Clean Power Plan expected to propel wind development in central states

Source: Jeffrey Tomich, E&E reporter • Posted: Tuesday, March 31, 2015

There’s little disagreement that U.S. EPA’s Clean Power Plan will be a catalyst for continued development of the massive wind energy potential of the nation’s central corridor.

But how much and how fast it’s developed ultimately depends on a laundry list of technical and policy questions involving EPA’s final rule and how states choose to implement it.

Some of the issues are ones the Federal Energy Regulatory Commission is expected to explore tomorrow when it hosts the last of three regional meetings on Clean Power Plan implementation in St. Louis. FERC’s focus will go way beyond the integration of renewable energy, of course. But the role of wind as a compliance tool for states looms large across the central region that’s the focus of the meeting.

States including Iowa, South Dakota, Kansas, Minnesota and Oklahoma each get at least 15 percent of their electricity from wind and will undoubtedly be looking to do more as a way of reducing the carbon intensity of its generating fleet.

“We’ve only scratched the surface of the potential,” said Steve Gaw of the Wind Coalition, a group that advocates for wind across Texas and the Great Plains region. “Certainly we can do a lot more.”

Beside being a zero-carbon source of energy, wind provides long-term cost certainty that provides a hedge against the risk of natural gas price volatility and implementation of future environmental regulations.

“The one thing that wind can buy with a good price today is a good price for the life of the project,” he said. “It just makes a tremendous amount of sense.”

It’s not just the industry blowing its own horn. In a study this month, the Department of Energy said wind energy, currently 4.5 percent of the nation’s electricity supply, could provide 35 percent by 2050. Even under a more modest “business as usual” scenario, wind is seen providing 25 percent of the electricity sector by midcentury (Greenwire, March 12).

Beth Soholt, executive director of Wind on the Wires, a group advocating for wind across the Midwest, said the industry has work to do even though wind must play a role in state compliance plans.

“It’s not a slam-dunk,” she said. “Even if it looks like wind will be a large part of the compliance strategy, we have to get it through utilities and other stakeholders that are not thrilled with that result, such as incumbent fossil fuel generators.”

Transmission for growth

One key for further deployment of wind is transmission.

Across the Midcontinent Independent System Operator’s footprint, there’s enough new transmission being developed to accommodate thousands of megawatts of additional wind energy.

Clair Moeller, MISO’s executive vice president of transmission and technology, said there’s about 13,000 MW of wind connected and operating within MISO today. Transmission is being developed to accommodate 25,000 to 35,000 MW, depending on where projects are built. Those projects were approved in 2011 to help states meet renewable portfolio standard requirements.

“We can about double the wind that we have with the existing plans in place, providing the multi-value projects get constructed,” Moeller said. “At this point, there does not appear to be any risk around that.”

Moeller noted that wind’s potential as a resource is limited by its reliability characteristics. Output varies by time of day and season, and MISO must have enough generating capacity on call to meet demand. For instance, wind accounted for 8.8 percent of the energy consumed in MISO’s footprint in November but just 2.2 percent in August, when the grid operator sees demand peak.

“When we do the math around how much dispatchable generation you need, we try to take all of that statistically into account,” he said. “Because the wind resource is pretty skinny in August when is typically when our highest demand is, it doesn’t get a very big credit in terms of its ability to be counted on during that peak day.”

The variability of wind has been offset somewhat by improved forecasting tools and geographic diversity. Wind farms scattered across a large region allow MISO to manage variability better than if they were clustered in a small area.

That makes wind a more valuable tool for states in terms of Clean Power Plan compliance if they band together instead of choosing to meet the EPA requirements on a stand-alone basis.

Questions for a regional solution

But the draft EPA rule is unclear on how carbon-free power is credited when it’s produced in one state and used in another.

Also, because carbon-reduction targets vary significantly by state, it complicates efforts to find regional solutions.

“Any kind of regional solution can’t socialize the burden, and it can’t socialize the cost of carrying that burden,” Moeller said. “So that’s the first and most important hurdle to work our way through.”

Gaw, a former chairman of the Missouri Public Service Commission, likewise acknowledged obstacles to efficiently and affordably integrating renewables. For instance, some MISO states toward the south don’t have much wind potential, but are located adjacent to windy states within the Southwest Power Pool.

“To the extent that FERC can help with that, it’s going to be important,” he said.

MidAmerican Energy, a unit of Warren Buffett’s Berkshire Hathaway, suggested other ways FERC could help when it comes to the Clean Power Plan and enabling the integration of renewables.

“Implementation of the Clean Power Plan is likely to trigger a surge in new renewable projects,” Jeffrey Gust, vice president of compliance and standards for the utility, said in a statement pre-filed with the commission ahead of Tuesday’s meeting.

MidAmerican said the existence of regional transmission organizations has played a significant role in integrating wind energy, and that FERC should continue providing a strong signal, including incentives on return on equity, for entities to join organized markets.