With plans to bring on thousands of new megawatts of wind power over the next eight years, Hydro-Quebec has set its sights on becoming a leader in understanding how to optimally integrate large amounts of wind into a major power grid. "We feel that with the hydropower facilities we have, if there is a place on earth with the maximum possibility to integrate wind and hydropower, it is Quebec," says André Boulanger, president of Hydro-Quebec Distribution, the company that just a year after ordering 1000 MW of wind capacity -- one of the largest wind energy purchases ever -- is in the process of preparing a request for proposals for another 2000 MW.
Hydro-Quebec's 36,000 MW system is made up largely of hydroelectric generation, including 25 large storage reservoirs. Its transmission grid is the most extensive in North America, with 32,539 kilometres of line reaching across a vast territory and 18 interconnections tying it to other markets in Canada and the US. The combination not only allows Hydro-Quebec to tap into wind sites across a broad geographic area, but also provides it with an enviable set of tools to manage their output.
Hydro generation is typically quite versatile in load-following and providing reserve capacity. In Canada, the correlation between demand -- largely driven by heating load in the winter -- and periods of good wind production means the utility can store more water in its reservoirs.
Hydro-Quebec TransÉnergie, the utility's transmission arm, estimates that right now it can integrate 3600 MW of wind without constraints on the operation of the network. "I don't think this is a limit," says Boulanger. "I think the capacity to integrate more wind plant is there. I think we have to find a way to optimise it and to be economically efficient."
The biggest challenge from Hydro-Quebec's perspective, says Boulanger, is dealing with the variability of wind's output. "The main drawback of wind power is its intermittent nature. But we have to master it," he says. The key to doing that, he adds, lies with wind forecasting, an area in which the utility plans to focus much of its research efforts. "Short term forecasting is essential for optimum system operation, so this is one aspect we will work very hard at."
Since Hydro-Quebec Distribution launched its first request for 1000 MW of wind power in May 2003, says Boulanger, wind has become an increasing competitive way to add new generation to its mix. "Over the last two years, things have moved very, very rapidly in the case of wind and in the case of fossil fuels. The price of wind has gone down and the price of fossil fuels has gone up, so what we see right now is a situation where wind is really affordable compared to conventional thermal energy sources. This is something we were not anticipating two years ago, so we are very happy with that situation."
The average price of the 990 MW the utility bought from its 1000 MW tender is C$0.065/kWh. Most observers expect bid prices to be higher in response to the new tender because of the higher price of wind turbines, but Boulanger believes the sheer size of the request for proposals (RFP) and its delivery schedule, which provides a stable market over five years, will keep prices competitive. "I think it should be interesting to suppliers," he says. "This is something you don't see very often in the market."
The provincial government, which is Hydro-Quebec's sole shareholder, plans to impose rules on the tender to require manufacturing facilities in Quebec (main story). But Boulanger says that equipment suppliers, who have been struggling to keep pace with growing demand across North America, are looking to build new production capacity anyway. "We feel that the timing of the second RFP is very well placed."
The utility is also pleased with the province's decision to allow bidders to propose projects anywhere in the province, in contrast to the first RFP where wind farms had to be located in the Gaspé region. "We believe that locating the wind farms throughout the province will ease the integration of wind into our transmission grid and that should bring lower transmission costs overall," says Boulanger.