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Wind Integration and the Cost of Carbon

Renewables are greenest when displacing coal, not gas.

Fortnightly Magazine - March 2011

With the abandonment of a nationwide energy policy by the previous Congress, states continue leading carbon mitigation efforts. Indeed, existing state policies and renewable portfolio standards (RPS) are already having a significant impact on the U.S. generation portfolio. FERC now proposes to weigh state policy as a consideration in transmission filings. Should state policies guide federal action? Will they suffice to reduce carbon emissions?

The 30+ states with renewable energy or carbon regulations cover a wide range of policies. All have some degree of RPS, for which the dominant portion may be met only by physical delivery of power in state. Treatment of low-emission resources varies by state and technology. Policy makers in many states believe mature energy sources (such as hydroelectric) should not receive market preferences, but that only technologies not yet competitive should receive incentives. States also use incentives to drive local industrial policy, and hopefully, in-state job creation. They often select the particular technologies they believe will be ultimately successful in the marketplace. Furthermore, many states have preferences for local generation to advantage in-state industry.

Along with the frustration of progress toward a national carbon policy, 2010 was notable for the release of numerous wind integration studies. No fewer than five of these complex analyses were completed, covering multi-state regions such as NREL’s Eastern and Western Interconnection studies, together with state and sub-regional studies covering SPP, New York and New England. These multi-million dollar studies used more sophisticated models than prior work did. They contain a wealth of results covering operational analyses and impact on ancillary services, over a range of high voltage transmission build-out scenarios.

The studies produced some controversial initial results, such as NREL’s finding that Midwestern wind linked to the East via an EHV network could be somewhat less costly than scenarios depending more on local and off-shore wind resources in the East. These studies have sparked interest in more definitive work. To support this, the U.S. Department of Energy funded the Eastern Interconnect Planning Council and a parallel state effort in a multi-stakeholder process.

The success of renewables installations through 2010 indicates that the early demonstration project phase has passed. It’s now appropriate to refocus on the ultimate purpose of adding renewables: reducing carbon emissions. To this end, the wind integration studies are useful because they analyze how renewables displace fossil generation. These displacements result in different carbon reductions across a wide range of scenarios considered in the modeling.

Adding renewables has a disparate impact on carbon depending on whether the facilities displace coal or gas-fired generation. Coal has twice the carbon content per MMBtu as natural gas, and steam-fired boilers are far less efficient than modern combined cycles. So coal generation produces more than twice as much CO 2 per MWh as gas-fired generation (see Figure 1) .

Optimal Investment

The wind integration studies show the effect on fossil generation by renewable additions. Surprisingly, the NREL’s Eastern Interconnection and the ISO New England studies

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