1. NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC June 30, 2010 Brian Hirsch, Ph.D. Michael Milligan, Ph.D. Dave Corbus E. Ian Baring-Gould National Renewable Energy Laboratory Golden, Colorado USA Alaska Wind Integration Review of Technical Meeting

2. National Renewable Energy Laboratory Innovation for Our Energy Future Drivers for Renewable Energy Many National drivers for expanded renewable energy use – many appropriate for Alaska: Fuel Price Uncertainty Federal and State Policies Economic Development Public Support for Renewables Energy Security Carbon Risk

3. Is Wind on the Railbelt Technically Possible? Yes… But… There are significant challenges that have to be addressed Many of the challenges are technical, but there are technical solutions with economic impacts to many of these A great deal of the challenges are contractual (e.g., IPP, inter-utility and gas supply) and financial – and these need to be better understood National Renewable Energy Laboratory Innovation for Our Energy Future

4. Key System Wide Integration Challenges From ~30 technical representatives from almost all of the utilities on the railbelt Short-term regulation (cycles to minutes) Transients Transmission constraints Short-term response/dispatching Mid-term (minutes to hours) Dispatch (hydro/thermal) Gas constraints Unit Commitment Long-term (months to seasons) –Hydro-thermal Understanding the costs and benefits to customers/members National Renewable Energy Laboratory Innovation for Our Energy Future

5. Recommended/Typical Approach Structure of a Railbelt Wind Integration Assessment Implement a Technical Review Committee (TRC) Development of a timeline for different studies Identification of the timeframe for the study - Implementation of planned capacity improvements, large hydro, etc. Define the process and scenarios to be considered as part of the wind integration study Determine if analysis focuses of individual utilities vs. system wide operation – both technical & contractual Conduct the wind integration study National Renewable Energy Laboratory Innovation for Our Energy Future

6. Steps of a Formal Integration Study (1 of 3) Data collection, assessment and development –What data needs to be collected vs. what is available –Resource - Review of wind data (speed & direction) – what is adequate data for the different studies that need to be done. –Wind resource modeling –Utility information Book end analysis – determine issues triggering larger regulation issues - at what point is expanded control or regulation required. Transient analysis – voltage, power flow, short circuit etc. National Renewable Energy Laboratory Innovation for Our Energy Future

7. Steps of a Formal Integration Study (2 of 3) Analysis of following items over the various time scales (Will involve nesting studies) –Transmission – transmission congestion –Gas nomination – availability, transportation (deliverability), and contractual –Hydro-thermal dispatching – unit flexibility –Inter-utility coordination –Wind forecasting and the potential impacts on dispatching –Alternative wind scenarios, eg Geographic diversity –Thermal flexibility, O&M cost of thermal cycling, thermal plant efficiency penalties –Impact of wind on emissions (unit requirements & heat rate) –Contractual issues/implications/limitations –Observing physical system constraints National Renewable Energy Laboratory Innovation for Our Energy Future

8. Steps of a Formal Integration Study (3 of 3) Sensitivity studies – as appropriate and determined Alternative approaches for supplying ancillary services Risk management – understanding the impacts of changes in key parameters Economic analysis Costs & benefit associated with different solutions National Renewable Energy Laboratory Innovation for Our Energy Future

9. Post Integration Assessment Based on the analysis – assess the following Addressing contractual requirements as identified in the study Identifying what operating margins an IPP should provide Identification of what would/should be done anyway regardless of wind development as the system is improved and expanded. Identification of pro’s and con’s of IPP vs utility ownership Impacts of wind projects implemented by organizations outside of utility control – how does this impact the close utilities and the system as a whole –Large projects (IPP’s, large users, etc.) –Community scale projects (2MW?) - how much regulation and fuel supply issues are experienced for different sized generators and technologies –Other contractual options National Renewable Energy Laboratory Innovation for Our Energy Future

10. Near Term Pressures Fire Island project near-term actions… CIRI requires signed PPA by September 2010 to qualify for ITC Expires (currently) at the end of the year – though it may be extended (political issues) Utility technical staff believe that at this time there is insufficient information and time to sign the PPA National Renewable Energy Laboratory Innovation for Our Energy Future

11. PPA Due Diligence (Fire Island) Short term reserve required of wind farm with the system operating under business as usual (seconds to minutes) – analysis to define requirements. –Validation of data –Analysis of wind and load data –Transient analysis Longer term regulation requirements (minutes to years) – analysis to define requirements. –Transmission – transmission congestion –Gas nomination – availability, transportation(deliverability), and contractual –Hydro-thermal dispatching Utilities determine what regulation risk, ramp limits and curtailments they can accept (clipping the waterfall curve) and then the project providing all of that regulation. Identification of wind system specifications – ride through, inertia, etc Basic cost & benefit analysis Definition of collaboration and contractual agreements with associated parties – inter utility, gas companies What needs to be signed and when; escape clauses, defining conditions National Renewable Energy Laboratory Innovation for Our Energy Future

12. NREL Observations & Recommended Next Steps There is not a clear understanding of the risks of installing wind technologies in the near term There is a lot of confusion and miss-understandings regarding wind development, specifically Fire Island Although rushing a project is always a bad thing – decisions on Fire Island are requested in the near term Facilitated discussion on the project between all parties Conduct preliminary wind study – bracketing integration impacts and costs (better understanding the Risks) Move forwards on a Wind Integration Study

13. Steps Forward Determining what to do with Fire Island Proposal Near term and complete collaboration – open facilitated discussion Determination of what information is required to make an assessment of regulation needs to make utilities “comfortable” with the project (Risk acceptance and limitations) Development of the TRC and continue the analysis Develop the public case for the project (cost / benefit looking at the long term impacts) Move forwards on a Wind Integration Study Process for implementing; TRC, Who, how to do it, what to do… Identification of costs and funding ($2-4M project)

14. NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC E. Ian Baring-Gould National Wind Technology Center & Deployment & Industrial Partnerships Centers 303-384-7021 Ian.baring-gould@nrel.gov Questions & Discussions