BIG UTILITY W/NEW ENERGY MEANS BIG NEED FOR NEW WIRES

The impressive story of Duke’s accrual of New Energy assets, spurred by North Carolina’s new Renewable Electricity Standard (RES), was reported here just last week. (See UTILITY BUYING MORE WIND, THANK THE RES) The utility that had very little New Energy generating capacity before the state’s RES became a reality expects to have 500 megawatts of wind capacity by the end of 2008 and has also been making deals all year to develop solar energy generating capacity.

The news that Duke brought the 42-megawatt Happy Jack wind installation on line highlights the most crucial issue facing the wind energy industry. The production tax credit (PTC)? No.

The PTC issue is a crucial policy matter pending in Congress this very week and the failure of legislators to overcome partisan bickering and extend it will hurt the wind industry in 2009. It is likely, however, that next year’s Congress will take a much more favorable attitude toward New Energy policy. The 2009 recession, if Congress creates it, will be followed by an inevitable boom when policy makers finally come to their senses.

A more serious matter is transmission. Why? Because transmission is expensive. (Not that legislation isn't expensive - but insiders have confided to NewEnergyNews that politicians are much cheaper to buy than new transmission.)

There are certainly entrepreneurs looking for the opportunity to build and profit from new transmission but doing so is an expensive, time-consuming proposition. Case in point: Happy Jack.

Major transmission upgrades are planned for the western grid. Part of that development is the Miracle Mile-Ault project in the southeastern part of Wyoming near Happy Jack. A January 2008 report examined connecting the wind installation to the grid:

This report describes the power flow and stability studies performed to determine the impacts of interconnecting a new 42 MW Network Resource at the Happy Jack 115 kV substation in southeast Wyoming…The identified impacts of the proposed project on the local transmission system will require an upgrade of the 2.4 mile Happy Jack-Corlett 115 kV line for all base cases and associated dispatch scenarios…The estimated total upgrade costs required to mitigate the overload were estimated to be $734,000…Additional upgrades would be required if the proposed project’s in-service date occurred prior to the completion of the Miracle Mile-Ault transmission project, which is scheduled to be in-service by the first quarter of 2010…”

This is a great indication of the complexities of building transmission and yet mentions nothing of the Not-In-My-BackYard (NIMBY) issues that plague much new transmission.

When things are done ad hoc, they are more expensive and require extra effort. When they are done as part of a larger plan, they take more time. Planners invariably come down in favor of the latter approach. From the report: “…it is recommended that the in-service date of the proposed interconnection project be deferred until the Miracle Mile-Ault transmission project is complete. This scenario minimizes the required network upgrades….”

For a utility with a big investment in its power plant, getting its power online is all-important. Duke Energy did not wait until 2009 or 2010 to get Happy jack online but faced the ¾ of a million dollars in extra costs.

Duke’s takeover of Catamount Energy gives it extensive new wind energy generating capacity. It also gives it the need for new transmission.

Furthermore, in order to supply 20% of U.S. electricity by 2030, it is estimated the wind industry will require $60 billion in new transmission.

That’s a lot of new wires. Ultimately, the wind installations aren’t much use without them.

Looks like the "new wires" business is going to be busy.

Transmission for Happy Jack. (click to enlarge)

Duke finalizes $240M Catamount acquisition
September 15, 2008 (AP via Forbes)
and
Duke Finalizes catamount Enwergy Acquisition
September 15, 2008 (PR Newswire/DOMTEX via MarketWatch)

WHO
Duke Energy Corp./ Duke Energy Generation Services (DEGS), Catamount Energy Corp.

WHAT
Duke Energy finalized its June acquisition of Catamount Energy and announced the opening of the Happy Jack wind installation.

Local transmission could connect to regional transmission. (click to enlarge)

WHEN
- The Catamount acquisition was announced in June (UTILITIES BUY MORE WIND).
- Because the line segments are already scheduled to be rebuilt in 2009, any upgrades prior to 2009 would require different specifications.

WHERE
- The Happy Jack wind installation is in the eastern part of Wyoming, near Cheyenne.
- Transmission for Happy Jack are part of the Miracle Mile-Ault project with a 14.75 mile Cheyenne-Rockport 115 kV line rebuild.
Catamount Energy Corp. is based in Rutland, Vt.
- Duke Energy has ~35,000 megawatts of electric generating capacity in the Midwest and the Carolinas, natural gas services in Ohio and Kentucky, and 4,000+ megawatts of electric generation in Latin America.
- Duke Energy is based in Charlotte, N.C.

WHY
- Duke expects to have ~500 megawatts of wind energy capacity online by the end of 2008 and 5,000 megawatts in development in 12 states.
- DEGS develops, owns and operates electricity generation for large energy consumers, municipalities, utilities and industrial facilities.
- DEGS specializes in innovative and environmentally sound generation development of New Energy sources.
- Duke Energy is one of the largest electric power companies in the U.S. with ~4 million customers.
- Happy Jack: 20 Suzlon S88 SFIG wind turbine generators.

Regional transmission will unleash Wyoming's humongous wind potential. (click to enlarge)

QUOTES
- Wouter van Kempen, president, DEGS: "The Catamount purchase further positions Duke Energy with additional expertise, resources and a proven track record to continue our growth in the wind business…We are extremely excited to have the Catamount team, based in Rutland, Vt., join our team…"
- The interconnection assessment: “…All cost estimates include labor and materials for network infrastructure only, and do not reflect any additional ancillary services that may be necessary. All direct assigned costs associated with radial transmission and/or equipment from the point of interconnection (POI) to the generation facility would be the sole responsibility of the customer…”