40% POWER FROM WIND WITHIN REACH, A CIVIL RIGHT – NEBRASKA REPORT

Wind Integration Study Completed; Statewide study evaluates impact on other generating resources from adding wind generation
March 5, 2010 (Nebraska Power Association)
and
Wind Industry Applauds Release of Nebraska Wind Integration Study
March 12, 2010 (American Wind Energy Association)

THE POINT
Integration was one of the greatest achievements of the 20th century, from Martin Luther King’s courageous fight in the 1950s South to Lech Walesa’s fight to bring 1980s Eastern Europe into the free world to Nelson Mandela’s 1990s heroic triumph in South Africa. Without meaning to belittle those magnificent efforts, the world is now engaged in a so-far non-confrontational struggle for integration that could have even more far reaching and longer lasting impacts than any of those awesome struggles.

The easiest way for opponents to discredit the New Energies is to dismiss them as intermittent. Burners use the apparently intuitively obvious fact that the sun and the wind come and go to argue they are unrealiable sources of energy. What is intuitively obvious, however, is not necessarily the same thing as true.

Though sun and wind are intermittent, they are not unpredictable or unreliable sources of power generation. They only require grid operators to “work a little harder” to effectively integrate them into the existing transmission system. The price of such work is a marginal increase in the cost of transmission that adds marginally to the cost of electricity. The pay-off is that the New Energies can then play a bigger and more important role in the generation of domestically harvested, emissions-free electricity that increases U.S. jobs and reduces the flow of U.S. money to foreign countries.

Nebraska Statewide Wind Integration Study, by the Nebraska Power Association and funded by the U.S. Department of Energy (DOE) National Renewable Energy Laboratory (NREL), shows that it is possible for the people served by the Southwest Power Pool (SPP) transmission system to get as much as 40% of their electricity from wind energy at no loss of reliability and no prohibitive increase in cost.

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Obtaining more electricity from wind will require the SPP transmission system operator to effectively integrate a wide range of wind generation sources and to integrate that into the electricity supply. The paper evaluated scenarios in which the SPP obtains 10%, 20% and 40% of its electricity from wind in 2018. This represents 1,249-to-4,7272 megawatts in 2018, when there will be an expected 8,700 megawatts of total generation. The study of 40% wind is the highest level of wind integration ever studied in such detail for any transmission system anywhere.

Though the intermittency of wind is less significant because of the increasing accuracy of next-hour and next-24-hours forecasts, integration costs are due to the basic fact that the production costs of maintaining high reliability for “actual” wind (because of forecast error, the need for incremental fossil fuel reserves and wind variability) are higher than predicted in “ideal” cases (where there is no forecast error, etc.).

The study used 4 major scenarios and more than 15 primary cases covering a wide range of variations. The cost of integration varied, depending on the method used. The integration of 10% wind could cost as little as $1.39 per megawatt-hour (MWh), or as much as $3.21/MWh and 40% could cost as little as $1.68 per MWh or as much as $5.41/MWh (if the SPP is required to fund the burden of exporting wind to other power system regions in the 25-state Eastern Interconnection). But these costs are much lower than found by previous studies and amount to no more than a 10% increase in the price of electricity.

Clearly the technology is available, the need is great and the time has come to give the New Energies their civil rights and fully integrate them into the world's power supply.

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THE DETAILS
The 4 basic cost-analysis scenarios:
(1) 10% wind penetration in Nebraska and the rest of SPP without the addition of an Extra High Voltage (EHV) a 765kV transmission overlay.
(2) 20% wind penetration without the EHV transmission.
(3) 20% wind penetration with the a 765kV transmission.
(4) 40% wind penetration with the 765kV transmission.

The study used several methods to look at all the parameters of reliability and cost.

The increase of 10%-to-40% wind penetration is 8 to 31 times as much wind power as the SPP is currently using.

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The SPP serves Kansas and Oklahoma, most of Nebraska, and parts of New Mexico, Texas, Louisiana, Missouri, Mississippi and Arkansas.

Nebraska is the nation’s only totally public power state. Nebraska Power Association (NPA): municipalities, public power districts, public power and irrigation districts, and cooperatives doing generation, transmission, and/or distribution of electricity; 3 balancing areas (Nebraska Public Power District, Omaha Public Power District, the Lincoln Electric System); ~28,248 GWh of annual retail load (2007); 9,000 MW of generation capacity (including out-of-state purchases and sales). Six Nebraska utilities; 152 MW of wind generation projects in 5 locations w/2 pending PPAs of 102 MW more and more in planning

Nebraska's power system supplies electricity at 6.28 cents per kWh (2007), the 5th lowest state rate.

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The key goal was to determine wind integration costs including how it would increase the need for regulating reserves in real-time operations as well as the inefficiency of planning for day ahead demand and the problems with forecast of load and wind thereby introduced.

Broadest objectives of the study:
(1) Evaluate the impact of wind energy on system operations through synchronized
wind and load data and state of the art analysis techniques.
(2) 10% wind energy penetration study required, additional scenarios at higher penetrations encouraged.
(3) Evaluation by a combination of statistical analysis and production simulation.
(4) Evaluate integration of wind with the federal hydroelectric system for improved cost and reliability.
(5) Evaluate all ways to cut costs and increase reliability, including innovative markets,
institutional arrangements within or between Balancing Areas, or physical response on an economic basis.
(6) Produce meaningful and supported results with an authoritative Technical Review Committee (TRC).
(7) Get the message of the opportunity across to Nebraska utilities.
(8) Quantifythe expected wind integration costs.
(9) Involve all stakeholders in future Nebraska wind generation development and state leaders.
(10 Build a data base and utility expertise.

Note: There was no intent to define where wind resources are but to define wind’s general potential.

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Wind Generation Scenarios: 10%, 20%, and 40% of Nebraska retail electric energy sales in 2018.

Database: Production profiles for wind plants east of the Rocky Mountains. Every 10 minutes for 2004, 2005, and 2006. 580,000 MW of wind generation.

Wind in states adjacent to Nebraska has impacts through energy markets. Price signals, a function of load, transmission, and available resources, determine demand. The marginal cost of adding or subtracting wind, because it uses no fuel, is almost zero, making it a “price taker” that lowers locational pricing and, if there is transmission, lowers electricity prices across a wide region. If transmission is congested, prices are only lowered locally.

For the study, wind in other SPP states was assumed to cost the same as Nebraska wind.

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The parameters of the Eastern Interconnection Wind Integration and Transmission Study (EWITS) were used for the studied regions. The base case scenario was the amount of wind that meets the current state Renewable Electricity Standards (RESs).

Installed capacity of the Eastern Interconnection states is ~50,000 MW, making out-of-SPP penetration ~6% per state, which means that when SPP penetration goes to 20% and 40% Nebraska will be exporting a lot of the electricity. This could be a study flaw because other states in the SPP may also be building wind.

The basic model data includes generating units, the transmission network, hourly bus loads, and wind generation profiles.

NPA utilities’ projected demand was structured to SPP day-ahead and ancillary services markets anticipated for 2018. Hourly transactions used were for the SPP market and adjacent areas (MISO, SERC, TVA). A “hurdle rate” between regions of $5/MWh was used for the interchange cost of out-of-state purchases and sales.

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Existing and planned transmission through 2013 made the base case. Transmission capacity would be an issue for the 20% and 40% penetration estimates, so differing scenarios were modeled with differing transmission capabilities. Some 40% scenarios included a 765 kV Extra High Voltage (EHV) capability.

In simulations, units are hypothetically committed and dispatched to serve load at each bus. Transmission constraints and other system limitations that challenge reliability and security were recognized, as was the need to adjust the system to accommodate the delivery of wind energy.

Modeling was done through the running of multiple simulations to determine how increasing amounts of wind affect the use of other resources, the transmission system and electricity market prices.

What grid operators must optimize:
(1) The deployment of wind generating units according to hourly wind forecasts and next day load forecasts.
(2) Hourly reserve constraints/requirements based on available wind and transmission.

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In Nebraska, integrating wind means reducing coal generated electricity but increasing natural gas consumption as spinning reserve backup. Natural gas responds to the faster ramps and forecast errors associated with wind. Costs can go up.

Costs range along a spectrum in the report, depending on the model used:
(1) The reference 2018 total cost estimate assumes no emissions regulation, federal
Renewable Energy Standard ((RES) or Renewable Energy Credit (REC) price.
(2) An incremental wind purchase cost is estimated for wind-generated electricity added above the amount now in the SPP.
(3) An incremental transmission cost is estimated for new transmission infrastructure needed as wind is added.
(4) A cost of GhGs for various scenarios (including the Waxman-Markey Cap&Trade system and some GhG tax proposals.
(5) The total cost estimate is the reference cost + wind costs + transmission costs – savings when GhGs are priced.

One peculiarity to Nebraska: The state is bisected by transmission systems and there would be unique complexities and costs in transferring wind-generated electricity between the Western Interconnection and the Eastern Interconnection.

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If transmission is in place in Nebraska to interconnect and integrate sources – and this is significant because it is also true in the U.S. generally - there is likely to be no significant wind generation curtailment. In the study, all scheduled wind generation in-state and export commitments modeled were met through redispatching to distribute active wind.

There was also no significant “dumping” of electricity when the wind dispatch price was $40/MWh. (This price assumes a $15/MWh REC price and a $25MWh Production Tax Credit (PTC), which give wind priority on the grid because they mean revenue for the state.)


Using larger amounts of wind necessitates access to large export markets.

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In the event of transmission inadequacy, some wind curtailment would occur:
(1) 2% at the 10% penetration without the overlay.
(2) 7% at the 20% penetration without the overlay.
(3) 0% at the 20% penetration with the overlay.
(4) 5% at the 40% penetration with the overlay.

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Going from 10% to 20% increases Nebraska wind use by 4.35 TWh and exports by 3.20 TWh (74%). Going from 20% to 40% wind penetration (with the EHV overlay) increases Nebraska wind use by 8.12 TWh and exports increase by 4.74 TWh (58%).

The export estimate assumes surrounding states continue to use 6% wind, a potentially fallacious assumption.

Wind, because of variability and forecast uncertainty, has a big impact on the need for regulating reserves (aka “spinning” reserves) to meet Automatic Generation Control (AGC) requirements. For the SPP, 10% wind energy will increase the average hourly requirement by ~500 MW. At 20%, it is ~1000 MW. At 40%, it is ~2000 MW. Requirements vary hourly with both wind and load. At 10% wind, they can more than double. At 40% wind, they can increase by over 7 times.

There is cost in this increased requirement but more cost would result from performance degradation without it.

Larger operating areas, facilitated by better transmission, allays the potential for such costs but smaller operating regions allays the cost of AGC requirements. For 10% wind, Nebraska needs 148 MW AGC but if it is serving the SPP, it needs 798 MW.

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The study showed monthly capacity value for wind sites in Nebraska ranged from a 0.06% minimum to a 16.5% maximum. As in most of the U.S., the 2 most common months of peak electricity demand, July and August, are also the 2 months of lowest wind production.

The highest winds are in April, May, September and October, when minimum increases to 6.55% and maximum remains at 16.5%.

All wind sites (Nebraska and SPP) taken together raised monthly capacity values, if adequate transmission is available, to 10.79% (minimum) and 30.35% (maximum).

The study left little doubt that new transmission will be necessary for Nebraska to achieve a 40% wind penetration.

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To minimize the stresses of integrating higher levels of wind:
(1) 15 of Nebraska’s 20 flowgates for wind had transmission constraints.
(2) Branches with 115kV-to-345kV lines exceeded limits and require redesign to relieve overloads.
(3) Overloads increase with higher wind penetrations and decrease with the addition of 765 kV EHV lines. It’s that simple.

Increased wind penetration reduces GhGs in some scenarios:
(1) Nebraska emissions decrease ~8% as wind goes from 10% to 40%.
(2) SPP states’ emissions decrease ~15% as wind goes from 10% to 40%.
(3) At higher levels of wind, there will be more wind exports and therefore GhG reductions outside the Nebraska/SPP region.

With high wind penetration and a price on GhGs, emissions reductions do not increase significantly over the no-price-on-GhGs case because a higher cost for emissions drives more use of natural gas as a reserve:
(1) A $25 per ton GhG price cuts SPP emissions ~2% more than without a price.
(2) A $50 per ton GhG price cuts SPP emissions ~6% more than without a price.
(3) A $120 per ton GhG price cuts SPP emissions ~19% more than without a price.
(4) A $120 per ton GhG price would be expected to increase natural gas use in Nebraska by 138% more than a $25 per ton price and increase the state’s use of natural gas to 80+% of its capacity.

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Additional costs for integrating wind not in the paper:
(1) Increased maintenance and planned outages.
(2) Degradation from ramping, cycling, etc.
(3) GhGs from increased ramping not in historical data used for modeling.
(4) Other.

Total Costs
The models assume a REC price of zero and that the Production Tax Credit (PTC) would be phased out if/when an emissions price is applied. The PTC is available through 2012 but could be discontinued if a federal Renewable Electricity Standard (RES) is enacted.

The summary of costs including a price on GhGs is for 4 cost categories and 15 primary cases based on 2006 wind and load data. Variables include incremental wind generation cost, incremental transmission, GhG prices, production and other fixed costs.

(1) The total cost estimates for 2018 with a $50 per ton GhG price are from $23.7-to-$28.5 billion for emissions regulation, a 20% increase. If the emissions regulation is through a tax, the cost increase could be higher.
(2) A $25 per ton GhG price through a Cap&Trade system adds ~9% ($2.2 billion) to the total cost ($23.7 billion) in 2018. With a tax, the increase would be 22%.
(3) Each 10% increase (going from 10% to 40%) in wind penetration (7,540 MW) adds ~1.7% to the total cost.
(4) Each 1% increase in costs is ~$237 million per year.
(5) Only the very high GhG price scenario increases emissions, through the increased use of natural gas, to near the proposed cap in the Cap&Trade system.
(6) At 10% wind penetration and a $25 per ton GhG price, Nebraska alone increases SPP costs for integration to an estimated $22 million per year.
(7)With Cap&Trade, costs increase 9.5% as the GhG price goes from $0 per ton to $25 per ton and 6% as it goes from $25 per ton to $50 per ton because the SPP will decrease exports as GhGs become more expensive.
(8) At 20% wind penetration and the $25 per ton GhG price, the extra cost is $3 billion higher and at $50 per ton, the cost is $6 billion higher.

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Other costs:
(1) Wind and transmission installation, operation and maintenance.
(2) Inefficeincy losses, emissions and outages due to increased ramping by fossil fuel backup.
(3) Unpredictability of exports.
(4) Unpredictability of marginal winds.

Though the ten study objectives were fully accomplished, the NREL researchers suggest further work for (1) a "proxy resource" definition, (2) factors pertaining to exports, (3) more detail on wind resources and loads so as to more accurately assess ramping costs, (4) more detail on transmission design and its relation to export factors, (5) more detail on wind capacities beyond the SPP, and (6) input from operational and transmission personnel.

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QUOTES
- Rob Gramlich, Senior Vice President for Public Policy, AWEA: “This study corroborates what we’ve learned from around a dozen other wind integration studies and tens of thousands of hours of real-world grid operating experience: wind energy is a very effective tool for reducing carbon emissions, and large amounts of wind energy can be reliably integrated onto the grid at low cost…”

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- Clint Johannes, Chair, NPA joint planning committee: “Because there is no economical way to store large amounts of electricity, utilities must balance the electricity generated by power plants with the consumer’s demand for that energy instantaneously…Adding more wind-powered generation, which is a variable resource, changes the way utility operators achieve this balance and impacts how and when existing thermal-based units, such as coal and natural gas-fired facilities, generate…”

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- Clint Johannes, Chair, NPA joint planning committee: “Since Nebraska is part of the Eastern Interconnection, which electrically interconnects the eastern two-thirds of the United States, changes in the levels of wind-powered generation in Nebraska impacts the entire region either directly or indirectly…Nebraska’s generating utilities, which are part of regional operating systems, must consider these impacts both inside and outside of the state…Some generating utilities in Nebraska have put into place strategic goals of adding 10 percent renewable generation resources to their total mix by 2020 and other entities are exploring the idea of exporting wind for profit…Results of this study are an important first step in helping us better understand how the addition of more wind power in the state impacts electric utility costs as well as the operational impacts to the electric utility system in Nebraska and regionally.”