The programme examines the concept of "self-supply" by allowing Iberdrola to provide the reserve generation needed to balance its wind energy holdings instead of buying it from BPA. The company expects to surpass 1.3GW in Oregon and Washington when a handful of projects comprising 400MW are completed early next year.
Outside the pilot programme, wind power on BPA's system is balanced exclusively by hydropower. But the relentless expansion of wind generation in BPA's balancing area - 3GW and rising - has threatened to exhaust the grid's ability to compensate for wind variability with hydropower alone. By balancing its own wind generation, Iberdrola will essentially halve the rate of roughly $11/MWh that BPA charges for wind integration based on 30% capacity factors.
BPA will be able to redirect those hydropower reserves towards balancing new wind generation from other developers. "It frees up about 300MW of flexibility on the hydro system that otherwise would be tied up for balancing reserves," says BPA spokesman Doug Johnson.
Iberdrola operations vice-president Kevin Devlin says that it has been working on the idea for at least a year. Iberdrola is in a unique position to launch the programme. In addition to a control centre at its Portland headquarters, which allows round-the-clock control of every turbine in its system, it owns more than 600MW of natural-gas-fired generation at its Klamath Cogeneration Plant and peaking plants near the California border in Klamath Falls, Oregon.
Gerry Froese, Iberdrola managing director of asset management explains: "If I am over-generating on my wind fleet and I have to find somewhere to put the power, I can back off Klamath and use that surplus wind power in that hour to serve my Klamath schedule."
Iberdrola recruited several partners including Constellation Energy, which will manage conventional power sources and loads from its national control centre in Houston, Texas. Versify Solutions is providing computer software, while TransAlta and Grant Public Utility District will increase the overall generation portfolio with traditional resources.
The pilot began in September under trying circumstances that included a period of unusually volatile wind. But Iberdrola easily met hourly compliance parameters set by BPA. The agreement stipulated a limit of 216 minutes a month where Iberdrola is allowed to fail the parameters, and it failed about a third of that level.
BPA still acts a provider of last resort in its balancing area, as long as Iberdrola meets the conditions of the agreement. The pilot runs till September 30, 2011, which is the end of BPA's current rate period.