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BPA, utilities and wind developers meet to hash out solution to oversupply of renewable power  

Credit:  By Ted Sickinger, The Oregonian, www.oregonlive.com 6 June 2011 ~~

There is no single, cheap or easy fix to the oversupply of electricity the Northwest has experienced as surging wind and water energy have overwhelmed regional demand and the ability to export surplus power.

The question now is whether utilities and renewable power producers in the region can agree on a suite of potential solutions, or if one will ultimately be imposed by courts or an outside regulator.

That was the subject on the table Monday at the downtown Hilton, where the Bonneville Power Administration reconvened a regional “wind integration” forum to wrestle with the issue.

Drawn from utilities, wind developers, regulators and energy advocates around the region, the committee has no statutory authority, but has proven a somewhat effective forum to vet wind integration issues in the past.

BPA, which markets power from the federal dams in the region and controls about three quarters of the high-voltage transmission system, has been curtailing production from wind farms during off-peak hours for the past two weeks as a near-record spring runoff has pushed up hydroelectric generation.

The power logjam and resulting curtailments have created a crisis for policymakers: how to integrate the region’s growing supply of intermittent wind power without compromising grid reliability or transferring big new costs onto BPA customers who don’t use the wind power.

In the past month, the agency has driven utilities in the region to curtail virtually all generation at their coal and gas fired plants by dumping low-cost hydropower on the spot market. It says it can’t spill more water over the dams to accommodate wind production without violating water quality standards and harming fish.

Wind farm owners respond that BPA is violating the law by unilaterally canceling their transmission contracts. The agency has substituted free hydropower to make up scheduled deliveries, but refused to compensate the wind operators for lost tax and renewable energy credits that are generated only when turbines are spinning.

Most of the wind generated inside BPA’s control area is exported to outside utilities, many of them in California. And the agency doesn’t want its own public utility customers to bear the growing cost of balancing variable wind or compensating wind farm operators for lost credits when its shuts them down.

Wind output in the region has surged tenfold in the last decade, from 600 to 6,000 megawatts, as utilities in Oregon, Washington and California scramble to meet early targets under their states’ renewable energy standards. The laws require utilities to meet increasing shares of their customer demand with renewable power during the next 15 years.

At peak capacity, regional wind output is equivalent to 15 to 20 natural gas-fired power plants – growth that has outstripped any forecast or growth in electricity demand and poses a host of challenges for managing and maintaining reliability on the grid.

There is little agreement on how big the energy surplus might get over the next 10 years. While BPA forecasts that it could grow substantially based on the transmission requests it has already received, large wind developers said Monday that the industry’s breakneck growth is likely to slow significantly for the next five years.

“There’s a lot of junk in the pipeline as you look at wind proposals,” said Don Furman, the senior vice president of external affairs at Iberdrola Renewables, the largest developer of wind farms in the region. “What we see is leveling off at 6,000 megawatts until we get into the middle part of the decade.”

That could give some breathing room for policy makers, though they would have to agree on further actions. BPA officials said Monday that there was no business case for a big transmission expansion to California, which would cost $5 billion to $6 billion.

Wind developers and large utilities such as Portland General Electric that own their own wind farms say there is adequate transmission capacity now to accommodate more deliveries south. They believe there is a market solution to the problem, and that BPA should be paying utilities outside the region to shut off their own thermal plants and take its excess hydropower rather than curtailing wind. So-called negative pricing exists in other markets with lots of wind farms, they say, and should here too. Public utility customers of BPA are opposed, as they would be forced to bear some of the costs.

BPA is already pursuing a host of alternatives and has proposed more, from increased energy storage capacity in Canada to more dynamic transmission scheduling. Attendees suggested it may even be worthwhile to pursue legislative changes that would allow replacement hydropower to qualify for tax and renewable energy credits when wind production was curtailed.

Brian Skeahan, general manager of Cowlitz Public Utility District, reiterated that there was no silver bullet, and that the region would need to pursue a host of solutions. But he said the committee needed to openly address the issue on everyone’s mind.

“The cost allocation issues matter,” he said. We need “some conversation about who pays.”

Source:  By Ted Sickinger, The Oregonian, www.oregonlive.com 6 June 2011

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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