Canadian wind power developers say they will fight a plan by the New Brunswick System Operator (NBSO) to implement charges, in the form of a regulated tariff, to cover the system costs of integrating wind power. A recently released wind integration study for the Maritimes region -- an area made up of the provinces of Nova Scotia, New Brunswick and Prince Edward Island -- estimates integration costs ranging from C$4.39/MWh with 400 MW of wind to C$7.36/MWh with 800 MW of wind. Most of that is for hour-to-hour schedule balancing and is dealt with through the market. But there are also regulation and load following costs, ranging from an estimated C$0.98/MWh to C$1.41/MWh, that the NBSO wants to charge directly to wind producers.
NSBO's intention, says the operator's George Porter, is to deal with the issue of inter-jurisdictional cost shifting. The core of the issue is that government-owned New Brunswick Power provides essentially all ancillary services to the NBSO balancing area, which includes the Canadian provinces of New Brunswick and Prince Edward Island (PEI) and northern Maine in the US. "To the extent that those costs are incurred in New Brunswick as a consequence of wind generation for Prince Edward Island and northern Maine load, there is a sense that is not entirely fair," he says. A tariff on wind producers, he says, would ensure the costs of providing the services are recovered from the market participants responsible for the generation that is causing them.
But the wind industry has concerns about how the integration report handles the cost issue, says Canadian Wind Energy Association president Robert Hornung. "It is not so much the level of the costs identified, because they are broadly consistent with what other studies have shown, although we think they could be reduced. I think the bigger concern is with the distribution and allocation of the costs."
The industry thinks system integration costs should be born by load, the consumers who are loading the system with demand for electricity. "This energy is coming on line because government has identified it as a priority and has actually put in place legislated requirements to make it happen. They have presumably done that because they see it as a priority for society," says Hornung. "If that is indeed the case, we would argue that the costs associated with actually bringing that power on line should be borne by society and not the wind industry."
The NBSO, says Porter, is in the process of designing the tariff and tentatively expects to file with its regulator by the end of the year. Both Maritime Electric in PEI and the northern Maine system administrator have agreed to pass on whatever charge is implemented to wind power producers in their jurisdictions.
Meantime, Porter believes the system operator, developers and utilities in the region need to look at ways to reduce potential integration costs. "The study confirms that, yes, there are costs there, they are material and we can discuss how that should be handled. But clearly because the costs are there, it warrants looking at ways to minimise those costs."
Creating one area
Forecasting of wind output so the utility can plan ahead is one avenue. But a big part of the solution, Porter says, lies in regional co-operation. Moving to a single balancing area in the Maritimes would be one step. "It's generally understood in the industry that with a larger balancing area you get greater diversity in the wind regime, but also you have diversity of generation and responsive load capabilities to keep the system in balance," says Porter.
Right now, Nova Scotia is a separate balancing area. But the NBSO has been pushing the idea of a merger for some time, says Porter. And in an area like the Maritimes, with an exceptional wind resource but with a relatively small load and generating base, he believes the demands of integrating intermittent generation could provide the catalyst. "We've been very public about it and we have made that pitch to Nova Scotia Power, for example. I don't know what is really stopping them. Maybe they'll come up with another solution. They've talked about storage options. Maybe there is something out there. But I suspect they will get to the point where they see that this is a cost mitigation method that they can't ignore."
Nova Scotia Power's Margaret Murphy says the question of creating a single control is one that has no easy answer. The province requires the utility to supply 20% of Nova Scotia's consumption from renewable sources by 2013 and that is where it is focussing its planning. But she says it is also aware "of the larger realities of the power market" with producers looking to develop wind projects not just to meet domestic demand, but also to tap into opportunities for selling power into the US Northeast. One 19.8 MW project in PEI is already exporting electricity and renewable energy credits to the New England Power Pool (Windpower Monthly, July 2007).
"It is not something that we are building our business plans to right now. We must satisfy what our provincial government requires of us. But increasingly it is a broader area that I think people are thinking about as they build up their own domestic arrangements." The Nova Scotia Department of Energy is planning its own wind integration study in which the utility will participate, says Murphy.
The NBSO also needs to look beyond the Maritimes when it comes to using regional resources to help integrate wind, Porter adds. "Service could be provided from Hydro-Quebec or the New England market and benefits could flow in both directions. Like with Quebec, they may have a need for voltage support in the Gaspé, which we may be able to provide from northern New Brunswick. On the other hand, they may be able to provide regulation and load following services to us. Our requirements are miniscule on their overall system. It would almost be lost in the weeds," he says. "We need to get them engaged in the discussion."
A larger market brings more flexibility to both generation dispatch and load responsiveness. "We believe there are loads out there on the system that could be responsive to signals from the system operator. We've been trying to engage them -- and not just because of wind power integration. I think it is another case where wind power integration will lead to greater benefits of increasing the demand response capabilities of the system," says Porter.
Moving to a larger balancing footprint could also provide a more liquid market for ancillary services. Right now there is 145 MW of wind capacity in the three Maritime provinces and northern Maine, but projected wind development is expected to bring that to 1022-1522 MW by 2016, equivalent to 16-24% of system peak load. A key concern identified by the Maritimes integration study is the availability of capacity-based ancillary services to meet the need.
"NB Power Generation has raised doubts about its obligation and ability to provide these services at the level of the anticipated requirements," the study says. As a result, it adds, it may be necessary to place an upper limit on the amount of ancillary services to be used to integrate wind. "Even with the exploration of various means to mitigate the impact, such an approach would most likely result in an upper limit on the amount of intermittent generation."
Self help to no cap
But rather than look at caps, the study says, generators could go beyond the limits by supplying their own incremental ancillary services. "Developers probably can't supply these services from the wind farm itself, but they can get a contract with Hydro-Quebec or they can contract with someone in New England or someone that builds a new generator in New Brunswick, or pay for a storage facility. Whatever it might be," says Porter. "Who would we be to block that and say no?"
The industry, says Hornung, would "push back very hard" against any attempts to set hard caps on wind development in the Maritimes. "Our perspective is that if you say we have to manage it sensibly and smartly going forward, everyone can live with that. If you say we have a cap and you draw a line, you immediately put a whole bunch of investment at risk," he says.