1. Transmission and Wind Integration June 7, 2010 Michael Goggin American Wind Energy Association

2. Outline ●Benefits of Wind Energy ●Transmission Overview ●Wind Integration Overview

3. Over 500,000 Total Jobs Supported By Wind In DOE report Fact: in 2008, 35,000 new jobs added Currently Installed MW by State

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

5. 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 CO 2 $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

6. Transmission

7. ●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

8. Iowa 17,639 Minnesota 18,203 New Mexico 18,007 North Dakota 12,602 Penn. 2,935 South Dakota 27,806 Oklahoma 10,187 Illinois 17,086 Ohio 3,810 Kansas 9,433 Wisconsin 628 Michigan 3,242 WV 818 New York 6,990 VT 236 Total 297,808 MW MA 520 Montana 5,694 NJ 704 Under 1000 MW 1,000 MW-8,000 MW Over 8,000 MW Missouri 5,411 Indiana 8,225 Maine 1,866 NH 496 RI 949 DE 450 MD 100 VA 83 Arkansas 60 Texas 50,669 3,994 California 11,575 Colorado 15,904 Idaho 730 Nebraska 2,690 Nevada 4,099 Oregon 14,336 Utah 1,349 Washington 8,702 Wyoming 9,582 Wind in Interconnection Queues by State AWEA calculation as of March 16, 2010

9. Economies of Scale for High-Capacity Transmission Source: MISO

10. 765-kV benefits are substantial over 500-kV and 345-kV. 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

11. 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

12. ●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

13. Wind Integration

14. 2009 U.S. Wind Penetration Source: AWEA data, EIA forms 906 and 920, 2008 data

15. European Wind Energy Penetration, 2008 Source: EWEA 2007 and Eurelectic 2006

16. 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

17. Source: NREL The Flexibility Supply Curve

18. The Distance Element of Wind’s Variability Correlation in plant output as a function of time and distance Source: NREL

19. The Time Element of Wind’s Variability Study Wind Penetration1 minute5 minute1 hour Texas 2008 [1] [1] 15,000 MW6.5 MW30 MW328 MW California Energy Commission 2007 [2] [2] 2,100 MW, +330MW solar0.1 MW0.3 MW15 MW 7,500 MW, +1,900 MW solar 1.6 MW7 MW48 MW 12,500 MW, +2,600 MW solar 3.3 MW14.2 MW129 MW New York 2005 [3] [3] 3,300 MW- 1.8 MW52 MW [1] [1] http://www.uwig.org/Wind_Generation_Impact_on_Ancillary_Services_-_GE_Study.ziphttp://www.uwig.org/Wind_Generation_Impact_on_Ancillary_Services_-_GE_Study.zip [2] [2] http://www.uwig.org/CEC-500-2007-081-APB.pdfhttp://www.uwig.org/CEC-500-2007-081-APB.pdf [3] [3] http://www.uwig.org/nyserdaphase2appendices.pdfhttp://www.uwig.org/nyserdaphase2appendices.pdf

20. Wind Integration Costs DateStudyWind Capacity Penetratio n (%) Regulation Cost ($/MWh) Load Following Cost ($/MWh) Unit Commitmen t Cost ($/MWh) Gas Supply Cost ($/MWh) Total Operating Cost Impact ($/MWh) May ‘03Xcel-UWIG3.500.411.44na1.85 Sep ‘04Xcel-MNDOC150.23na4.37na4.60 June ‘06CA RPS40.45*tracena 0.45 Feb ‘07GE/Pier/CAIAP200-0.69tracena***na0-0.69*** June ‘03We Energies41.120.090.69na1.90 June ‘03We Energies291.020.151.75na2.92 2005PacifiCorp2001.63.0na4.60 April ‘06Xcel-PSCo100.20na2.261.263.72 April ‘06Xcel-PSCo150.20na3.321.454.97 Dec ’08Xcel-PSCo203.951.185.13- 6.30**** Dec ‘06MN 20%31**4.41** Jul ‘07APS14.80.372.651.06na4.08 Source: NREL

21. 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

22. 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)

23. 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

24. 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

25. 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

26. Grid Balkanization Impairs Wind Integration

27. 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

28. Questions? Michael Goggin mgoggin@awea.org 202-383-2531 mgoggin@awea.org