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JUNE, 2003 Wind Power & Transmission:
Many of the old rules for access to transmission capacity and planning were not written to accommodate the unique characteristics of wind power technology, and can therefore have the unintended consequence of adding costs to the delivered price of wind power. As the U.S. electricity market slowly transforms from one with several hundred vertically-integrated utilities with their own transmission control areas to one with a handful of large regional transmission organizations, the rules are being rewritten. Wind power advocates are struggling to ensure that the new rules remove provisions in the present system that discriminate against wind power and other variable technologies. Wind power is different in a number of ways from the power technologies that transmission operators are used to dealing with. The projects are smaller, have short development lead times, and are tied to a specific site that is often remote. In addition, the capacity factors are lower and the output is controlled by the wind, not the transmission control operator. The remote location and low capacity factor can mean higher transmission investment per unit output. Small project sizes and quick development time result in an inherent planning mismatch with transmission investment. In a white paper entitled "Fair Transmission Access for Wind: A Brief Discussion of Priority Issues," published in 2000, AWEA laid out a number of specific target issues, including scheduling imbalance penalties, rate pancaking, nondiscriminatory interconnection, and the need for future transmission infrastructure planning. Scheduling imbalance penalties: The old transmission rules have often imposed severe penalties when a generator fails to meet the schedule that it provided the day before. These punitive, non-cost-based penalties were created to ensure reliability and to stop generators from controlling or 'gaming' the electricity supply, and therefore running up the price. However, since wind is a variable energy source and cannot be controlled, AWEA and other wind advocates have argued that wind plants should not be penalized except to the degree that their inability to forecast transmission needs causes actual economic cost to the transmission system owner. Rate pancaking: To deliver energy to a load that is located far from the remote site where the power was generated, a wind farm may have to use the transmission systems of multiple owners or operators, each of whom can collect access charges. This phenomenon is referred to as rate "pancaking." To avoid penalizing wind generation, the transmission grid should be a single network resource available to a large geographic area. Nondiscriminatory interconnection: Under current rules, a 2-MW wind plant usually faces the same process for applying for transmission capacity as a 300-MW gas-fired power plant, although it would impact the grid in a much smaller way. Lack of capacity credit: Many system operators require entities that serve electric customers to show proof that they have enough installed capacity to meet their load requirements plus a reserve margin. Generators are paid a market price for this capacity, but the methodology that some use to calculate capacity requirements makes wind ineligible to receive any payments even though it clearly does contribute to system capacity. ® Studies show no excessive costs from moderate levels of wind Many of the above transmission rules were written because transmission operators have assumed that the variability of wind power will add excessive costs to maintain system reliability. A number of studies are now emerging that show the costs associated with adding wind are negligible at low penetration levels (<¢0.2/kWh), modest at medium levels (¢0.2-0.5/kWh), and can be moderated even at relatively high levels. Studies in the U.S. have been carried out by Xcel Energy, the Bonneville Power Administration (BPA), and PacifiCorp. In Europe, research has been done on the NORDEL Scandanavian grid, the ELTRA system in Denmark, on the Cyprus transmission system, and on Ireland and the United Kingdom. Detailed information and a bibliography on the principal U.S. studies that have been done to date is contained in a paper prepared for the European Wind Energy Conference that recently concluded in Madrid by Brian Parsons and Michael Milligan of the National Renewable Energy Laboratory (NREL), Bob Zavadil and Daniel Brooks of Electrotek Concepts, Brendan Kirby of Oak Ridge National Laboratory, and Ken Dragoon of PacifiCorp. The paper will be available soon on the NREL Web site at www.nrel.gov . Need for more transmission capacity: In addition to the above-mentioned problems, wind power faces the larger problem that the transmission infrastructure was built to deliver power from large power plants to load centers, and little infrastructure exists in the best wind resource areas. Last year, the Federal Energy Regulatory Commission (FERC) introduced a wide-ranging blueprint to make transmission market rules clearer and fairer with a draft regulation—known as Standard Market Design (SMD). Although its main focus is rationalizing the transmission system for all market participants, one effect is that it would solve many of the problems that wind power now faces in terms of transmission access and treatment.
However, SMD is now facing some political hurdles. Some vertically-integrated utilities and state regulators in some regions have questioned FERC's authority over regulation of transmission for a utility's native load, insist on participant funding of transmission expansion (making the wind developer pay for all network upgrades), and have voiced other complaints. The good news, according to AWEA, is that some regional transmission operators are continuing to adopt the SMD principles: "The East Coast RTOs are already there. The Midwest ISO is on the right track. However, the western RTO and the Southeast are not moving forward with policies to eliminate discrimination against wind power, except in a piecemeal fashion." Until there is a national system for transmission, some "affirmative action" for wind power may be required. For more information: The 2002 AWEA white paper is available from the AWEA Web site at The 2000 AWEA white paper is available at
http://www.awea.org/policy/documents/transmission.PDF
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©
2003 by the American Wind Energy Association. |
his article will examine
the subject of transmission rules, to see how they can impact wind power's
development. The article is largely based on information presented at the
Fundamentals of Wind Energy seminar held just prior to the recent WINDPOWER
2003 conference by AWEA