1. EXETER A SSOCIATES, I NC. March 29, 2006February 17, 2008 1 New Transmission Initiatives for Renewable Energy and Some Thoughts on Wind Integration Kevin Porter NARUC Winter Meetings Staff Electricity Committee Washington, D.C.

2. EXETER A SSOCIATES, I NC. 2 Presentation Outline  Transmission Initiatives for Building Transmission in Advance of Generation  Basic thoughts on wind integration  Sources of additional information

3. EXETER A SSOCIATES, I NC. 3 Renewable Energy and Transmission  “Chicken and egg” problem can be quite severe with transmission and renewable energy  Renewable energy developers do not always have the financial capability to support large-scale transmission investments  Transmission is not built because it is not evident that renewable energy projects will be developed to use the transmission  Various initiatives underway  CA ISO Location Constrained Resource Interconnection  Competitive Renewable Energy Zones (Texas, Colorado)  Open Season (BPA)

4. EXETER A SSOCIATES, I NC. 4 CA ISO Location Constrained Resource Interconnection  Non-network facilities that would connect at least two eligible and unaffiliated generators in identified energy resource areas  Must go through the CAISO Transmission Planning Process and turned over to the CAISO’s operational control once in operation  Costs are rolled into the CAISO’s transmission access charge until generators come on-line, after which generators pay pro rata share of going forward costs  Demonstrated interest of 60% or more of transmission capacity, of which at least 25% is from interconnection agreements  Limited to 15% of total net high-voltage transmission plant investment of participating transmission owners in CAISO  Approved by FERC in December 2007

5. EXETER A SSOCIATES, I NC. Competitive Renewable Energy Zones  Identifies zones with high clean energy potential and transmission necessary to access it  In Texas and Colorado; description here largely based on Texas  Zones in Texas determined by availability of renewable energy resources, suitability of land and financial commitment of generators to construct renewable capacity. Zones nominated by utilities in Colorado, subject to action by the Colorado PUC.  Recovery of transmission costs  Spread across all LSEs in Texas  Via rate adjustment clause in Colorado (including planning and development costs and construction work in progress)  In Texas, developers must deposit letter of credit for 10% of their assigned share of the estimated costs identified in the transmission plan. No such requirement in Colorado 5

6. EXETER A SSOCIATES, I NC. BPA Open Season  BPA has several proposed projects in interconnection queue  BPA has proposed open season to determine zones or clusters to study for new transmission  All requestors of transmission service must participate in open season or forfeit their position in the BPA interconnection queue  One year’s worth of transmission charges in advance, unless customer pays for transmission upgrade costs in advance  Instead of participant funding, BPA proposes to estimate expected reliability, economic and “future use” benefits of new transmission and recover those in BPA general revenue requirements  Under discussion; may take place later this year 6

7. EXETER A SSOCIATES, I NC. Basic Issues to Contend With Concerning Wind Grid Integration  Grid operation requires balance between generation and load  Wind generation cannot be controlled and scheduled with a high degree of accuracy  Goal is to manage net system variability and net system uncertainty, not the variability or uncertainty of wind and solar

8. EXETER A SSOCIATES, I NC. Impact of Variable Power Sources  Power system is designed to handle tremendous variability in loads  Wind adds to that variability  System operator must balance loads=resources and meet reliability standards  It is not necessary or desirable to match wind’s movements on a one-to-one basis

9. EXETER A SSOCIATES, I NC. Wind Myths  For each wind power plant, a conventional generator must be kept standing by in case the wind does not blow  Wind requires storage  The wind only generates energy 25-35% of the time (it is really ~80%)  These myths have been refuted by  Extensive analysis  Operating practice of wind plants around the world

10. EXETER A SSOCIATES, I NC. Factors that Influence Wind Integration  Balancing area size  Generation Mix  Wind resource geographic diversity  Market-based or self-provided ancillary services  Size of interconnected electricity markets

11. EXETER A SSOCIATES, I NC. 11 Lessons Learned So Far  The costs for integrating wind is non-zero and increases as the proportion of wind generation to conventional generating resources or peak load increases.  Reserve costs attributed to wind integration are relatively small at wind penetration levels of less than 20%. These costs generally increase as the level of wind penetration increases.  How the variability and uncertainty of wind generation interacts with variations in load and load forecasting uncertainty has a large impact on the level of wind integration costs.  The level of geographic concentration of wind projects also affects wind integration costs. Greater spatial diversity of wind projects can lessen the fluctuations in wind output and therefore lessen wind integration costs

12. EXETER A SSOCIATES, I NC. Large-Scale Studies in Process  Western Wind & Solar Integration Study  30% Wind in footprint, 20% in WECC  Eastern Wind Integration Study

13. EXETER A SSOCIATES, I NC. Further Information  National Wind Coordinating Collaborative Bi-Monthly Transmission Update Calls  Open to all  Next one is March 11 th at 1 p.m. Eastern  http://www.nationalwind.org/publications/transmission/updates/defa ult.htm http://www.nationalwind.org/publications/transmission/updates/defa ult.htm  Contact me or Katie Kalinowski at kkalinowski@resolv.org  Table on RTO market rules and wind power  http://www.uwig.org/windinmarkets.htm http://www.uwig.org/windinmarkets.htm  Table on New Transmission Proposals  http://www.awea.org/policy/regulatory_policy/transmission_docume nts/Expansion/Summary_ProactiveTransmissionPolicies_Jan2008. pdf http://www.awea.org/policy/regulatory_policy/transmission_docume nts/Expansion/Summary_ProactiveTransmissionPolicies_Jan2008. pdf  Wind Integration Studies  http://www.uwig.org/opimpactsdocs.html http://www.uwig.org/opimpactsdocs.html 13

14. EXETER A SSOCIATES, I NC. Further Information (2) IEEE Power Engineering Society Magazine, November/December 2005 Updated in 2007 IEEE Wind Power Coordinating Committee Wind Super-Session, Summer 2008 Utility Wind Integration Group (UWIG) Spring meetings in Dallas April 16-17 www.uwig.org

15. EXETER A SSOCIATES, I NC. March 29, 2006 Contact Information Kevin Porter Exeter Associates, Inc. 5565 Sterrett Place Suite 310 Columbia, MD 21044 410-992-7500 410-992-3445 fax porter@exeterassociates.com 15

16. EXETER A SSOCIATES, I NC. Appendix 16

17. EXETER A SSOCIATES, I NC. Accommodating Higher Levels of Wind and Solar Generation  Flexible, quick response generation with minimum turndown should be emphasized for future resource additions  Note that retirements may accelerate due to variable renewable generation  Market design that encourages and rewards maneuverable generation  Elimination of contractual obligations that thwart maneuverability  Inventory generation capability  Consolidate balancing areas, or mimic consolidation through sharing energy imbalances, area control area, etc.  Price-responsive load and demand response  Perhaps plug-in hybrids in the future

18. EXETER A SSOCIATES, I NC. 18 Accommodating Higher Levels of Wind and Solar Generation (2)  New transmission can enhance the grid’s ability to accommodate variable renewable energy generation  Making the most of existing transmission  Explore alternate line/path rating criteria (e.g., wind plants would rarely be at full output simultaneously due to spatial diversity)  Explore new technologies, including:  Real-time line ratings  Controls to manage output from multiple variable renewable resources

19. EXETER A SSOCIATES, I NC. 19 Accommodating Higher Levels of Wind and Solar Generation (3)  Curtailment – reduce or limit output of intermittent generation (wind) during periods of low load and high wind and high hydro  Forecasting – Encourage development and use of improved wind and solar forecasting methods  Day-ahead for unit commitment on grid-wide basis  Hour-ahead for real time operation  Monitoring – Record and archive operational data from existing new intermittent renewable generation (meteorological and MW)  Verify actual operational characteristics versus expectations  Refine operating practices, performance, and flexibility requirements  Data for future studies of grid operation and performance with increased intermittent renewable generation