Executive Digest Commentary: March

Recently I wrote an article for PowerGrid International (a sister magazine to Electric Light & Power on which I also work) about the Tres Amigas SuperStation, expected to be the nation’s first renewable energy market hub.

The energy transmission project will connect the three main U.S. power grids using the latest superconducting cable, voltage source converter and battery storage technology to provide a link capable of handling 5 GW of electricity initially and the ability to expand to 30 GW.

It will be in Clovis, N.M., close to the borders of western Texas, Colorado and Oklahoma—a location abundant with potential wind and solar energy.

I interviewed several people who are spearheading the project and working for its developers. I easily picked up on their excitement and expectation that Tres Amigas will open up a market for renewable energy that will excite and entice new entrants and investors.

If and when the Federal Energy Regulatory Commission (FERC) rules in favor of two recent Tres Amigas filings—one on rate structure and the other on allowing the Electric Reliability Council of Texas (ERCOT) to remain independent of FERC jurisdiction—the developers can attract the investors needed to make the $1 billion project a reality, they said.

Before I worked on this article, I didn’t understand much about ERCOT and how it differs from the eastern and western grids. I still don’t understand a lot about the subject, but I know that ERCOT will not connect to Tres Amigas unless it can remain independent. ERCOT has always been independent, and Texas wants it to remain that way.

The economic benefits of being able to move its wind power to markets outside of ERCOT, however, might be enough to outweigh whatever benefits come from being independent of FERC’s jurisdiction. Connection to new markets is especially important in Texas, where developed wind energy has been responsible for a lot of transmission congestion that has even led to negative prices in the ERCOT West zone.

Negative pricing typically occurs when excess electricity supply cannot reach demand as a result of transmission grid constraints. In some cases, wind facilities must curtail their output even when consumers in adjacent areas are paying high electricity prices because of high demand. This wastes carbon-free renewable energy resources and creates huge price discrepancies in adjacent areas, resulting in much lower revenues for the curtailed wind plants. In some cases, wind generators pay to have ERCOT take their electricity to keep their renewable portfolio credits and tax incentives. It just doesn’t seem right.

Although Texas grid management improved in 2009 compared with previous years and resulted in less negative pricing than 2008—19.55 percent in the first six months of 2008 vs. 13.77 percent in the first six months of 2009—a lot of clean energy is wasted, and a lot of revenue is lost.

In addition, Texas is far from exhausting its potential wind energy supply. The state has much more wind capacity to be developed.

I asked if access to new markets and the potential revenue the state could acquire through these markets would be enough to entice ERCOT to give up its independence if FERC so ruled. Without hesitation, they said “no.” They’re optimistic, however, that FERC will realize the overall benefits of the Tres Amigas SuperStation and that it will allow ERCOT to remain independent.

I hope so, too. After speaking to my sources and researching, I’m convinced that the nation will benefit if the three interconnections are linked and a broader market for heartland wind and solar energy is created. I look forward to FERC’s rulings and to following this project.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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