Public Power Harvests the Wind: Utility wind program experience

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Public Power Harvests the WindUtility wind
program experience

• Jill K. Cliburn
• Based on work for the DEED Program
• American Public Power Association
• and
• Wind Powering America Program, US DOE
• September, 8 2005

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Public power utilities A unique market for wind
development

• 2000 systems, mostly city-owned
• Serving 20 million customersabout 15 of the
  U.S. utility market
• From lt 1 thousand to gt 1 million customers
• Often working through (gt60 nationwide) joint
  action agencies for energy supplies
• Among Americas first utility wind programs and
  green power pioneers

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A growing legacy in wind

• Programs well established in the 1990s
• - Traverse City, Michigan
• - Waverly, Iowa
• - Sacramento, California
• - Fort Collins (PRPA), Colorado
• - Moorhead, Minnesota
• Waverly introduced utility green tags
• Austin consistently 1 green power marketer in
  U.S.
• Public power dominates the top 10 for green power
  participation rates
• Munis represent 4 out of 5 WWF PowerSwitch!
  leaders, aiming for 20 RE/EE

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The Case Study Approach

• The case study approach
• Key to establishing benchmarks and best practices
• Helpful in speeding program development
  cost-effectively
• Suited to public powers collegial culture
• Looked at
• Economic and non-economic program drivers
• Resource acquisition strategies
• Technical approaches
• Marketing approaches and outcomes
• Lessons learned and program outlooks

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Joint-action agencies and utilities examined

• Arkansas River Power Authority/Lamar
• AMP Ohio/Bowling Green
• Austin Energy
• Platte River Power Authority/Fort Collins
• Municipal Energy Agency of Nebraska/Aspen

• Missouri River/ Worthington/ Moorhead
  
• Sacramento Municipal Utility District (SMUD)
• Seattle City Light
• Waverly, Iowa
• Acquisitions ranging from 2.4 MW to gt175 MW,
• gt 500 MW total by YE 2005

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Sample matrix Project definition
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Sample matrix Major drivers
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Sample matrix Businessand marketing issues
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Trends

• A review of all 9 cases revealed trends in
• Planning process
• Project design
• Prominent drivers
• Problem areas

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Sample Trends Project design

• Preference for direct ownership, even among
  systems that currently have PPAs
• - Response to lingering concerns about power
  marketers
• - Affords greatest control of the resource
• and cost-effective dispatch among
  supply options
• - Protects indigenous wind (community pride)
• Some munis and JAAs still use shorter-term or
  cash financing, peculiar relative to other
  generation projects.
• - Bad news Results in higher cost wind and
  smaller projects.
• - Good news May help explain why munis (who
  could use these approaches more easily than IOUs
  could) have led during risky early years of
  utility wind development.
• Sophistication in financing and contracting is
  increasing

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What about the economic driver?

• Changing economics
• influence project trends
• Larger turbines and larger wind farms encourage
  development partnerships
• Transmission costs discourage some projects
  encourage distributed wind
• Universal disappointment in limited incentives
  for public power (REPI funding shortfalls)
• Other drivers, e.g., consumer interest, portfolio
  diversification, fuel-cost risk management push
  utilities to find economic solutions

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At issue Growing preference for
rate-based wind

• Needed to reach resource portfolio commitments as
  high as 20
• Perceived as a commendable, city-wide decision
• Lower administration costs
• Lower risk when utilities dont face monthly
  obligations to customers on contract
• Some utilities believe in both green power
  marketing and rate-based wind, because marketing
  keeps customers educated and engaged.
• Other utilities believe they cannot support both.
  If regulators require green power options, some
  systems say this discourages larger rate-based
  resource acquisitions.

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At issue Understanding RECs

• REC. Isnt that a co-op???
• Few munis have worked with RECs (green tags) so
  far
• Customers believe that utilities that own wind
  generation are producing green power whether or
  not they retain the RECs
• Need to recognize and encourage utilities that
  facilitate wind development through plant
  investments, while clarifying that wind
  generation disembodied from RECs is not green
  power.
• Growing opportunities to sell RECs to IOUs or
  power marketers
• Our customers believe they are getting all the
  green power from the turbine We really dont try
  to convince them otherwise, even though the RECs
  are sold throughout the (joint-action agencys)
  system.
• - Small utility manager

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Conclusions Whats unique aboutpublic power
wind?

• The economics must work, but they are not the
  main drivers of the wind investment decision.
• Regulations affect public power differently.
• JAAs can partner with local systems and with each
  other to leverage large projects.
• Some JAAs allow local systems to subscribe. This
  allows early-adopters to jump-start a region-wide
  program.
• Huge opportunities exist for distributed,
  lower-speed systems that sidestep transmission
  problems.
• Most public power utilities share concerns about
  intermittency these can be addressed