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Wind Energy: An Assessment. Lisa Linowes 2010 Mid-America Regulatory Conference Consumer Forum June 6 - 9, 2010 Kansas City, Missouri. Energy market goals. Meeting peak demand energy needs Efficient, reliable, cost-effective generation Greenhouse emission reductions

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Presentation Transcript

Wind Energy: An Assessment

Lisa Linowes

2010 Mid-America Regulatory Conference Consumer Forum

June 6 - 9, 2010Kansas City, Missouri


Energy market goals
Energy market goals

Meeting peak demand energy needs

Efficient, reliable, cost-effective generation

Greenhouse emission reductions

Stable, secure, sustained fuel sources (nix foreign oil)‏

Environmentally sensitive siting of generation

June 9, 2010 2


The system planning
The System Planning

Joint Coordinated System Plan

Eastern Interconnection

Planning Collaborative

June 9, 2010 3


The tools
The Tools

State Renewable Portfolio Standard

State requires a % of electric energy sales be generated by renewable technologies (29 states and DC mandatory)

Federal Production Tax Credit (since 1992)‏

Per KWh tax credit for electricity generated by qualified resources

Stimulus Bill: Federal loan guarantees

US Department of Energy guaranteed loans to finance renewable energy projects, electric transmission projects, etc. No performance requirement.

June 9, 2010 4



Industrial wind represents more than 90% of the proposed generating capacity of all renewable energy projects.

Image: Elk River 150mw facility, Butler County Kansas

June 9, 2010 6


The vision
The Vision generating capacity of all renewable energy projects.

June 9, 2010 7


... And what this would look like. generating capacity of all renewable energy projects.

  • 305,000 MW of installed wind geographically distributed

  • 19,000 miles of new 765 kV transmission lines

  • $60+ billion in transmission & infrastructure costs(2007 dollars, assumes $2.6 million per mile 765 kV line cost)

  • Wind power development capital costs in the trillions

  • Profit motive married to fast-tracking of approvals

Fine print: costs are ballpark estimates created without the benefit of detailed engineering.

Sources: American Electric Power: Interstate Transmission Vision for Wind Integration (2007)DOE 20% wind power by 2030 (2008)‏

June 9, 2010 8


Compared to today
Compared to today generating capacity of all renewable energy projects.

  • US Total installed: 34,000 mw

June 9, 2010 9


Crash course in wind
Crash course in wind generating capacity of all renewable energy projects.

  • Energy resource with limited capacity value

  • Intermittent, non-dispatchable, unpredictableProduction ‘out of sync’ with load (and peak)

  • Locationally constrained, land intensive

  • May displace fossil fuel but cannot replace it

  • Runs counter to Standard Market Design principles

  • Environmental/societal costs not well understood

  • Free, but very expensive! High contract price; costs spread over fewer hours of generation.

June 9, 2010 10


What doe says about wind
What DOE says about wind generating capacity of all renewable energy projects.

  • Wind is an energy resource, not a capacity resource.

  • The capacity value of wind has been shown to range from approximately 5% to 40% of rated capacity.

  • Because wind is not a capacity resource, it does not require 100% backup when the wind is not blowing.

  • Wind power cannot replace the need for many “capacity resources” …If wind has some capacity value for reliability planning purposes, that should be viewed as a bonus, but not a necessity.

Source: June 2008 DOE report “20 percent wind power by 2030”

June 9, 2010 11


Stetson wind april 8 2009
Stetson wind generating capacity of all renewable energy projects.April 8, 2009

June 9, 2010 12


Stetson wind april 25 2009
Stetson wind generating capacity of all renewable energy projects.April 25, 2009

June 9, 2010 13


Stetson wind may 31 2009
Stetson wind generating capacity of all renewable energy projects.May 31, 2009

June 9, 2010 14


Benton County Wind (130.5 mw) Hourly Gen… generating capacity of all renewable energy projects.

…mapped to PJM Hourly Load

Capacity Factor

MWH

Period from July 14, 2008 to July 18, 2008

http://www.pjm.org/markets-and-operations/energy/real-time/loadhryr.aspx http://www.ferc.gov/docs-filing/eqr/data/spreadsheet.asp

June 9, 2010 15


Benton County Wind (130.5 mw) Hourly Gen… generating capacity of all renewable energy projects.

…mapped to PJM Hourly Load

Capacity Factor

MWH

http://www.pjm.org/markets-and-operations/energy/real-time/loadhryr.aspx http://www.ferc.gov/docs-filing/eqr/data/spreadsheet.asp

June 9, 2010 16


Rps the rec market
RPS & the REC market generating capacity of all renewable energy projects.

  • Twenty-nine states plus DC

  • Establish set-aside market for renewables(Qualified renewables vary by State and subject are to change)

  • Single-price system rewards energy not capacity

  • Discourages competition leading to higher prices (Economic development)

  • Arbitrary percentages, limited analysis (ex: IL)

June 9, 2010 17


Valuing a rec
Valuing a REC generating capacity of all renewable energy projects.

  • A single metric:

    1 MWh of energy equals 1 REC

  • Based on a single assumption:

    1 MWh of renewable energybacks out 1 MWh fossil

June 9, 2010 18


Recs a binary market
RECs, a binary market generating capacity of all renewable energy projects.

  • As compliance is met, REC prices sink

  • Ex:

    • MA alternative compliance payment: $61/MWh

    • Current market value for same: $18/MWh

    • Future REC values: under $25 through to 2016

Source: Chicago Climate Futures Exchange

June 9, 2010 19


Case study cape wind
Case study: Cape Wind generating capacity of all renewable energy projects.

  • 130 turbines, 468 mw installed (3.6 mw each)

  • Anticipated average CF: 39% (~182 mw)

  • Terms of negotiated PPA just released:

    - Wholesale, bundle energy price: $207 MWh

    - REC component: $67 MWh

    - Energy component: $140 MWh

    - 3.5% yearly escalator

    Comparable renewables pricing: $80 MWh

    Conventional pricing: $50 MWh or less

June 9, 2010 20


Thank You generating capacity of all renewable energy projects.

Lisa Linowes

www.windaction.org

603-838-6588


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