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Not-So-Green Superhighway

Unforeseen consequences of dedicated renewable energy transmission.

Fortnightly Magazine - February 2012

intermittent wind power; however, the amount of wind on BPA’s system has grown rapidly, increasing both the need for reserves and the risks to system reliability. BPA found that increased size of the wind fleet was compounded by wind generators’ inability to accurately account for wind ramp events in their schedules, thereby requiring BPA to hold a significantly larger amount of reserves to provide balancing services. 5.43 cents per kWh is a significant increase; EIA estimates that the average annual electricity price in 2010 was 9.8 cents per kWh, so adding 5.43 cents per kWh would represent an increase of 43 percent. Current electricity rates in the Pacific Northwest are between 5 and 6 cents per kWh, so a surcharge of 5.43 cents effectively would double the delivered cost of power.

Thus, actual costs must include the costs of RE plus the imputed costs of backup power. Including backup would provide a dispatchable system, whose costs could be legitimately compared with coal and other baseload options, and if such costs are incorporated into the RE LCOE, these cost estimates would increase significantly.

There’s also the question of how the costs of increased RE transmission should be included in the RE LCOE. This issue is often framed as the difficulty of getting power from RE sites to the major demand centers on the coasts. Costly transmission lines will be needed to move RE to the major population centers, and there must be considerable redundancy in the new transmission lines to guard against damage due to natural disasters and terrorism. All of this entails considerable additional costs. As noted, legislation has been introduced for “green transmission” lines that would be restricted exclusively to renewable electricity. 19 While the feasibility of such proposals is questionable, if such lines are actually built it might be that all of their costs would have to be included in the RE LCOE.

Coal Utilization Scenarios

Added transmission could greatly impact the existing coal fleet. 20 Utilization of the existing coal fleet is currently about 72 to 74 percent. However, this can be increased to about 85 percent if there’s enough transmission to transmit the added coal generation to the load at nights and weekends. 21 Much current night and weekend load is handled by natural gas. Natural gas isn’t cost-competitive with coal, and is only used due to lack of adequate transmission from coal plants. Most of the underutilized coal capacity is in the middle U.S. and is stranded from the East Coast. U.S. coal capacity is about 310 GW, coal furnishes about 2 trillion kWh annually, and the U.S. consumes about 1.1 billion tons of coal annually.

If added transmission increases utilization of existing coal plants by 10 percent, coal could provide an additional 200 billion kWh and coal demand would increase by 100 million tons—even assuming no new coal plants are built. 22

Analyzing two scenarios, and performing two sensitivity analyses for each, allows the potential impact of additional transmission on coal plant utilization to be estimated. The analysis assumes that additional RE transmission would enable capacity