It's certainly puzzling, if not downright peculiar. That's the feeling one gets after studying the notice of inquiry (NOI) that FERC launched late last year, after nearly 10 years of dragging its...
Why the green grid might do better without open access.
LLC, which met a disappointingly early end when the commission denied its novel proposal in an order issued late last year. (See, Grasslands Renewable Energy, Docket EL10-51, December 16, 2010, 133 ¶FERC 61,225.)
Spearheaded by the Steptoe attorney and conference panelist Raskin, the Wind Spirit Project would have created a “collector system” of transmission lines across Montana, Wyoming, and perhaps North Dakota, integrated with battery storage and perhaps also some pumped storage hydro facilities, in order to aggregate and assemble a portfolio of various diverse wind power resources to create a high-capacity, firmed and shaped energy product for delivery to market.
In point of fact, the project would have operated very much like the webs of natural gas gathering lines that crisscross Texas and Louisiana and which feed into processing plants that weed out impurities and prepare the gas to serve as a reliable retail energy product. And as gas gathering lines operate largely outside FERC jurisdiction, perhaps the Wind Spirit Project should have enjoyed a similar regulatory reprieve, but it was not to be.
In its application, Grasslands provided evidence that if wind power could be collected and aggregated from a diverse set of wind farms exhibiting different locational and temporal profiles, and then firmed and shaped by storage and other locally produced generation, a firm renewable power product could be created with an average annual capacity factor of around 95 percent. Only then would project output be sent to market.
In addition, the project design would compensate equity participants through a netback scheme that would cover costs but place no limits on upside earnings. But this arrangement of turbines, storage, and portfolio management would prove a delicate balance. As was stated in the petition filed at FERC, “the project economics will not work if the petitioner is required to build a collector system that is oversized relative to the initial demand for transmission service”—which was the initial demand from equity partners signing on to help fund the project from day one.
Thus, Raskin and project sponsor Grasslands asked FERC to rule that if third-party developers should come along later to request transmission service across the Wind Spirit collector system, the sponsor would be authorized to deny the request, or else make the service available only at full incremental cost, rather than the embedded average cost of the original project. This argument lost out to FERC’s open access policy, as it was seen as granting preferential treatment to the initial project participants.
Nevertheless, FERC claimed to have “appreciation” for the novel project, and suggested various alternatives in its December order, such as holding an open season to assess interest from would-be participants, or use of a cluster procedure to determine the exact set of diverse facilities that would make the economics work.
Back at the conference, Raskin showed no bitterness over the decision, but stuck to his guns that FERC shouldn’t dictate green project design.
“It is not discrimination,” he said, if a transmission project developer builds a smaller line—and that small line has the effect of excluding a shipper—if the