Although today microgrids serve a tiny fraction of the market, that share will grow as costs fall. Utilities can benefit if they plan ahead.
Renewable portfolio standards bring volatility to Mid-Columbia markets.
In 2006 and 2007, California, Oregon, and Washington enacted renewable portfolio standards (RPS) designed to mandate a high percentage of renewables over the following 20 years. 1 The three initiatives have been highly successful and have increased the quantity of renewable resources – primarily wind – throughout the West.
The increasing number of intermittent and non-dispatchable resources has caused a variety of unintended consequences. A conflict between Bonneville Power Administration (BPA, the federal utility whose control area contains the majority of wind developments) and wind producers has reached the Federal Energy Regulatory Commission in Washington, D.C., and is the subject of a rate proceeding at the BPA. 2
While thermal generation is scheduled by hour, day, and month, renewable projects often are subject to weather and climate considerations. The generation of these resources can vary wildly – often from minute to minute. Hydroelectric resources traditionally are viewed as less firm than thermal and nuclear generation, because run-off from winter snows is highly variable. But wind and solar also are variable resources, and unlike hydro they generally aren’t dispatchable. Wind, the current renewable of choice, is especially intermittent, with periods of zero generation interspersed with periods of high generation. In a perfect world, the extra generation from these renewables could be stored easily against later need. The world isn’t perfect, however. For example, the Pacific Northwest’s quasi-battery, the reservoirs along the Columbia and Snake Rivers, often face environmental constraints and can’t be used to store intermittent generation.
BPA currently lists 41 wind projects with a combined nameplate capacity of 4,711 MW ( see Figure 1 ).3
The recent Western Electricity Coordinating Council (WECC) plan indicates massive increases are coming in wind and other renewables in the current decade (18,000 MW in wind alone) in the Western Interconnect. 4 The majority of the region’s wind resources are forecasted for Oregon and Washington ( see Figure 2 ).
The eastern desert counties of Oregon and Washington have seen an enormous growth in wind generation. There are a number of reasons why this is such a good location. The wind resources are plentiful and NIMBY (not in my back yard) concerns are rare, given the area’s low population.
One of the unforeseen consequences is that off-peak prices in the large and liquid Mid-Columbia wholesale market went negative for almost one-sixth of the time in 2011 and 2012 ( see Figure 3 ).5
The location of the wind farms in eastern Oregon and Washington generally surrounds the massive hydroelectric resources along the Columbia River. The Mid-Columbia Bus surrounding the major dams has created one of the largest electric markets in the world. Prices at Mid-Columbia are reported in the energy media, at FERC, and at the Energy Information Administration, and are the basis of industrial and resource contracts throughout the Pacific Northwest.
The market is also highly transparent, since there’s no third-party administrative agency that can restrict market information. To recapitulate Paul Samuelson’s