By Sandy Smith, Utility Wind Integration Group
The American Wind Energy Association (AWEA) and the U.S. Department of Energy have been working toward introducing a “20 percent by 2030″ vision scenario for wind. One major obstacle in the way of that goal is the inadequacy of the national transmission system as it currently exists. Put simply: Where wind is, transmission generally isn’t.
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The chief contributor to this problem: Areas with the best wind resource are remotely located. Construction and expansion of transmission systems are complicated and expensive undertakings. Despite the obstacles, policy initiatives are under way to facilitate transmission infrastructure expansion in the “lower 48″ portion of the United States. While enabling interconnection of wind power plants is not the sole focus of all these efforts, it is clear that wind generation will benefit from them.
The California Transmission Conundrum
California has a significant amount of wind capacity on-line–2,361 megawatts (MW) at the end of 2006. More than 4,000 MW of new renewable generation has been proposed, which will go a long way toward meeting the state’s renewable portfolio standard (RPS), which calls for 20 percent of the state’s energy to come from renewable sources by 2010. California is blessed with significant wind resources; however, as with many portions of the U.S., the resources are located in remote areas where the infrastructure to transmit the energy to where it is needed does not exist.
A significant concern with transmission construction or expansion is how to finance it. Under the system utilized by the California Independent System Operator (ISO), charged with managing the flow of electricity along the state’s open-market wholesale power grid, transmission construction costs are treated in two ways. With transmission for interconnection to generation, known as gen-ties, the costs for network expansion or upgrades are paid up front by the generator’s owner, with the money reimbursed over a five-year period once the facilities are energized. The California ISO controls the other transmission category (network upgrades), and costs are reimbursed by ratepayers.
This two-tier mechanism has proved problematic for developers of renewable generation facilities as they tend to be smaller in size than conventional generators and located more remotely. Recognizing these issues to be barriers to meeting the RPS goal, the ISO has worked on an alternate means of financing transmission for interconnecting renewable generation.
The California ISO filed a petition with FERC in January 2007 requesting approval of a third category of transmission. Targeted toward accommodating renewable generation, the ISO proposed a hybrid financing model where utilities would bear the upfront costs for building transmission but be reimbursed at a later date after the renewable projects are on-line and generating revenue. To be eligible for the third category, a transmission project has to meet a set of criteria that includes its renewable designation, as well as a smaller capacity, proof of funding barriers and other issues.
In April 2007, FERC granted the California ISO the declaratory order approving the third transmission category in concept, declaring that it found the ISO’s proposal struck a reasonable balance in addressing the barriers impeding development of location-constrained resources while providing protection to ratepayers through a rate impact cap and the commercial interest provision. The commission noted that renewable generation is considered “location restrained” because it must be built where the resource–wind, geothermal, etc.–is located. The ISO then worked with stakeholders to develop a tariff for this third category, which was submitted late last year for FERC approval.
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In addition to this activity, the state of California has formed a public-private partnership to consider the feasibility of building new transmission lines to access renewable generation. This effort, called the Renewable Energy Transmission Initiative (RETI), will serve as a way to facilitate the development of renewable generation to help meet the state RPS. The goal of RETI is to put in place the infrastructure to deliver energy from renewable generation located in remote parts of the state or in adjoining states. The effort is being spearheaded by the California Public Utilities Commission, the California ISO, California Energy Commission and representatives from publicly owed utilities in the state. RETI plans to identify major renewable zones to be developed throughout the state and to rank all renewable resource areas to establish an order for transmission line development.
A Texas Tale
Texas, which overtook California in AWEA’s 2006 rankings as the state with the most wind capacity, is implementing a plan to facilitate the development of transmission connecting renewable generation to the grid. In 2005, the Texas legislature passed a bill increasing the state’s RPS to 5,000 MW by 2015. Realizing the key component for meeting this objective consists of electricity generated in the wind-rich western part of the state–necessitating upgrades to the transmission system–the legislature called for the designation of competitive renewable energy zones (CREZ). The CREZ concept flips the existing transmission planning process around by planning ahead for transmission in wind-rich areas so that when new generation is ready to connect to the grid, the lines are already there.
There is plenty of activity related to wind development under way in Texas, with more to come. According to the Electric Reliability Council of Texas (ERCOT), there are 2,992 MW of wind generation currently in operation on their system, with an additional 1,701 MW planned through 2008. (This does not include that part of the grid that is not under ERCOT’s control, but under the Southwest Power Pool’s jurisdiction.) On paper, each CREZ is expected to support roughly 1,000 MW of generation, and the costs for transmission would be paid by ratepayers.
A number of companies and organizations expressed interest in the CREZ process, requesting hearings or filing petitions to nominate CREZs. In addition, several companies partnered to form ventures to build merchant transmission for the CREZs. Electric Transmission Texas LLC (ETT), a proposed joint venture between subsidiaries of American Electric Power and MidAmerican Energy Holdings Company, filed in February 2007 a transmission proposal for the construction of approximately 1,000 miles of transmission lines to support CREZ development. At the same time, ETT proposed an additional approximately 900-mile, high-voltage, high-capacity backbone transmission system.
On Oct. 3, five CREZs were designated in West Texas and the Texas Panhandle. ERCOT has initiated a transmission optimization study to develop options for delivering wind power from the five CREZs to customers throughout the ERCOT system. The CREZ model is being studied closely by a number of states, and is actually being implemented in Colorado. It has also been proposed as a national transmission development mechanism in legislation proposed by Senate Majority Leader Harry Reid (D-Nev.).
A Western Roundup
Outside California, quite a bit of activity is ongoing regarding transmission development to support movement of electricity among the western states. Wyoming, Colorado and New Mexico have established state offices or organizations to facilitate and fund transmission infrastructure development. Notable examples include the Wyoming Infrastructure Authority (WIA), Colorado Clean Energy Development Authority and New Mexico Renewable Energy Transmission Authority.
Several key transmission development initiatives are under way in the western U.S. including TOT-3 Wyoming/Colorado InterTie, Wyoming-West Project, TransWest Express and the High Plains Express project. The TOT-3 Wyoming/Colorado InterTie is a 345-kV project running from northeast Wyoming to the Colorado Front Range and is intended to deliver roughly 800 MW of capacity to Xcel Energy/Public Service Colorado. The target on-line date is 2011 or 2012. The Wyoming-West Project would carry electricity from southwest Wyoming to Utah and is being studied with a 345-kV or 500-kV configuration. This project also has a projected completion timeframe of 2011 or 2012. It would provide a means to move power from Wyoming to California via a DC line. The TransWest Express line would go from the Wyoming Powder River Basin to Arizona via Colorado or Utah and facilitate moving power from coal plants in the area to the Southwest. Led by the WIA and National Grid, this effort also has participation from Arizona Public Service, Salt River Project, Southern California Edison and Tucson Electric. Currently in the feasibility analysis phase, the High Plains Express is a transmission backbone that would run through the eastern plains of Wyoming and Colorado to central Arizona, linking many of the aforementioned projects and providing access to renewable generation. The High Plains Express would either be a 345- or 500-kV line connecting the TOT 3 project, the TransWest Express project, the Eastern Plains Express proposed by Tri-State Generation and Transmission, and several other projects. The project backers, led by Xcel Energy, hope to coordinate the effort with the Federal National Interest Electric Transmission Corridor process and have the line complete by 2017.
The state of Colorado has gone a step beyond in terms of transmission expansion. In spring 2007, the Colorado legislature passed a bill, which was signed by the governor, requiring utilities to identify “energy resource zones” where transmission constraints hinder electricity delivery to consumers or the development of new electric generation facilities to serve the state’s consumers. The bill requires utilities to undertake biennial reviews to designate areas in which transmission capacity lags behind generating capacity; for such areas, utilities would submit proposed plans for development of additional transmission facilities. The Colorado Public Utilities Commission would be required to grant or deny any necessary certificates for such development within 180 days.
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The legislation would allow utilities to recover costs during construction of new or expanded transmission facilities through a rate adjustment clause. This approach mirrors that of the Texas CREZ initiative.
Around the Country
A significant amount of activity is going on in other parts of the U.S., particularly with the Independent System Operators/Regional Transmission Organizations as well as independent transmission companies.
Midwest Independent System Operator (Midwest ISO): The Midwest ISO has a significant number of wind generation projects in its interconnection queue. The Midwest ISO has undertaken a series of transmission expansion plans and, in its most recent effort, is taking steps to optimize the coordination of long-term transmission needs with new generation. The Midwest Transmission Expansion Plan 2007 (MTEP 07) addresses factors such as renewable portfolio standards as well as FERC Order No. 890 and seeks to change the fundamental way the ISO approaches transmission planning. The Midwest ISO wants to move from the traditional approach of planning transmission to ensure system reliability to one that optimizes the value of expansion. According to MTEP 07, with the right assumptions, transmission investment will be better aligned to generation needs.
Southwest Power Pool (SPP): There is a good amount of activity under way in the SPP area. SPP approved a 2008-2017 transmission expansion plan in February that budgeted $2.2 billion in projects to maintain reliability. SPP established priorities of facilitating wind development in the central and south plains and supporting renewable and overall energy objectives in Oklahoma and Kansas. A key development relating to transmission development in the region is an extra high voltage overlay effort, which is a 20-year-plus visionary blueprint to shape near-term planning. This project, which would allow for 13,000 MW of wind, provides a strategic assessment of how to meet SPP’s future reliability and capacity needs through the use of a 500- and 765-kV transmission system overlaying the existing SPP footprint and integrating with the existing EHV systems of Entergy, the Midwest ISO and PJM.
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SPP’s project team conducted a study considering the challenges of operating the electric system up to the year 2026 and identified an optimized package of projects designed to satisfy the needs of SPP and its member systems. The team used an innovative screening methodology to test many different system configurations and performed detailed analysis on six leading alternatives. The top-performing alternative, which has a cost estimate of almost $5 billion, is a 765-kV loop in the central part of SPP’s footprint with connections extending to Midwest ISO/PJM, SERC and ERCOT.
ISO-New England: ISO-New England received proposals at the end of 2007 for long-distance transmission lines to bring wind and hydropower from northern New England and Canada’s eastern provinces into load centers. This is critical as many of the states within the ISO-New England footprint have aggressive RPS goals. Work is under way to refine and implement the New England East-West Solution, or NEEWS. This effort, slated for presentation to regulators in early 2008, would link southeastern Massachusetts and Rhode Island with Connecticut. Northeast Utilities and National Grid USA are taking the lead on this effort.
Independent Transmission Companies: Independent transmission companies are for-profit companies that own or lease transmission facilities. Chief among these are American Transmission Company, which owns and operates infrastructure in Wisconsin, Michigan, Minnesota and Illinois; and ITC Holdings, which owns and operates infrastructure in Michigan and is acquiring transmission lines in Iowa, Illinois, Minnesota and Missouri. ITC Holdings established ITC Great Plains, which is a transmission company certified as a utility in Kansas. ITC Great Plains notified SPP of its commitment to construct, own, operate and maintain the northern portion of SPP’s “X Plan.” The 180-mile-long transmission project calls for installation of a transmission line commencing northeast of Dodge City, Kan., running southeast to Comanche County, Kan. The line will then run from Comanche County northeast toward Wichita. ITC Great Plains anticipates that the project will be completed by 2010. The company has also filed with the Oklahoma Corporation Commission to be considered as a utility, thus giving it eminent domain authority to build lines. It is in discussions with utilities in the state to partner on transmission construction projects.
As can be seen, a tremendous amount of activity is ongoing both nationally and regionally to build or expand transmission infrastructure to get electricity generated from wind plants to customers. One of the key lessons to be drawn from observing all of this is that transmission construction or expansion projects are increasingly being scoped to accommodate wind farms that have yet to be built. Historically, transmission planning has been conducted with system reliability and least-cost considerations in mind. The trend of expanding and enhancing infrastructure to interconnect generation resources that are all too frequently in remote areas reflects a “build it, and they will come” mindset–a significant change in how the electric power industry views renewables.
Any opinions or analysis in this article are those of the writer, not the Utility Wind Integration Group, and do not reflect the views of UWIG, its members or its board of directors.
This article is based on a paper presented at the 2008 DistribuTECH/TransTech conference
