Growth in variable resources creates an increasing need for demand response and fast-ramping generation. The right market design can bring both.
Renewables attract utility investment dollars.
called the OU Spirit wind farm, and the University of Oklahoma contracted to purchase its output. As part of a plan to add another 700 MW, I characterize them as our anchor tenant. They’re the first ones in, and they set the stage for us to move forward. The university has committed to be 100-percent renewable by 2013, and we’re working with them to make that happen.
Also, we issued an RFP for 300 MW in December and we got a healthy number of bids. When we finish this cycle, we’ll immediately issue another RFP for 300 MW.
As we developed our renewable energy plan, we saw three things. First, transmission lines and wind generation provide a hedge against gas prices. Gas prices last year hit nearly $13, and that demonstrates the volatility of gas prices we’ll continue to see going forward. Our customers already have benefited from the price hedge of wind power.
Second, with more wind we’re positioning ourselves for potential RPS and carbon legislation. We’re in the mindset of being leaders in this area, with the stated goal of not building any more fossil plants until 2020. The more you put renewables on your system, the more you protect your customers from CO 2 regulation. That may be uncertain, but a national RPS is almost a certainty, and there’s nothing wrong with being an early mover. It’s the right thing to do.
Third, we realized it’s important to get our customers involved, and to let them help us. So when we got our new transmission line approved last year to bring wind to Oklahoma City, we asked the commission to approve new retail tariffs for customer participation. They can be up to 100-percent renewable, or 75- or 50-percent renewable. This is our way of allowing customers to continue participating in wind-development efforts.
The first transmission-line jump started all this, and now working with the Southwest Power Pool we formed a joint venture, the Tall Grass partnership, with AEP and MidAmerican Energy, to build a $500 million, 765-kV line from the Oklahoma panhandle to the Kansas border. AEP brings significant knowledge of high-voltage construction, MidAmerican brings financial strength, and OG&E brings the rights of way and project experience. We expect to move forward with these plans and be done by 2013.
Kuga, PG&E : Over our 100-year history, we’ve been a pioneer in hydro, both large and small, as well as geothermal. Currently we don’t own any geothermal but we’ve developed an extensive system of geothermal projects. At one time it was well over 1,000 MW. That’s now owned by third parties, but we still own a substantial amount of hydro capacity.
Despite that 100-year history, like many utilities we’re just beginning to get into the ownership spectrum of [today’s] renewable energy business. Our focus has been two-pronged. First, we’ve made contractual commitments to have more than 20 percent of our future delivered electricity come from renewables. Currently about 13 percent of our actual deliveries are from renewables. That’s based on the California definition, which includes hydro plants smaller than