Energy infrastructure giant TransCanada Corporation is inviting bids for space on two planned transmission lines running from north-central US to the Southwest.
Each of the proposed 500 kV high-voltage direct current lines, with 3 GW capacity, would cost an estimated US$3 billion to build. Both would terminate in the Eldorado Valley near Las Vegas, Nevada, with the 1760 kilometre Zephyr project originating in south-east Wyoming and the 1600 kilometre Chinook line starting in south-west Montana.
The so-called open season competition for space on the lines kicked off mid-October, with bids due five weeks later. The company will decide whether to then start the regulatory approval process, which it expects will take three years, once it determines if there is enough interest. The decision to proceed will be made for each project individually.
While open-season rules require TransCanada to accept bids from all types of generation, says company spokesman Terry Cunha, the company expects wind to dominate: "Major wind generators have expressed strong interest in securing capacity on these lines."
Anchor customer
The open season is not offering all of the transmission capacity on each line to bidders, as TransCanada received approval from the US Federal Energy Regulatory Commission (Ferc) earlier this year to negotiate bilateral contracts with an "anchor customer" for 1.5 GW of capacity on each line. It was the first time Ferc approved a rate plan for a privately owned, or merchant, transmission project that did not require a competitive open season for all of a line's capacity.
Cunha says the anchor customer concept gives companies that want to build transmission across multiple states a way to get around the chicken-and-egg dilemma they face. Without transmission already in place, many providers of electricity to end-users and wholesale customers are often unwilling to sign agreements to buy power from distant renewables generators, Cunha explains. And, without those contracts, the generators are unwilling to sign up for long-distance transmission capacity. Signing up an anchor customer signals to the market that the project is real and gives TransCanada the confidence to commit significant capital.
Ferc chairman Jon Wellinghoff says that this "more flexible approach" will be key to dealing with transmission constraints that are holding back wind energy development in many parts of the US.
"We must do more to unlock the potential of our country's location-constrained renewable energy resources," Wellinghoff says. "This order is one of the most significant steps this commission has taken toward that goal."
Cunha would not disclose the identity of potential anchor customers, citing confidentiality restrictions. But the company's website does say that initial agreements have been signed with wind power developers.
TransCanada is best known for its vast network of pipelines that stretch more than 59,000 kilometres into virtually all the major gas supply basins in North America. It also has a power generation portfolio of nearly 11 GW, including wind power projects in Canada and the US.
