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Green Energy Outlook

Realizing the benefits of a modernized system requires an integrated strategy.

Fortnightly Magazine - January 2010

In fact it’s not uncommon for the West to experience negative energy prices as a result of excess wind generation.

In an effort to realize the full benefits of ERCOT’s wind capacity, the Public Utility Commission of Texas (PUCT) approved the Competitive Renewable Energy Zone 2 (CREZ 2) in 2008. Projected to cost approximately $5 billion, CREZ 2 is designed to increase the transmission capability from West to East by more than tenfold. When completed in 2013, CREZ 2 will provide transmission for a total of approximately 18,500 MW of wind capacity in ERCOT.

Smart-grid technologies also will be an important element of the overall T&D modernization effort. Smart grids should allow for two-way communication and response between utilities and consumers through the use of a dynamic network utilizing smart meters, device and appliance controls, data management tools and neural networks. This will enable consumers to respond to real-time prices and select the most cost-effective energy usage pattern. Fully implemented smart grids aim to create an integrated distribution system between utilities and consumers that also incorporates such aspects as distributed generation sources including house solar panels, and electric cars.

Another critical component to the integrated solution is balancing generation. Many types of renewable generation aren’t dispatchable and have much smaller capacity factors in comparison to base-load generation such as coal plants. Renewable generation is subject to generating only when renewable resources are available. Therefore, some types of renewable-generated energy, such as wind, often is produced in large volumes during low demand periods, and subject to substantial volatility. Given this, it’s important to have balancing generation to supplement renewables.

One specific example of the importance of balancing generation also involves ERCOT, when in July 2008 wind generation spiked 1,500 MW in 30 minutes. This forced the system to remove several non-wind generators from operation. The wind generation then proceeded to drop 2,500 MW, which forced the system to try to bring those same non-wind generators back on-line, in addition to others. Over a four-hour period, real-time energy prices fluctuated from nearly $100/MWh to over $170/MWh ( see Figure 6 ). In this case it’s important that quick-start resources, such as peaking plants, are available. Without such resources, markets like ERCOT—made up of a large proportion of wind capacity—will be subject to grid instability and consequently subject to spikes in real-time energy prices.

Smart grid and storage technologies also can help balance supply and demand. On the supply side, storage facilities will be able to store excess generation in hours that it isn’t needed, such as wind generated in off-peak hours. Smart-grid technologies have the capability to also have storage elements, through electric car batteries, for example. On the demand side, smart-grid technologies will send appropriate signals to the consumer so that demand can be shifted to hours when renewable generation is available.

Financing the Solution

Realizing the potential benefits from energy initiatives aimed at modernizing the country’s generation fleet and T&D network will require development and execution of a closely integrated set of programs. Successfully implementing these solutions will require significant capital, and