Last month the Bonneville Power Administration (BPA) -- a federal power marketing agency in the United States Northwest -- backed out of a wind project in Montana, one that had been under development for 18 months and had steadily grown in size from 22 MW to 66 MW. While cost was an issue, a big part of BPA's decision to halt its involvement was the near impossibility of delivering the power to Northwest population centres. The transmission path between Montana and the states of Oregon and Washington, where most of the Northwest's electricity load is located, is already over subscribed. "There is no transmission to get from there to load centres in the Northwest," says BPA's George Darr. "Montana has a great wind energy source, but to my knowledge nothing is being done about the transmission problem."
The Montana Blackfeet project, originally announced in September 2000, (Windpower Monthly, October 2000) is not dead. Its developer, SeaWest Windpower, is looking for a power purchaser and it is still hopeful of getting BPA back aboard, says SeaWest's Dave Roberts. Alternatively and more probably, it could attract a local utility that would absorb the project into its own system without having to look for a way to send the power out of state.
The problem is not just confined to these western states. Transmission constraints are standing in the way of wind power development in North and South Dakota and even in south western Minnesota where 450 wind turbines already line Buffalo Ridge.
Pat Wood of the Federal Energy Regulatory Commission (FERC) thinks part of the problem is the incomplete transition of the power business from a regulated to an open market. Indeed, ten years of competition in wholesale electricity trading has strained transmission grids across the US and little has been done to bring those grids up to date. His hope lies in the formation of regional transmission organisations (RTO) that will deal with transmission bottlenecks. In fact, a recent Department of Energy (DOE) report suggests that FERC should work with RTOs to make sure the transmission system is modernised.
Still, the US wind energy industry has made important strides in transmission policy during the last two years. Most of the effort and progress has been in search of fair treatment for intermittent resources like wind generated electricity. FERC acted in April on a proposal from the California Independent System Operator to drop energy imbalance charges for such resources, penalties that in some cases threatened to double the price of wind (Windpower Monthly, May 2002).
Imbalance charges were originally designed not to keep out wind, but to prevent "gaming" of the scheduling system by levying heavy penalties on those who schedule a chunk of the transmission system, but fail to deliver the power. Some of those penalties are as much as $0.10/kWh. Wind advocates point out that they unduly penalise a resource that cannot control its variability and so cannot game the system. Shortly after FERC's decision, BPA in the Northwest began a proceeding that would also remove imbalance charges for wind from its open access tariff, a change that could become effective in September. The American Wind Energy Association wants FERC to use the California model as a template for other transmission providers across the country.
In California and the Northwest, the wind industry is also stepping forward to develop advanced wind forecasting models that will allow power marketers to closely schedule wind resources for the hourly and day-ahead markets. While effective forecasting will help gain acceptance for wind generation from utilities and power marketers, one consultant thinks wind already fits well with wholesale power markets.
"Utilities considering developing wind generation don't need to ask whether it's technically feasible to integrate wind generation into wholesale markets -- it is," says Eric Hirst, a consultant on electricity market restructuring. "These markets have considerable flexibility, which can accommodate the lack of control, unpredictability, and volatility inherent in wind farm output." At the same time, though, better forecasting and scheduling ahead of time rather than in real time will improve earnings for generators, he found in a study completed in the fall (Windpower Monthly, October 2001).
While important, lowering costs and eliminating imbalance penalties do not solve all problems, especially in some areas of the country where the transmission system is overbooked, as it is in south western Minnesota. Great River Energy, a generation and transmission co-operative, says six of nine turbines at its Chandler Hills Wind Farm on Buffalo Ridge have remote control and monitoring equipment installed that allow Xcel Energy, which owns the transmission lines that deliver power from Buffalo Ridge to Minnesota's population centres, to interrupt service if lines become overloaded. Great River also put on hold an agreement with developer and operator enXco to build the 21 MW Chanarambie Power Partners project in the same area, but even by 2003, when the project is scheduled to go ahead, it will be risky.
"We will take some transmission curtailment risk to get the project built," says Mark Rathbun of Great River Energy. "We're banking on the transmission system getting beefed up." Transmission improvements are already in the planning and review stages. Xcel is proposing transmission upgrades to allow an additional 825 MW or more of installed wind capacity along Buffalo Ridge. With a local load of less than 30 MW and with current wind production at Buffalo Ridge at nearly 300 MW, with more on the way, nearly all the power must be sent to markets out of the area.
Xcel, which is reviewing the $158 million project with the Minnesota Public Service Commission and with the public, favours an option that includes a 345 kV transmission line that would feed Buffalo Ridge. The project also includes a new substation and a new 161 kV line.
"This is not just to accommodate wind generation," Xcel's Paul Adelman says, adding that it could also feed a biomass project in the area. "But this project would not be going forward if not for wind. In this area, wind is king."
Dakota's big push
While Xcel is taking care of the transmission constraints at the windiest of Minnesota sites, no significant transmission improvements are planned for the Dakotas. North and South Dakota top the US list in wind potential, but together have just one utility sized turbine -- a NEG Micon 900 kW unit -- spinning over the flat and empty plains. North Dakota Governor John Hoeven told a crowd of over 700 people at a March wind power conference that the state is ripe for wind development, but getting the energy to market is the real challenge. A fifth of the energy produced in the state, mostly by coal, is exported and transmission lines to the large eastern markets are over-scheduled. "We would love to develop wind projects in North and South Dakota, but where would you send the power?" asks Greg Jaunich of Navitas, a wind project developer in Minneapolis, Minnesota.
Still, a partnership of wind developers think they can eke at least 480 MW more transfer capability out of interstate transmission lines and are planning to build what would be the nation's, and maybe the world's, largest wind project. Global Wind Harvest Inc, with partner UPC Wind Partners LLC, is in preliminary stages of developing the $500 million project on the North and South Dakota border. Land rights are tied down, but the partners are still looking for a power purchase agreement. This could come out of their bid to supply new power in response to Xcel's solicitation last year for 1000 MW of new generation from any source, says Global Wind's Todd Wilen.
He says the size of the Dakotas project is not arbitrary. The area's wind resource is considerable and the 480 MW represents the maximum amount of transmission capacity the partners think is available to the east and the south, but only if they make some improvements. "We plan to utilise the existing transmission infrastructure, but some upgrades will be necessary," Wilen admits. "We would have to bear some of those costs and if a third party is impacted, we would have to bear those costs also."
To accommodate the transmission systems in the area, the partners have divided the project into two parts, although they will be side by side. If they get interconnection approval, output from one part would flow into the Western Area Power Administration system, while electricity from the other will flow eastward onto Midwest Independent System Operator transmission lines. They've applied to both for interconnection studies.
A National Transmission Grid study released by DOE in May says the federal government -- specifically DOE and FERC -- has a role in helping to modernise the US transmission grid. It goes on to say that RTOs -- the California Independent System Operator (ISO), Midwest ISO, the Electric Reliability Council of Texas and others still in their formative stages -- have the primary role of ensuring that transmission bottlenecks are tackled. The FERC's Wood praises the study's findings, saying they support the direction the commission intends to take.
The DOE study points out that a decade of free electricity markets has left the nation's transmission infrastructure obsolete. "Investment in the transmission system has not kept pace with the growth in generation and the increasing demand for electricity," states the report. Woods blames an incomplete transition from regulated to competitive energy markets for the transmission deficit. While the Bush administration claims that deregulation has saved consumers over $13 billion, Wood says transmission congestion is costing consumers hundreds of millions of dollars every year and that relieving bottlenecks could save $500 million annually.
While some RTOs are already operating, voluntary RTO development in other regions is moving slowly and that can only slow the progress of transmission infrastructure projects. RTO West, which would consolidate most of the Northwest's transmission system, has set back its implementation date from 2003 to 2006 or later. BPA, however, owner of about 70% of the region's transmission, is moving ahead on as many as 20 large infrastructure projects that could cost as much as $2 billion. Many of those projects are designed to relieve congestion.
Whatever part DOE thinks the government has to play in ensuring there is adequate grid infrastructure in the US, also to handle the wind industry's rapid growth, there is still no overall plan. Until there is, it appears transmission constraints on wind power expansion will continue to be handled locally -- and only after being pushed by wind advocates and others interested in new generation.