Regulators mull grid policy changes to accommodate projects

Federal energy regulators will meet in Denver tomorrow to discuss whether and how to change electricity transmission rules to spur the development of remote wind energy projects in the West.

Mary O’Driscoll, Greenwire senior reporter

The 11 states in the Western Interconnection — generally comprising the Rocky Mountain region and all states to the west — are brimming with 300,000 megawatts of potential wind energy resources. Arizona, California, Colorado, Nevada and New Mexico have renewable portfolio standards and changing Federal Energy Regulatory Commission transmission rules would allow them to accommodate the significant additional wind generation needed to meet their energy goals.

The problem is that windpower projects are facing operational problems when it comes to the nation’s larger power grid. Wind generation is an intermittent resource and wind-powered turbines have low capacity factors, or usage rates, because their output is controlled by nature rather than by dispatch based on markets. As a result, the effective transmission charges for wind generators typically are much higher than those paid by conventional power plants.

Furthermore, experts note that wind is a remote resource requiring highly coordinated transmission planning that often takes many years, while the wind generators themselves can be planned, built and made operational in a relatively short time.

Finally, while conventional plants can be located near load centers to avoid transmission constraints, wind generation must be sited where wind currents are strong and consistent. Nationally, these sites are an average distance of 500 miles from major metropolitan centers, according to a FERC staff report prepared in advance of tomorrow’s meeting. To connect with the grid, wind generators must invest in transmission interconnections of longer than 10 miles.

A paper prepared by the Western Interstate Energy Board says the Western region would benefit from a FERC review of its open access transmission policies for electricity and the development of new transmission "products" that would provide the flexibility allowing wind energy producers to make better use of the nation’s power grid.

"Technical innovation, high natural gas prices and government policies have made wind energy an economic generation option," said the Western Interstate Energy Board, the energy arm of the Western Governors Association, in its paper. "Transmission constraints, both physical and institutional, present the most important impediments to greater wind development in the West."

The FERC staff report advocates development of regional transmission organizations (RTOs) as a way to treat wind generation on an equal basis — an expected conclusion given FERC’s push for formation of regional markets for the past several years. Resistance to the RTO concept is high in the West, however, and particularly in the Pacific Northwest where state regulators and some utilities contend their systems are not well-suited to the RTO concept.

Short of RTO formation, the FERC staff report outlines several "novel approaches" to solve the problem, including new transmission products advocated by the Western Interstate Energy Board. They include new twists on the pro-forma transmission tariffs that would allow what are called "conditional firm," "curtailable firm," "priority non-firm" and "hourly firm" transmission service. Such a system would offer wind generators better ways to get access to the transmission grid. These are all variations on the "firm" transmission service that is considered a bedrock for use of the transmission grid.

The report also advocates measures to reduce the effect of imbalance penalties that wind generators must pay for their varied use of the transmission grid, and use of alternative methods to allow wind resources to contribute to regional reserve requirements and capacity markets.

Finally, the staff report notes that lessons from the gas industry can be used to develop alternatives to the traditional transmission services under open access rules.

Within the natural gas industry, pipeline companies — which like electricity transmission companies offer access to their systems through pro forma tariffs — adjust such tariffs over time so they can offer various nontraditional services. These initiatives, the staff report says, may serve as conceptual models in developing nonstandard transmission grid services. For instance, gas shippers schedule and pay for transmission service on a volumetric basis, limited only by maximum daily volumes established for the service. These services usually allow for no-notice variations in scheduled quantities.