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.” In, 2006.
Executive Summary
The potential benefits of wind power as a clean, renewable, economic, domestically avail- able power source have captured the attention of energy policy leaders, consumers, and the electricity industry. The United States (US) has tremendous wind energy resources. California is viewed as one of the leaders in the modern US wind industry in terms of capacity installed; however, 16 other states have even greater wind potential. Only a small portion of that potential has been tapped. The US currently derives approximately 1% of its electricity from wind power, whereas parts of Europe use wind power to meet up to 25% or more of their electricity needs.
In 2005, wind power in the US grew rapidly and became more competitive as volatile natu- ral gas prices increased and crude oil prices reached record highs. Improved technology, federal tax credits and public policies that encourage utilities to use clean energy sources helped fuel the growth from coast to coast. Projections are that US wind capacity could reach 100 gigawatts (GW) by 2020, meeting 6% or more of national electricity needs.1
The objective of this paper is to examine the transmission policy issues around wind and renewable sources of generation. Reliability and commercial issues are reviewed, both in the US and abroad, and recommendations are provided for effective integration of wind sources into the US electric system. Key findings of this paper are:
■ Over-reliance in the US on any one fuel type results in reliability and economic consequences, highlighting the benefits of diversified energy resources.
■ Wind generation is becoming an economic power source, and has the further benefit of mitigating environmental climate change concerns.
■ In order to tap the vast potential of new generation sources such as wind power in the US, we must address the existing challenges in generator interconnection and trans- mission cost and planning policies.
■ The current US transmission system was not built to support competitive regional markets nor is it sufficient to integrate planned and potential new generation sources; additional transmission infrastructure will be required.
■ Operating techniques for intermittent generation resources, properly structured market rules, and effective transmission policies for regional planning, cost allocation, and cost recovery and incentives will help to facilitate wind power as well as other new sources of generation.
■ Transcos (for-profit independent transmission companies) focus on delivering low-cost reliable energy to consumers by facilitating robust electricity markets and providing transmission access to new generation sources including renewable energy. Because of their for-profit structure, a further advantage is that Transcos can be held firmly accountable by regulators for system performance and operating costs.
■ Robust transmission infrastructure policies in countries outside the US have helped them progress toward achieving their goals for renewable sources of energy while maintaining system reliability. The challenges to effective integration of wind power in the US are not insurmountable; they can be addressed with industry, public, and regulatory commitment.
■ Several countries, including Denmark, Germany, Spain and the UK have had coordinated government efforts and policies to facilitate wind power, and these are proving very effective. Some areas of North America, such as Alberta and Texas, are also employing planning and cost allocation policies that are helpful to new generation sources.
Specific recommendations for changes needed to take advantage of US renewable resources to the benefit of electricity market users and customers are:
■ Employ greater use of available operational techniques, such as wind forecasting tools, for reliable operation of wind resources;
■ Properly structure market rules to address imbalance and capacity value in a manner that reliably and economically facilitates renewable generation sources;
■ Engage industry and stakeholders in long-term, robust, and comprehensive regional planning for transmission infrastructure, including infrastructure needed for new sources of generation;
■ Incorporate economic and customer cost metrics, in addition to reliability, into regional planning processes;
■ Implement workable cost-allocation and recovery mechanisms to recoup the costs of transmission infrastructure improvements;
■ Provide regulatory incentives for transmission infrastructure investment and independent ownership/operation of the nation’s transmission system.
