The proposal was meant to make for easier and more cost-effective grid connectivity for wind projects. The issue is who will pay for additional generation reserves needed to back up the grid as more renewable energy comes online.
The American Wind Energy Association (AWEA) contends that Ferc's proposal imposes a significant new tax on renewables, while generators with far more expensive back-up requirements, such as coal and nuclear power stations, essentially get deeply discounted rates. AWEA believes the problem is rooted in a proposal footnote that apparently levies the charge, but could just be a drafting error.
"We're optimistic that this was just an honest mistake," says Michael Goggin, AWEA's manager of transmission policy. "This is only proposed rulemaking, so we're still a long way away from having it finalised. We're also optimistic that Ferc will make whatever changes are needed - and we'll be suggesting changes to fix the problem as well."
The footnote references Ferc's May regulatory decision in favour of Kansas energy utility Westar. This allowed the utility to impose a balancing charge of nearly $6/MWh for wind generation exported out of the state, based on the fact that wind's variability necessitates additional payments for back-up power.
But AWEA believes this unfairly singles out wind. "I think there's some inherent bias people have because wind is this new thing so let's put it in this category," says Goggin. "And we don't think it's a fair way to look at the net incremental impact on the overall power system, which we think is the fair way to look at what our costs should be."
AWEA and others contend that traditional electricity plants benefit from back-up costs that are shared among all generators, while wind is increasingly given special charges.
"A 1,100MW nuclear plant can go down and the utility may be required to hold 1,100MW of contingency reserves," says Ken Dragoon, senior resource analyst at the Northwest Power and Conservation Council. "In most cases, that plant doesn't pay for 1,100MW; generators all pay as though they are equally responsible for that cost."
Yet, a sudden coal or nuclear plant outage is far less predictable than a weather front headed for wind turbines from 30 miles away. And while wind plants in effect help subsidise the cost of reserves for traditional generators, wind is singled out to pay separate balancing charges that other generators do not pay.
A pilot programme by Iberdrola, the US's second-largest wind developer, may soon show that balancing charges are inflated on the Bonneville Power Administration (BPA) transmission system - roughly $11/MWh for access to wires outside Ferc jurisdiction that cover much of the Pacific Northwest.
Iberdrola, which expects to surpass 1.3GW of wind power in Oregon and Washington early in 2011, recently began co-operating with BPA to balance its own wind generation by using a 600MW natural gas-fired co-generation plant that the Spain-based company owns in Oregon.
If Iberdrola can provide cheaper reserves than BPA, Goggin believes it will prove that balancing charges assigned to wind are incorrect. "If we are going to be seeing these unsubstantiated charges then we like the option of being able to beat them by paying what the real cost is," he says.
Otherwise Ferc's proposal is widely regarded as a much-needed reform for converting inefficient hourly scheduling to 15-minute intervals when co-ordinating transmission services. Roughly half of US transmission is controlled by a dozen regional transmission organisations and independent transmission operators - many of which already use fiveor tenminute forecasting schedules.
Getting it right
Huge swaths of transmission, especially in western US, still rely on the inefficient 60-minute approach. Tighter schedules result in enhanced accuracy, which lessens the amount of back-up generation required to ensure steady transmission on the grid.
"The 15-minute scheduling would reduce reserve requirements for everybody," says Dragoon. "It's a general efficiency improvement that's being spurred by the development of wind generation. But actually, even without the wind, it would save a lot of money and make more efficient use of the resources that we have."
Ferc's proposal is subject to a two-month public consultation period, ending in January, and the agency is refusing to comment on the document until all responses have been considered, according to a spokeswoman.
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