Transmission Access Challenges for Wind Generation

1
Transmission Access Challenges for Wind Generation

• Developing solutions nationwide and in ERCOT

2
Fundamental challenge in wind development is
still resolving the chicken and egg problem.

• renewable projects cannot secure contracts
  under RPS procurement procedures without knowing
  whether existing transmission will be able to
  accommodate them. At the same time, utilities
  are wary of investing in renewable transmission
  without assurances of cost recovery, which is
  premised on the renewable generation being
  built.1
• 1 CEC 2005 Integrated Energy Policy Report at
  99 (November 2005).

3
In addition to the lack of adequate transmission
system development, specific transmission-related
challenges continue to inhibit development of
wind generation, e.g.

• Lack of comprehensive regional transmission
  planning process and limited RTO/ISO authority
• Imbalance charges in transmission tariffs
• Obstacles in the interconnection process and
  interconnection queue delays
• Transmission cost allocation and assignment
  methods
• Calculation of the available transmission system
  capacity
• Difficulties in the existing methods for
  evaluating requests for long-term firm
  point-to-point transmission service
• Rate pancaking

4
The FERC, DOE, and Congress are taking steps to
respond to these impediments to the development
of wind generation

• FERC Orders No. 661 and 661-A, Interconnection
  for Wind Energy
• FERC Order 890, Open Access Transmission Tariff
  Reform
• FERC CAISO Decision
• FERC Docket No. RM07-19, Wholesale Competition in
  Regions with Organized Markets
• DOE Designation of National Interest Electric
  Transmission Corridors
• Senator Thune Amendment to Energy Bill
  designating Clean Energy Corridors
• Senator Reid Clean Energy and Economic
  Development Act

5
FERC Orders No. 661 and 661-A, Interconnection
for Wind Energy

• Standardizes interconnection agreements for wind
  generation above 20 MW
• Requires transmission providers to append new
  provisions to the standard agreement for
  interconnecting large generating facilities,
  which are required under their open-access
  transmission tariffs, in order to address
  technical requirements and procedures for
  integrating large wind power facilities into
  their transmission systems
• Requirements of wind generators
• Wind generating facility must remain operational
  during voltage disturbances on the grid.
• Large wind plants must, if needed, meet the same
  technical criteria for providing reactive power
  to the grid as required of conventional large
  generating facilities.
• Provides for supervisory control and data
  acquisition (SCADA), if needed, to ensure
  appropriate real-time communications and data
  exchanges between the wind power producer and the
  grid operator.

6
FERC Order 890, Open Access Transmission Tariff
Reform Significant Reforms for Wind Generation

• Greater consistency and transparency in the
  available transmission capacity (ATC) calculation
• Provides for open, coordinated and transparent
  planning on a local and regional level
• Reforms energy and generator imbalance penalties
• Adopts a conditional firm component to
  long-term point-to-point service

7
FERC CAISO Decision Addresses chicken and egg
problem in California and provides a model for
other areas.

• Approval of financing mechanism for the
  construction of transmission interconnection
  facilities to connect location-constrained
  resources to the CAISO grid.
• Financing mechanism rolls in the cost of
  transmission facilities through transmission
  revenue requirement (TRR) of constructing
  transmission owner
• Cost of the facility reflected in the CAISO
  transmission access charge (TAC), assessed on a
  gross load basis
• Each connecting generator responsible for pro
  rata share of going forward costs of using the
  transmission line.
• Once line is fully subscribed, all users of the
  grid pay the cost of the unsubscribed portion of
  the line through inclusion in the TAC.
• Once facilities are constructed, generators of
  any fuel type eligible to interconnect and
  contract for unsubscribed capacity.

8
FERC Docket No. RM07-19, Wholesale Competition in
Regions with Organized Markets Docket to
determine how to improve competition in regions
with organized markets.

• Regional markets can integrate more wind energy
  than small balkanized balancing areas, thus
  docket provides an opportunity to address
  critical wind issues interconnection queue
  logjams and insufficient RTO/ISO authority
• Interconnection queue logjams are inhibiting
  development in MISO and CAISO. Queue management
  difficulties mean that deadlines are being missed
  and interconnection costs remain uncertain.
• Given significant need for new transmission,
  RTOs/ISOs should have greater transmission
  planning authority and greater authority to order
  and approve construction.

9
DOE Designation of National Interest Electric
Transmission Corridors

• Corridors designated in the Mid-Atlantic Area
  (OH, WV, PA, NY, MD, VA) and Southwest Area (CA,
  AZ).
• Designations do not direct the construction of
  new facilities, but Energy Policy Act of 2005
  authorizes FERC to issue permits for new
  transmission facilities within National Corridor.
• Senator Thune Amendment to Energy Bill
  designating Clean Energy Corridors
• Would further amend the Energy Policy Act to
  provide for Clean Energy Corridors to be
  designated by the DOE specifies that FERC is to
  promulgate regulations for cost recovery of
  transmission providers that build and operate
  facilities authorized under the amendment.

10
Senator Reid Clean Energy and Economic
Development Act proposing National Renewable
Energy Zone designation

• Based on Texas CREZ model
• National Renewable Energy Zone designation
  provides for areas with significant renewable
  energy resources to be connected to transmission
  grid through transmission lines to be paid for by
  all utility consumers.

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Transmission Access for Wind Generation in Texas

• Implementation of Competitive Renewable Energy
  Zones
• PUCT Interim Order Designated Competitive
  Renewable Energy Zones and Established Tiers of
  Transmission Transfer Capacity for ERCOT Study

12
Zones Approved by Commission
13
Tiers of transmission transfer capacity the PUCT
has asked ERCOT to review in Transmission
Optimization Study
14
Tiers of transmission transfer capacity as
proposed by ERCOT as of November, 2007
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Preliminary transmission issues identified by
ERCOT in TOS

• What is the definition of a CREZ transmission
  line?
• Need to develop standardized terminology for
  direct interconnect, on-ramp, and other
  transmission interconnection terms
• What is the definition of transfer capability
• What is extent of ERCOT review of upgrades that
  are economic in reducing wind generation
  congestion?
• Should there be a differentiation between
  upgrades for CREZ units vs. other economic
  upgrades?
• What is potential impact of 765 kV and DC lines
  on system operation?
• Need to develop standardized transmission line
  parameters and cost assumptions, which now vary
  by region.
• Should transmission developed for lower MW
  scenarios be expandable?
• Where should hubs/interconnection points be
  located within a CREZ?
• Incorporate impact of Ancillary Services Study on
  TOS.

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Public Utility Commission of Texas Docket No.
34560, Selection of Transmission Service
Providers Related to Competitive Renewable Energy
Zones

• Proceeding in which the PUCT will determine how
  it will select TSPs to build new CREZ
• related transmission infrastructure. Key issues
• 1. Are there advantages to selecting transmission
  service providers on a competitive basis, in
  terms of cost or schedule, for the Competitive
  Renewable Energy Zone (CREZ) transmission
  projects? If there are risks associated with a
  competitive selection process, are the benefits
  sufficient that the Commission should implement
  such a process?
• 2. Does the PUCT have the latitude to implement a
  competitive process for selecting transmission
  service providers outside of a contested case, in
  which service providers bid on identified cost
  factors (such as cost of capital), these factors
  are used to select a service provider, and a
  service providers bid on a cost factor is then
  incorporated into the rates for the transmission
  project?
• 3. Does the PUCT have the latitude to adopt
  performance-based incentives (including CWIP in
  rates) and penalties for transmission service
  providers that are selected through a competitive
  process?
• 4. How could performance-based rates be
  implemented for candidates that are not incumbent
  Transmission Service Providers with rate bases?
• 5. What are the advantages and disadvantages of
  using the various components of the cost of
  capital as the chief criterion in the selection
  process?
• 6. Are the business and operating risks of
  transmission-only companies different than those
  of transmission and distribution companies?

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Public Utility Commission of Texas Docket No.
34577, Proceeding to Establish Policy Relating to
Excess Development in Competitive Renewable
Energy Zones.

• Proceeding in which the PUCT will promulgate a
  rule to determine a
• dispatch priority policy vis-à-vis first movers
  and latecomers to
• prevent piling on problem. And, if transmission
  is not sufficiently
• sized, rule may determine dispatch priority among
  first movers.
• Key proposals
• Nodal market will employ security constrained
  economic dispatch (SCED) to determine most
  efficient dispatch. No special dispatch
  mechanism.
• Allocation of Congestion Revenue Rights
• Adjusted Offer Curve
• Day Ahead Operating Limit with Last In First Off

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New challenge allocating resources among wind
developers