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Tres Amigas Tie Up

Synchronizing networks to bring green power to market.

Fortnightly Magazine - July 2010

officer of PJM, has launched a merchant transmission project to be located on a 14,000 acre site near Clovis, N.M. The project will be a superstation hub using DC to link asynchronous power markets in the EI, WECC, and ERCOT, regulate the direction and level of power flows between them, and make possible efficient energy transactions now precluded by each market’s inaccessibility to the others.

The project would permit power sellers in ERCOT to schedule power to either the EI or WECC; power sellers in the EI to schedule power to ERCOT or the WECC; and power sellers in the WECC to schedule power to either ERCOT or the EI, thereby providing expanded markets for renewable and other sources of power. The project also would form a balancing authority within WECC and support planned HVDC transmission overlay projects nationwide.

As envisaged, the Tres Amigas project initially will have three energy conversion terminals, each with a 750-MW VSC employing insulated-gate bipolar transistors (IGBT), to provide 5 GW of capacity, scalable over time to 30 GW to accommodate additional demand. IGBT technology enables the VSC to change the AC wave form into a DC circuit with conventional voltage and current characteristics and then, with precise control, to change it back to an AC wave form. The terminals would be linked by several miles of underground liquid nitrogen-cooled cable manufactured by American Superconductor, enabling high power flows with low resistance. The project also includes up to 100 MW of battery storage to provide ancillary services and reactive power to firm intermittent renewable resources. An optimization engine will determine generation and transmission utilization, congestion, reliability indices, and variable market conditions.

The project is a merchant facility and won’t have captive customers or rely on regulated cost-based rates. Project sponsors will bear all risks. To succeed commercially, the project will have to generate income by selling transmission rights, ancillary services, and reactive power to customers that see advantages in extending to the project interconnecting transmission lines, such as AEP-MidAmerican, Southwest Public Service, Sharyland Utilities, Xcel Energy, and Public Service Co. of New Mexico. Project income will be a function of the margin created by differing power prices in the EI, WECC, and ERCOT, a fraction of which will be captured as transmission revenue through sale of long-term and spot transmission rights. The resulting dollars must be sufficient to permit the leveraged financing of a capital-intensive facility costing north of $500 million.

Negotiated Rates

To obtain required regulatory approvals, last December Tres Amigas filed two parallel applications at the Federal Energy Regulatory Commission (FERC), one seeking authorization to sell transmission rights at negotiated rates and the other seeking a disclaimer of federal jurisdiction over any transmission owner that constructs transmission facilities interconnecting the ERCOT grid to the project.

In its negotiated rates application, Tres Amigas proposed to offer for bilateral sale, point-to-point physical transmission rights based on firm transfer capability from one scheduling point to either of the other two scheduling points. Thus, for an ERCOT seller, firm transmission rights would be framed by the ability to schedule