more power than lines operating at lower voltages. For instance, a single 765 kV line can carry as much power as three 500 kV lines or six 345 kV lines. The result is that fewer lines need to be constructed and less land cleared.Rallying farmer support
A less surprising partner is the agricultural lobby. This alliance between farming and wind energy is fostered by the fact that farmers can gain revenue by erecting wind turbines on their property, and many of the states with the best wind potential also happen to be rural and populated by farms, among them Montana, North Dakota, South Dakota, Minnesota, Wyoming, Nebraska, Iowa, Kansas, Colorado, Oklahoma, New Mexico and Texas. Given this potential, Iowa Governor Chet Culver sees the middle part of the US becoming what he calls the Silicon Valley of energy.
The recent entry into the wind market of the world’s leading manufacturer of farm equipment, John Deere, underscores that the agricultural industry has become aware it may share a common future with the wind industry. The company has set up a new division in Johnston, Iowa, that provides debt and equity financing for wind projects.
Moreover, two former US Senators, Bob Dole and Tom Daschle, have been trying to persuade Congress to approach farming and energy in a combined strategy. Through the 21st Century Agriculture Policy Project they are trying to boost agricultural revenue by helping farmers tap into markets for energy production, conservation and green house gas reduction. A report released in May by the group outlines opportunities for farmers in wind, solar, biofuels and carbon sequestration.
This energy-efficient home in Broomfield, Colorado was constructed as part of the US Department of Energy’s Building America programme – but it is far from typical warren gretz/nrel
Farmers would benefit from transmission expansion, particularly a ‘robust long-distance transmission system … built from wind-rich farm and ranch lands to areas without native renewable energy resources’, the report says.
To reach this goal, the report calls for expanding the capacity of the existing federal Power Marketing Administration (PMA) transmission system, particularly in the north west and west. The US Department of Energy manages the system, which markets federally generated power and owns transmission, much of it in areas with strong wind potential. The Dole-Daschle alliance proposes that renewable energy projects in the PMA receive streamlined consideration and preference for interconnection over non-renewable projects. In addition, they are pushing for Congress to authorize $1 billion per year for five years to provide tax-exempt bonds for the construction of transmission that facilitates development of renewables.Expanding the footprint
The agricultural report also extols the benefits of expanding regional transmission organizations (RTOs), which are independent organizations that are regulated by the federal government. They operate transmission assets, oversee wholesale markets and sometimes span several states. With its large footprint and multiple generation sources, an RTO can help solve the problem of wind intermittency. If the wind isn’t blowing, other power plants can easily be deployed to make up for it.
An RTO can help wind, and wind can help the RTO. Yakout Mansour, President and CEO of the California Independent System Operator, points out that although wind comprises less than 5% of Cal-ISO’s portfolio, California’s energy crisis of 2000-2001 – when the state was forced to impose rolling blackouts – probably wouldn’t have occurred had that 5% existed then. ‘On a regional basis, when you have diversity, it is very doable and the right way to go,’ he said.
Moreover, RTOs offer a mechanism to pay for new transmission, which is one of the reasons why Patrick Wood says he pushed the concept so hard when he served as FERC Chairman. The AWEA has been urging the FERC to expand RTOs, not only because organized markets increase reliability and foster competition but because they clearly attract renewables. While organized markets encompass only 44% of the nation’s wind energy potential, they are responsible for 73% of its wind installations.
‘Large regional energy markets provide for cost-effective balancing of generation and load with significant penetrations of variable, non-dispatchable power sources, and they facilitate delivery of resources remote from load centres,’ said the AWEA in a letter to Joseph Kelliher, FERC Chairman. The February 2007 letter was co-signed by several other organizations and renewable energy developers, among them Iberdrola, Babcock & Brown, the Natural Resources Defense Council, PPM Energy, Horizon Wind Energy, the Conservation Law Foundation and the California Wind Energy Association.
Organized markets can also benefit from renewables in that they provide flexible transmission tariffs that can be paid on an ‘as-used’ basis as opposed to a capacity reservation basis. In addition, organized markets create ‘transparent and fair’ prices, which is important to a renewable energy project if it finds it cannot fulfill a contract and must buy power to make up for its shortage or, conversely, if it must sell power because it is producing an excess.God’s big battery
A pairing or packaging of resources also can help wind power overcome reliability and grid problems. Together, the twosome may offer a higher capacity factor than one resource alone. One of the most commonly discussed is the pairing of wind with pumped hydroelectric projects, what Airtricity’s Wood calls God’s big battery. The Sacramento Municipal Utility District, the sixth largest publicly owned utility in the US, is exploring the use of wind power to pump water uphill at night, where it is stored. On days when wind turbines are not producing power, the water can be released to produce hydroelectricity. Wind, in turn, can make up for periods when hydropower is deficient because of low-water levels or regulatory restrictions on water use.
Another increasingly discussed pairing is demand resources and wind. Cal-ISO’s Mansour spins a vision of offering customers a green product made available through a kind of demand-response mechanism. The US utility industry already is beginning to deploy smart meters that give customers the ability to engage in forms of real-time pricing. That is, rather than being billed under an average rate, they are charged the actual market rates, which can vary dramatically during the course of day. The customer can choose to engage in an electricity-intensive activity, like drying clothes, when the prices are low, in an effort to save money. Mansour asks why this ability could not extend to green power: let customers know when the wind is blowing so that they can choose to buy power at that time.
‘Imagine if you ask people if they want to subscribe to a green energy programme – not just green pricing. It [would be] technology that allows your consumption to be adjusted based on availability,’ he says.
King Mountain wind farm cielo wind power
Indeed, looking at the bigger picture, demand resources and renewables are likely to be twin pillars of the US pursuit to reduce carbon emissions, according to a May 2007 report entitled The Twin Pillars of Sustainable Energy: Synergies between Energy Efficiency and Renewable Energy Policy and Technology, by ACORE and the American Council for an Energy Efficient Economy.
Paired, the two resources could reduce carbon emissions by 46% in two decades, according to the study. Further, used together they are an asset to grid operations. For example, efficiency measures and renewables often have different load shapes on the grid, so, when paired, they can improve overall system operations. On a hot summer day, efficiency can reduce peak load, while solar and wind energy can operate at high output, allowing grid operators to cut back on peaking units, which are often expensive and highly polluting diesel generators. The pairing creates a kind of hedge that can reduce consumer prices, particularly in competitive markets, where electricity prices tend to spike during heat waves. The pairing can be especially beneficial in reducing costs in markets that have locational pricing.
Over a broader planning horizon, the pairing allows utilities to better manage portfolio planning. Demand resources can be up and running quickly to meet short-term power needs in the US. In fact, over a five-year scenario, planners see energy efficiency providing the bulk of new resources, according to the report. Renewable generation, on the other hand, can supply a greater portion of the long-term portfolio need.
Moreover, efficiency measures can play a key role in helping states meet RPS requirements. By reducing energy usage in a system, efficiency measures reduce power load. This, in turn, cuts back on the amount of megawatts of renewables needed to meet the standard. Put simply, if a utility’s load is 1000 MW and efficiency measures reduce it to 900 MW, then the utility must supply only 90 MW to meet a 10% RPS, rather than 100 MW. In short, efficiency allows the US to forgo adding as much supply as it projects it will need.
‘Realizing this potential would require a substantial and persistent policy commitment, but the leading states in energy efficiency investment are already documenting savings in the range of 1% of total electricity sales on an annual basis,’ the report said.
This approach can also help renewables displace more fossil fuel generation and occupy a larger percentage of the nation’s power portfolio. ‘Demand growth for energy must be brought into a sustainable range so that clean renewable technologies can begin to catch up with energy demand,’ says the report. ‘If energy demand grows too fast, no supply technology, no matter how clean, will be able to substantially reduce fossil fuel consumption.’
Indeed, if forecasts prove true that US energy sales could grow 54% over the next 20 years, it will take enormous effort and change for the country to develop enough clean energy to significantly expand its slice of the US power pie. But GE’s Abate points out that forecasts have been wrong before. Wind power development, in particular, has outperformed long-term predictions by a significant margin in recent years. The task won’t be easy, but with strategy innovations and a little help from its friends, the renewables market just may meet the ambitious goals it has set itself.
Elisa Wood is US correspondent for Renewable Energy World
e-mail: [email protected]
Research Assistant Andre Gil contributed to this article