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Economic Transmission Case Study: Champlain Wind Link

This case study analyzes the potential benefits and risks of the Champlain Wind Link project in Vermont, including its value proposition, power supply considerations, and the economic transmission of power. It explores the potential components and beneficiaries of the project, as well as the challenges and complexities associated with importing power from New York.

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Economic Transmission Case Study: Champlain Wind Link

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  1. Economic TransmissionCase Study: Champlain Wind Link Vermont System Planning Committee March 10, 2010

  2. Champlain Wind Link (“CWL”) • Potential project expanding PV-20 path • 230kV into Vermont • Capital intensive, across control areas • Scoped/developed by VELCO and Anbaric Transmission, LLC • Value proposition: several potential components • Power supply working group • Initial thoughts on benefits/risks • Research & findings

  3. Potential Value Components • Power supply value to project owners/subscribers • Cost-effective power source, vs. New England alternatives • Regional reliability benefits • NY Central-East interface • New England single-import limit • Local (?) reliability benefits • Address needs that Vermont reliability projects would otherwise need to address • Multiple facets • Each one complex • Multiple beneficiaries • Some winners & losers

  4. Power Supply Working Group • DU power supply staff, VELCO, Anbaric • December 2009 to February 2010 • Review the CWL from the perspective of a potential power supply resource • Not other considerations like system reliability, return on invested capital • Confidential • Gather information about potential sources of power over the CWL • Identify principal elements of the power supply value proposition, and associated risks

  5. Working Group Goals • Inventory benefits / risks unique to imported power over the proposed CWL • Solicit indicative proposals from potential NY suppliers • Gauge types of available resources, approximate pricing & terms • Conduct preliminary research on primary risks related to imports • Screening-level assessment of potential viability & cost-effectiveness of purchasing new power supply resources over the CWL

  6. Initial Thoughts:Potential Power Supply Benefits • New York renewable resources • Perceived cost advantage of NY wind vs. equivalent New England wind • Access to additional renewable resources • Access to lower-cost market power (energy & capacity) from northern NY • Price “spread” between the NY and NE markets • Negotiating leverage vs. other potential suppliers

  7. Initial Thoughts:Potential Power Supply Risks • Uncertainty regarding permitting / timing of CWL versus capacity market and supplier contract timelines • Complexity of the potential transactions (i.e., intermittent wind “firmed” by other resources) • Issues related to imports & intermittent wind • Capacity market penalties applicable only to imports • Requirements for external resources to sell Renewable Energy Credits in New England • Potential scheduling penalties related to imports • Future changes in market rules / rule differences between New York & New England

  8. Request for Proposals • Distributed to potential suppliers December 2009 • Mix of generation owners and other market participants • On behalf of the Vermont DUs, up to 150 MW • Seeking long-term resources • Wind and “firming” power • Individually or together • Indicative proposals

  9. Concept of Wind & “Firming” Power via the CWL

  10. RFP Findings & Observations on Power Supply via CWL • Didn’t find compelling power supply benefits • Not enough “spread” vs. New England options • Other basis for expecting CWL power supply value? • Historical data & consultant projections indicate a wholesale price “spread” from northern NY to Vermont • But probably not enough to cover full CWL transmission costs • The transaction concept (wind + firming from NY) is quite complex to evaluate and implement • Combination of intermittent resource & imports • A unique combination of transactions; outside the experience of Vermont DUs (and most market participants)

  11. A Few Observations on Economic Transmission • Importing power entails incremental risks (compared to resources internal to New England) • Capacity market, scheduling, REC eligibility • Many of these would not apply for an economic transmission project within New England • If power supply value derives from proposed projects, timelines can present extra challenges • Proposed power plant, output to be transmitted via proposed CWL • Substantial time & cost to evaluate • Project scoping & initial design • Transmission reliability/planning impacts • Power supply impacts for participants, non-participants • LMP effects • Multiple areas of expertise

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