Wind Transmission Issues
Ron Lehr, National Association of Regulatory Utility Commissioners
Lack of sufficient transmission to meet market demand for wind energy is one of the most significant barriers facing wind energy development today. In some cases, high quality wind resources are located far from load centers. Owners of competing generation resources usually utilities or government agencies—control existing transmission. Because the existing transmission was built to serve current generation levels and locations of sources and loads, there is very little excess transmission capacity available to serve the development of wind resources. Gaining access to transmission services for wind energy can be complex, time consuming, expensive, and futile. Because it regulates the wholesale, bulk power, and interstate transmission systems, the Federal Energy Regulatory Commission (FERC) is both the source and salvation for many transmission issues. Since the Energy Policy Act (EPAct) of 1992, open access has been an issue before FERC. A series of long orders has not yet achieved the goal of open access, but some progress is evident. FERC is working on a standard set of rules for interconnections between generators and the transmission system. Interconnection agreements can consume substantial time and effort, which FERC seeks to streamline. The open access transmission tariffs that transmission providers have filed with FERC limit services available to wind, retain high costs for transmission services, and include penalties that hurt wind economics and require impossible controls. These limits on service, high rate levels, and penalties can make costs for transmission services prohibitive. There has been a long period of institutional self-examination, confusion, and delay since FERC decided to require Regional Transmission Organizations. FERC’s new mega-rulemaking in favor of Standard Market Design makes it likely that the period of institutional uncertainty will continue in the foreseeable future. In this atmosphere, little regional transmission planning has occurred, and no consensus exists on the case that supports either public or private approvals or investments in additional transmission.
Importance For development of some remote, high-quality, low-cost wind resources, additional transmission capacity will most likely be required. Without it, the net costs of wind investment will be higher.
Options for Resolution
1. Develop wind closer to loads. Use machines that are designed for cost-effective operation in lower-quality wind sites.
2. Connect at the distribution level. At this level, clusters of turbines in small distributed patterns avoid transmission service requirements (see www.nationalwind.org, “Distributed Wind Power Assessment,” page 33 for Tom Wind’s Iowa case study. The study showed that wind can be connected at the distribution level in small clusters without great costs).
3. Separate the ownership of generation and transmission by utilities and government agencies. Require open access to transmission services on a common-carrier basis.
4. Plan for, invest in, and provide sufficient transmission services to allow wind to meet market demand. Participation in transmission planning should expand to include all those with a stake in the outcome, including public officials, non-profit groups, landowners, and individuals impacted by transmission investment. Returns on investment must be sufficient to recompense investors, and the business case for taking the investment risk must be clear and convincing. Investment should be at a level and pace that is current with demand for wind-generated electricity—any less would deny wind the opportunity to compete in a fair market.
5. Reform the transmission planning process, interconnection rules, and interconnection agreements. Provide transmission services to generation resources like wind that can be planned, financed, and constructed in short periods of time to reduce time, costs, and hassles. Do it better, faster, cheaper.
6. Do not penalize wind with imbalance charges unrelated to costs. Do not require wind to nominate strict production schedules to control area operators in the absence of agreements about wind forecasting, data collection and communications, and costs and benefits. Allow imbalances to be settled over monthly periods so wind variations can offset each other.
7. Create transmission services that can be curtailed. Firm transmission is not universally available or economically attractive to wind because wind at capacity factors of 30% to 40% pays much more for firm transmission than higher capacity factor generators. By allowing long-term access to services that can be curtailed or non-firm services (currently limited to one year service contracts by tariff), wind developers could decide whether the amount and timing of interruptions of their transmission service would be economically feasible given their wind farm’s performance over time.
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