Iberdrola Renewables began the first phase of its pilot in September last year. It allows the company, which is the region's predominant wind owner-operator, to provide the reserve generation it needs to balance unscheduled variations in its output instead of buying the reserves from BPA, which operates the region's transmission grid.
But on the eve of the start of the second phase in October, the company admitted that it had failed to save as much money as expected.
Economic consequences
"BPA's (curtailment) ... changed the economics of our self-supply programme and we have not been able to achieve the expected level of savings," said Iberdrola spokeswoman Jan Johnson.
Iberdrola officials declined to comment further on the actual savings during the first phase. By balancing its own wind generation, Iberdrola had expected to halve the rate of approximately $11/MWh that BPA had charged for wind integration based on 30% capacity factors.
Self-supply, which has been standard for years in parts of Europe, is being tested in the Pacific Northwest because wind's penetration in the area has become large enough to justify the change, said Salah Kitali, BPA's self-supply pilot project leader. In some US electricity markets, reserves for balancing can be bought hour-by-hour. Such an energy imbalance market does not exist in the Pacific Northwest.
Even when power prices are low, self-supply can be cost-effective because thermal plants - which might provide reserves - may stay offline to save their operators money, adds BPA consultant Preston Michie. "Low power prices reduce options (for reserve power)," he said, adding that the problem is worsened by a lack of storage for the region's hydro.
Iberdrola manages 1.39GW of wind energy in eastern Oregon and Washington state and owns more than 600MW of natural-gas-fired generation at its Klamath Co-generation Plant and at peaking plants in Klamath Falls, both in Oregon. The firm's self-supply has helped BPA reduce its balancing reserves by about 300MW.
