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Regulating for variable power

In a formal ruling on Open Access Transmission Tariff reform, the Federal Energy Regulatory Commission (FERC) has answered the US wind lobby's call for the creation of "conditional-firm" as a new category for energy service. In future, wind plant may deliver a specified annual quantity of power instead of having to match their output with existing criteria for "firm" or constant power, or non-firm or "conditional" power where the generator operates intermittently and/or powers down when grid operators require it.

The wind industry has long argued that it can occupy a middle ground that better matches wind's annual output by providing a certain amount of firm power over the course of a year. "From what we've seen so far, it's a real good step," says Mike Jacobs of the American Wind Energy Association. "It is a big deal that the wind industry set out to define this new transmission service just a few years ago, and now it is the law of the land."

Whether the ruling will have the positive impact hoped for remains to be seen. The good news is that conditional-firm must be offered by all utilities. A glaring concern, however, is that the terms and conditions for the curtailment risk will be reset every two years. "This means that the opportunity is now available to go forward with a project without building the 100% firm transmission," says Jacobs. "However, instead of some certainty of number of hours that a project faces curtailment, the conditions that will require curtailment are only defined for two years and then a new condition can be added that can change the risk materially."

For wind power developers seeking long term power purchase agreements, well in excess of two years, conditional-firm in its new but limited form is not likely to improve the economics of wind deals and so spur accelerated development. "If the commission had required fixed conditions for such services over a long term, that would have opened the way for the financing and development of many new projects," Jacobs says.

A separate FERC requirement for regional planning in all markets is welcomed by Jacobs. "I think that's a big positive one. Everyone now has to do regional planning. That's a big deal for the west," he says. Regional planning has been a feature of power markets controlled by Regional Transmission Organisations which have better accomodated variable wind power than the bilateral contract markets in much of the western US where such planning has not been required until now.

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