The Oklahoma panhandle has plenty of wind power-generating capacity, and more capacity is scheduled for the near future.
Now if there was only a way to get all that power onto the electricity grid.
Members of the Oklahoma Electric Power Transmission Task Force on July 9 discussed the pressing need for improvements to the state’s transmission infrastructure, particularly near Oklahoma’s “wind farms.” The problem is finding a company willing to invest in a project that may or may not yield a sizable return.
“I had the head of the SPP (Southwest Power Pool) in my office last week,” said Oklahoma Corporation Commissioner Jeff Cloud, who chairs the task force. “He called us the Saudi Arabia of wind.”
The Oklahoma Panhandle alone has the potential to house more than 8,400 megawatts of wind-generated capacity, said Shawn Lepard, a consultant working with the city of Guymon. Assuming an installed cost of $1.5 million per megawatt of capacity, that translates to a capital investment in the area of more than $12 billion to generate more than $1.2 billion in wind-generated electricity annually, with landowners getting as much as $38 million a year in royalty payments.
The rest of western Oklahoma, excluding the Panhandle, has the potential to house nearly 7,000 megawatts of wind capacity, with an investment of more than $10 billion. So far, just over 530 megawatts of wind capacity has been installed in Oklahoma.
Lepard said another 1,200 megawatts are currently “in the queue,” but development of those projects is contingent upon the state’s ability to build additional transmission lines to carry the power. Typically, wind power is generated in sparsely populated areas, and transmission capacity is needed to move that power into areas with more demand.
Guymon Mayor Larry Stump said the wind power industry in the Panhandle is basically all geared up with no place to go.
“The transmission lines that go north and south across the Panhandle are full,” said Stump. Even businesses built near the wind farms can’t get to the power that is generated at the present time, without enough transmission lines in place, he said. “We have no place to go with it, and I think we probably have more wind energy than the rest of Oklahoma,” said Stump.
Southwest Power Pool (SPP), the regional transmission organization that oversees power distribution for an eight-state region that includes all of Oklahoma, has been considering a plan to build additional transmission lines linking wind power supplies in Oklahoma, Kansas, Texas and New Mexico. The project is known as the X-Plan due to the configuration of the proposed lines, and is estimated to cost about $420 million.
Connecting 1,500 megawatts of wind generation from the Panhandle to central Oklahoma, would cost about $100 million.
Wind power is expected to generate significant revenues, both in the SPP region and nationwide, in the near future, said task force member Bary K. Warren, director of transmission policy and compliance for the Empire District Electric Co. in Joplin, Mo. Federal policymakers are eyeing a proposal that would require power companies to obtain as much as 15 percent of their generating capacity from renewable energy sources, with about half of that coming from wind power, he said. States that have little wind, like Georgia, will have to buy that power from states that are able to harness more wind power, like Oklahoma.
SPP may implement a similar requirement for the companies in its area, which would require as much as 16,000 megawatts of wind power capacity to be constructed in the region.
“You want to make sure Oklahoma is not left out of this process,” said Warren.
Lepard said companies are already building new transmission just south of the Oklahoma border in Texas, likely because Duke Energy has already invested in extensive transmission improvements. But Oklahoma is certainly not being ignored by the wind generation industry.
ITC Great Plains, a subsidiary of ITC Holdings Group, has filed an application with the Oklahoma Corporation Commission to be considered a utility in the sate.
ITC is a company focused solely on transmission – unlike many electricity utility companies that handle generation, transmission and distribution services. The company’s single focus on transmission can be a good thing for the areas in which it operates, since the company does not play favorites over which companies get to use transmission lines, said spokesperson Lisa Aragon. Since ITC is not competing for generation, the company can remain impartial and open up transmission lines to all competitors in the region.
“We try to go where the demand is,” said Aragon. “We’re not as involved in the industry, except to ensure that there are enough lanes on the highway, so to speak. We want to make sure there are enough on-ramps and off-ramps to serve the customers in the area.” In Oklahoma, the need for additional transmission capacity is apparent, said Aragon.
ITC Holdings also runs Michigan Electric Transmission Co., but was attracted to Kansas both by the need for additional transmission and by the tax incentives the state put into place for transmission projects.
Designation as a utility in Oklahoma would give the company the ability to use the power of eminent domain if necessary to construct new transmission lines, though Aragon said the company is “very community-oriented.” On the other hand, designation as a utility would not subject the company to the regulatory oversight of the Oklahoma Corporation Commission. Transmission issues are regulated on the federal level, she said.
Lepard said he was aware of ITC’s plans and had spoken with representatives of the company, but he said the city of Guymon isn’t picking favorites.
“We don’t care who builds it, as long as somebody does,” said Lepard. “If Oklahoma doesn’t have a line into that area, we’re not going to be a part of it.”
SPP is working on a system to help energy companies recoup their costs for improvements made to improve reliability, said Joyce Davidson of the Oklahoma Corporation Commission, but SPP is unlikely to help cover costs for improvements made for speculative, economic reasons.
“Transmission companies can build on their own right now,” she said. “If it’s clearly speculative, they’re going to have to make enough money to get a sufficient return on their investment. But so far, the numbers just haven’t worked out.”
Even if SPP agrees that the expenditures for new transmission for wind power in the area can be classified as improvements made for the sake of reliability, due to the unpredictability of wind power generation, the organization will give only a 10-percent accreditation for wind power. Warren said there have been days when the wind just doesn’t blow.
“Sometimes we got zero megawatts out of a 150-megawatt wind farm,” he said, adding that his company couples wind power with more reliable generation sources.
The situation puts investors at high risk, said Lepard.
“You can get back 10 percent, but you have to build a line capable of handling the whole thing,” said Lepard.
by Janice Francis-Smith
16 July 2007
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