Plugging in: States tap Oklahoma for growing wind energy generation
Credit: By Paul Monies | The Oklahoman | August 9, 2013 | newsok.com ~~
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The wind whipping down the Plains is increasingly being used to power electricity customers in nearby states.
After a decade where most of the state’s new wind generation went to Oklahoma utilities and cooperatives, a rash of recent agreements includes long-term contracts for electricity customers from Georgia and Alabama to Nebraska and Iowa.
Oklahoma’s wind exports are a key part of the state’s Oklahoma First Energy Plan. The state has almost 517,000 megawatts of possible wind energy to develop, according to the National Renewable Energy Laboratory. That puts it in ninth place for wind potential among the states.
“A lot of utilities in other states are looking to wind generation, but they don’t have access to wind resources,” said Jay Albert, Oklahoma’s interim energy secretary. “They are looking to places that do have access to them, and we have a world-class wind resource out in the Panhandle and western Oklahoma.”
Albert said construction and lease payments from new wind farms helps local economies. It also allows utilities to pair new wind power with high-efficiency natural gas power plants that can take over quickly when the wind stops blowing.
“That means more opportunities for natural gas production, which is good for a natural gas-producing state like Oklahoma,” Albert said.
Demand for wind generation has grown as many states instituted renewable portfolio standards in the last decade.
Twenty-nine states and the District of Columbia have some type of renewable portfolio standard. Another eight states, including Oklahoma, have renewable portfolio goals.
Oklahoma’s goal was to have 15 percent of renewable energy capacity by 2015. The state passed that mark last year, three years ahead of schedule. Oklahoma now ranks sixth in the nation for wind generation capacity, according to the latest federal Energy Department market report.
‘More and more valuable’
While the state has abundant wind resources in rural areas, how to get the electricity to large population centers outside Oklahoma remains an obstacle. Southwest Power Pool, a regional transmission organization that covers Oklahoma and eight other states, has been working with utilities across the region to better integrate wind into the grid.
Albert said some areas with high wind potential have little to no infrastructure to take the wind to market. In other areas with infrastructure, congestion can be a problem if there are too many resources competing for the same transmission lines.
Houston-based Clean Line Energy Partners LLC wants to build a high-voltage, direct-current transmission line from planned wind farms in the Oklahoma and Texas panhandles to utilities in Tennessee and the southeastern United States. The company’s $2 billion Plains and Eastern Clean Line is still in the environmental impact study and siting stages, but it may be operational by 2017 or 2018.
Mario Hurtado, Clean Line’s executive vice president of development, said out-of-state utilities taking wind power from Oklahoma is a good sign of things to come. Clean Line has been working on its 700-mile Plains and Eastern Line for four years.
“As time went on and technology improved, this incredible resource in Oklahoma will become more and more valuable to consumers farther east, who weren’t necessarily in Oklahoma but were close by and could be interconnected to either the existing grid or through additional investment in new transmission like the kind we’re doing,” Hurtado said.
Oklahoma’s two largest utilities own or contract for more than 1,500 megawatts of electricity from wind. That’s almost half of the state’s existing wind capacity of 3,134 megawatts. One megawatt can power about 250 homes.
Oklahoma Gas and Electric Co. has about 840 megawatts of wind capacity, while Public Service Co. of Oklahoma has more than 700 megawatts of wind.
“We continually gauge the marketplace and recently issued a request for information, but there are no plans to expand our wind portfolio at this time,” OG&E spokesman Brian Alford said.
PSO issued a request for proposal for up to 200 megawatts of wind power earlier this summer. Spokesman Stan Whiteford said the utility expects to have a contract by the end of August. It would replace and possibly expand an expiring 150 megawatt contract with a Blue Canyon wind farm near Lawton.
“Prices are very good right now,” Whiteford said. “Lots of utilities are looking to lock in good prices for the long-term since many of these contracts are 10 or 20 years. That’s always our primary consideration: Is it economic, and is it in the best interest of our customers?”
Wind projects continue to get favorable tax treatment at the state and federal level. Congress extended a federal production tax credit for wind generation until the end of the year.
It also changed the credit’s requirements so projects could start construction this year and still qualify.
The production tax credit pays 2.3 cents per kilowatt hour of electricity generated.
A 2012 report by investment banking firm Lazard showed wind generation competitive with natural gas generation, even without subsidies.
“States want to bring wind onto their system because it’s affordable,” Albert said.
“If you look at the levelized cost of adding electricity generation, aside from energy efficiency, natural gas and wind are the two most cost-competitive options. Utilities in other states naturally want to bring that into their portfolio.”
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