Deemed the best state renewables portfolio standard (RPS) in the United States in an overview report by the Lawrence Berkeley Laboratory, the Texas RPS has been extraordinarily successful, promoting the development of more than 900 MW of wind power in 2001 alone. But limited transmission out of the state's windy western reaches has brought the huge and rapid build-up of wind generation to a virtual standstill since then, a situation the industry hopes will be at least partially resolved through legislation now before Texas lawmakers, "Exciting things are going on in the Texas electricity market," says Mike Sloan of Vertus Energy Research Associates, who is one of the chief architects of the Texas RPS. "But transmission threatens everything."
The Texas legislature passed the RPS into law in 1999, requiring 2000 MW of new installed renewable generation by 2009 and outlining a series of steps to get there. By the start of this year, the first deadline, utilities were to have bought 400 MW of renewable generation. They had already far exceeded that target in 2001 when Texas' installed wind generation topped 912 MW, greater than the wind capacity gains of any single previous year for the entire US.
At that point, it looked like the Texans had figured out how to induce the right kind of magic from an RPS. The Texas standard for the proportion of renewables in supply portfolios was structured so that it applied to all state retail electricity providers in the region served by the Electric Reliability Council of Texas (ERCOT), which covers 90% of Texas' electricity load. It allowed utilities to buy and sell tradable renewable energy credits to meet their mandates, and imposed penalties on those that did not. The size of the Texas power market, the largest in the country, was another factor in the success of the RPS.
The bubble burst in 2002 when no wind projects were added to the state's generation. New projects are not looking that likely for this year either -- and lack of transmission is a main reason for the dwindling interest of wind developers, at least according to some industry sources.
Transmission constraints are a particular concern near McCamey, a town in West Texas, where as much as 760 MW of the wind generation located in that area finds itself curtailed when the wind blows the most. Right now, says Walt Hornaday of wind developer Cielo, which owns about 76 MW of wind power in the McCamey area, curtailments are consistently 50% to 60% of production. He expects that will drop to about 5% of production later this year when some small local transmission fixes are done, but until all the transmission upgrades are completed some curtailment is unavoidable.
American Electric Power (AEP) and the Lower Colorado River Authority, the main transmission owners in West Texas, are working on transmission projects in the area that will take care of local curtailments (Windpower Monthly, January 2003), but those projects will not be completed until 2005. Additional upgrades that could clear the way for up to 2000 MW of wind out of the area is not scheduled for completion until after 2007. Wind developers could move projects closer to load centres in east Texas while transmission is built in the west, but, says Sloan, the wind resource is not nearly as good and projects are less economic.
Although the wind capacity installed in 2001 meets the RPS requirements beyond 2005, when utilities are required to buy 850 MW of renewable generation, the difficulty comes in meeting the third landmark, which is 1400 MW by 2007. That is especially true now when transmission construction can lag wind project construction by four to six years.
"If you focus on how long it takes to build a transmission line, how can you expect a wind developer to begin building if he can't get the power to market?" Sloan asks. "With that in mind, the soonest they could get 2000 MW of wind out of McCamey is June 2008, and they would need to start today to do that, so I'm very concerned."
The Texas legislature is mulling over a bill that will give the state's utility regulator more power to influence when transmission should be built. The Public Utility Commission (PUC) can currently force transmission providers to build new transmission lines, and allow for recovery of their costs, only if reliability and safety are at issue. The new legislation will allow the PUC the same powers in order to alleviate congestion, such as the problems leading to curtailments at Texas wind farms. That legislation, which should pass in late May, could help close the gap on wind and transmission development in the state.
"Although it's not everything the wind industry needs, this one transmission fix will be helpful," Sloan says.