Transmission and Wind Integration

June 7, 2010

Michael Goggin

American Wind Energy Association

Outline

● Benefits of Wind Energy● Transmission Overview● Wind Integration Overview

Over 500,000 Total Jobs Supported By Wind In DOE report

Fact: in 2008, 35,000 new jobs added

Currently Installed MW by State

DOE 20% Report Scenario: 46 States Could Have Major Wind Development by 2030

Incremental direct cost to society

$43 billion

50 cents/month/

household

Reduction in emissions of greenhouse gasses and avoided carbon regulation costs

825 million tons of CO2

$50 to $145 billion

Reduction in water consumption 8% through 2030

17% in 2030

Jobs supported and other economic benefits

500,000 total with 150,000 direct jobs

$2 billion in local annual revenues

Reduction in nationwide natural gas use and savings for all gas consumers

11%

$86-214 billion

DOE 20% Report Summary: Costs & Benefits

Sources: DOE, 2008 and Hand et al., 2008 Note: All dollar values are in NPV

Transmission

● How a Lack of Transmission Hurts Renewables:• Renewable projects cannot connect to the grid• Project output can be curtailed because of inadequate

transmission• Cannot capture benefits of geographically diverse

resources● Transmission Needed Anyway to Reduce Congestion and

Improve Reliability• Consumers losing $10s of billions per year due to

transmission congestion and inefficiency• Reliability events cost consumers billions per year • Nearly every source of new generation will need new

transmission

The Lack of Transmission is a Major Problem

Iowa17,639

Minnesota18,203

New Mexico18,007

North Dakota12,602

Penn.2,935

South Dakota27,806

Oklahoma10,187

Illinois17,086

Ohio3,810

Kansas9,433

Wisconsin628

Michigan3,242

WV818

New York6,990

VT236

Total 297,808 MW

MA520

Montana5,694

NJ704

Under 1000 MW

1,000 MW-8,000 MW

Over 8,000 MW

Missouri5,411

Indiana8,225

Maine1,866

NH 496

RI949

DE450

MD100

VA83

Arkansas60

Texas50,669

3,994

California11,575

Colorado15,904

Idaho730

Nebraska2,690

Nevada4,099

Oregon14,336

Utah1,349

Washington8,702

Wyoming9,582

Wind in Interconnection Queues by State

AWEA calculation as of March 16, 2010

Economies of Scale for High-Capacity Transmission

Source:MISO

4.56.66.92.6*Cost/Mile ($M) for 2400 MW capacity

172110124132Typical Height (ft)

44%22%38%100%ROW utilization

factor

450900600200Total ROW (ft)

150150200200ROW per line (ft)

3631Lines Required for 2400 MW Capacity

8004009102400SIL per Line (MW)

2236Conductors/Phase

2111Circuits/Tower

345345500765Description

4.56.66.92.6*Cost/Mile ($M) for 2400 MW capacity

172110124132Typical Height (ft)

44%22%38%100%ROW utilization

factor

450900600200Total ROW (ft)

150150200200ROW per line (ft)

3631Lines Required for 2400 MW Capacity

8004009102400SIL per Line (MW)

2236Conductors/Phase

2111Circuits/Tower

345345500765Description

•* Cost in 2006 $US, based on average terrain

•** SIL is a relative capacity measure, thermal capacity is ~4000 MW for 765 kV and ~ 2000 MW for 500 kV

•

765-kV benefits are substantial over 500-kV and 345-kV.

765-kV benefits are substantial over 500-kV and 345-kV.

Transmission voltage selection significantly affects performance, cost

and the environment.

Transmission voltage selection significantly affects performance, cost

and the environment.

•* Cost in 2007 $US, based on average terrain.•** SIL is a relative capacity measure, thermal capacity is over 4000 MW for 765 kV and ~ 2000 MW for 500 kV.

•

Source: AEP

Reduced Land Use

The Market Failures● Economic benefits of transmission do outweigh costs:

• Joint Coordinated System Plan: Would pay for itself in 7 years by reducing power prices

• Texas study: Would pay for itself in 3 years• Reliability benefits• Reduction in fuel price volatility impacts• Benefits of connected renewables: environmental,

economic development, energy security

● Why don’t we just build the transmission? - Obsolete transmission policies, particularly cost

allocation policies- In many regions, current cost allocation policy is analogous to charging the next truck entering a congested highway the full cost of adding a new lane

● Policy reforms needed to allow new transmission construction to proceed:• Planning (pro-active planning)• Paying (broad regional cost allocation)• Permitting (streamlined siting)

● AWEA-SEIA white paper at http://www.awea.org/

GreenPowerSuperhighways.pdf

Policy Reform Needed: The Three P’s

Wind Integration

2009 U.S. Wind Penetration

Source: AWEA data, EIA forms 906 and 920, 2008 data

European Wind Energy Penetration, 2008

21.22%

11.76%

9.26%

8.42%

7.00%

4.28%

3.89%

3.78%

3.67%

3.40%

3.28%

1.82%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Denmark

Spain

Portugal

Ireland

Germany

EU-15

EU-25

EU-27

Greece

Netherlands

Austria

UK

Source: EWEA 2007 and Eurelectic 2006

Power System Operations:Background

● Electricity supply and demand must match at all times

● Grid operators accomplish this by increasing and decreasing the output of flexible generators, like hydroelectric and natural gas power plants

● Electricity demand is highly variable; forecasts are used, but there is still variability and uncertainty

● Electricity supply is also variable and uncertain● As a result, grid operators hold generation in reserve

to accommodate aggregate variability:• Regulation reserves • Load-following reserves • Contingency reserves

● Reserves can be spinning or non-spinning

Source: NREL

The Flexibility Supply Curve

The Distance Element of Wind’s Variability

Correlation in plant output as a function of time and distance

Source: NREL

The Time Element of Wind’s Variability

StudyWind Penetration 1 minute 5 minute 1 hour

Texas 2008[1] 15,000 MW 6.5 MW 30 MW 328 MW

California Energy Commission 2007[2]

2,100 MW, +330MW solar 0.1 MW 0.3 MW 15 MW

7,500 MW, +1,900 MW solar

1.6 MW 7 MW 48 MW

12,500 MW, +2,600 MW solar

3.3 MW 14.2 MW 129 MW

New York 2005[3]

3,300 MW - - 1.8 MW 52 MW

[1] http://www.uwig.org/Wind_Generation_Impact_on_Ancillary_Services_-_GE_Study.zip[2] http://www.uwig.org/CEC-500-2007-081-APB.pdf[3] http://www.uwig.org/nyserdaphase2appendices.pdf

Wind Integration CostsDate Study Wind

Capacity Penetration (%)

Regulation Cost ($/MWh)

Load Following Cost ($/MWh)

Unit Commitment Cost ($/MWh)

GasSupplyCost($/MWh)

Total Operating Cost Impact($/MWh)

May ‘03 Xcel-UWIG 3.5 0 0.41 1.44 na 1.85

Sep ‘04 Xcel-MNDOC 15 0.23 na 4.37 na 4.60

June ‘06 CA RPS 4 0.45* trace na na 0.45

Feb ‘07 GE/Pier/CAIAP 20 0-0.69 trace na*** na 0-0.69***

June ‘03 We Energies 4 1.12 0.09 0.69 na 1.90

June ‘03 We Energies 29 1.02 0.15 1.75 na 2.92

2005 PacifiCorp 20 0 1.6 3.0 na 4.60

April ‘06 Xcel-PSCo 10 0.20 na 2.26 1.26 3.72

April ‘06 Xcel-PSCo 15 0.20 na 3.32 1.45 4.97

Dec ’08 Xcel-PSCo 20 3.95 1.18 5.13-6.30****

Dec ‘06 MN 20% 31** 4.41**

Jul ‘07 APS 14.8 0.37 2.65 1.06 na 4.08

Source: NREL

Lessons Learned from Wind Integration Studies

● Wind forecasting can significantly reduce integration costs by reducing uncertainty

● Geographically diverse wind resources tend to be less variable● Wind resources spread over larger areas are less variable –

one of the reasons why transmission is important● Diverse wind has very little variability on the minute-to-minute

time scale● Wind is easier to integrate on more flexible power systems ● Market/system operation reforms can significantly reduce wind

integration costs● A robust transmission grid can significantly reduce integration

costs● Integrating wind is a cost issue, not a reliability issue (thinking

about “limits” or renewable thresholds is inaccurate) ● Storage is not needed, but can help

Solutions: Transmission is Critical

● NERC IVGTF: “Transmission expansion, including greater connectivity between balancing areas, and coordination on a broader regional basis, is a tool which can aggregate variable generators leading to the reduction of overall variability. Sufficient transmission capacity serves to blend and smooth the output of individual variable and conventional generation plants across a broader geographical region. Large balancing areas or participation in wider-area balancing management may be needed to enable high levels of variable resources.” (p. 43)

• NERC: “More frequent and shorter scheduling intervals for energy transactions may assist in the large-scale integration of variable generation.” (p. 61)

• In much of the U.S., power plants are scheduled to operate for hourly intervals, and expensive reserves are used to accommodate intra-hour variability

• Using 5- or 10-minute scheduling intervals accommodates intra-hour variability without reserves

• Studies show significant savings from moving to 5- or 10-minute intervals instead of hourly:• Bonneville Power: 80% reduction in wind integration costs• Avista: 40-60% reduction in wind integration costs

Shorten Power Plant Dispatch Intervals

Flexibility through markets

● NERC: “Additional sources of system flexibility include the operation of structured markets, shorter scheduling intervals, demand-side management, reservoir hydro systems, gas storage and energy storage.” (p. 48)

● Ancillary services markets provide incentives for generators, demand response, and other flexible resources to offer their services to the grid

● Markets ensure that lowest-cost resources provide needed flexibility services

Larger Balancing Areas

• Allow excess power in one region to be shared with neighboring regions

• Enable diverse wind resources spread over a larger area to be connected to the same grid, canceling out their variability

• Create cost savings

• Midwest ISO estimates savings from consolidating its 26 balancing areas into one are 3.7 to 6.7 times greater than the costs

• Savings are large even on power systems without wind energy

• Consolidation can be done physically or virtually

Grid Balkanization Impairs Wind Integration

• NERC: “Forecasting is one of the key tools needed to increase the operator’s awareness of wind plant output uncertainty and assist the operator in managing this uncertainty.” (p. 55)

• Largest opportunities for improvement:

• Better integrating forecasts into power system operations

• Faster updating short-term models, more data

Improve Use of Wind Forecasting

Questions?

Michael Gogginmgoggin@awea.org

202-383-2531