navigating interconnecion and transmission in the major us markets

Navigating Interconnection and Transmission in the Major US Markets

Rhonda Peters, Ph.D.Grid Interconnection and Transmission Engineer

Kevin Brokish, M.SGrid Interconnection and Transmission Coordinator

Clipper Windpower Development Co., Inc.Carpinteria, CA

© 2010 Clipper Windpower, Inc. and subsidiaries. All rights reserved.

European Wind Energy Conference: April 22, 2010



Agenda

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Clipper Snapshot

Regional Interconnection Processes

FERC “Pro Forma” Generator Interconnection Process

Navigating Interconnection

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2 Background: Key Transmission Policy Issues


Clipper Snapshot

• Established in 2001

• Capabilities:

– Wind Turbine Design/Engineering (R&D)

– Wind Turbine Manufacturing

– Wind Project Development

• 740+ Employees

• Headquarters: Carpinteria, California, USA / London, UK

• Wind Turbine Assembly: Cedar Rapids, Iowa, USA

• Publicly Traded on the London AIM Market

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Clipper Product Line

• 10 MW

• Offshore

• Manufacturing:

Blyth, England, UK

Liberty Britannia

• 2.5 MW

• Onshore

• 1,167.5 MW Installed

• Manufacturing:

Cedar Rapids, Iowa, USA

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Agenda

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Clipper Snapshot




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Electricity Business Regulatory Structure

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FERC

ISO/ RTO

Utility

PUC

Gen Load

• Federal Energy Regulatory Commission (FERC)

• Agency with jurisdiction over interstate electricity sales and wholesale electric rates

• Independent System Operator / Regional Transmission Operator (ISO/RTO)

• Coordinates, controls, and monitors the grid.

• Public Utility Commission (PUC)

• State-specific governing body that regulates the rates and services of public utilities.

Entities


Cost Allocation of TransmissionA Hotly Contested Issue

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Wind shouldn’t get a free ride

Total Cost = Generation + Transmission• Separating generation from its transmission

creates inaccurate economic signals

Deciding which load should pay is difficult

Load will pay in the end, anyway• Generators with power purchase

agreements can pass the cost through to consumers

Make Generators Pay!

Cost Causers ≠ Sole Beneficiaries• Why should generators fund:

• Lower emissions• Increased reliability and security• Local economic benefits• Capacity for future expansion

Charging multiple generators is ineffective• When a project drops, its obligation can be

“backfilled” with a new project, but the new project may not be prepared to fund a share of the transmission.

• Developer cost of capital is much higher than utility cost of capital.

Ad hoc system planning is inefficient• The system should be planned for both

today and the future, but generators should not be charged for overbuilding.

Load will pay in the end, anyway

Make Load Pay!


Who Wants Regional Transmission Built?

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My load shouldn’t pay. They aren’t using the

transmission.

Very Windy StateLow Load

Low Wind State

High Load

I don’t want to pay, either.I want in-state wind because it brings jobs and property taxes.

Transmission?



Agenda

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Clipper Snapshot




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Interconnection Request• $10,000 (€7.500)• Site Control or an additional $10,000 (€7.500)

FERC “Pro Forma”Large Generator Interconnection Procedures

Feasibility Study• $10,000 (€7.500)• Technical Data

System Impact Study• $50,000 (€37.000)• More Site Control

Facilities Study• $100,000 (€75.000)• More Technical Data

Large Generator Interconnection Agreement

Transmission Credits• Transmission charges

are discounted until network upgrade costs have been reimbursed.

Network Upgrade Reimbursement?

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EX

PE

NS

IVE

U

PG

RA

DE

S

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The Clogging of the QueueReason #1: Interconnection Requests Are Cheap

Available

Capacity

Used C

apacity

Project #1

Project #2

Project #5

Project #4

Project #3

Project #6

Project #7

Potential Revenue from Selling a Successful Project $X,000,000

Cost of Submitting Interconnection Request $10,000

“Free Riders”

“Cost Causers”

© 2010 Clipper Windpower, Inc. and subsidiaries. All rights reserved.12

The Clogging of the QueueReason #2: Suspension

Project #1

Project #4 SUSPENDED

Project #5 (Waiting…)

Project #6 (Waiting…)

Project #7 (Waiting…)MORE

UP-GRADES

Used C

apacityP

roject #4’s

Upgrade

Project #3

Project #2 SUSPENDED

• Speculative suspended projects claim available system capacity• Queued generation faces uncertainty• Queued generation faces expensive

upgrades



Agenda

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Clipper Snapshot




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NOTE: Many LGIP details have paraphrased/simplified in the interests of time.Please refer to Open Access Transmission Tariffs for the definitive rules of Generator Interconnection Processes.


MISO: Midwest ISO

Interconnection Request• Size Dependent (<6MW to >1GW)

$10,000 - $120,000 (€7.500 - €90.000)• Site Control or an additional $100,000 (€75.000)

Feasibility “Test” determines if system upgrades are minimal and project can skip the “SPA” phase

System Planning and Analysis Phase (“SPA”)

Definitive Planning Phase (“DPP”)• Size Dependent (<6MW to >1GW)

$40,000 - $520,000 (€30.000 - €390.000)• M2* Demonstration of Project Seriousness• M3** Demonstration of Project Seriousness

Interconnection Agreement• Cannot suspend

*Milestone 2 (M2) is two of the following: application for air or land permits, PUC approval, approval to proceed from the project’s board of directors, purchase order or agreement for generating equipment, security equal to one month of transmission service (approx $2000/MW).** Milestone 3 (M3) is one of the following: security equal to the cost of network upgrades, PPA, or a purchase/agreement for generating equipment

In Flux• Today: No (10% if

345kV or above)• Tomorrow: …?


Optional 135-day “parking”

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SPP: Southwest Power Pool

Interconnection Request• $10,000 (€7.500)

Feasibility Study• $10,000 (€7.500)

Preliminary Interconnection System Impact Study• $60,000 (€45.000)• Demonstration of Site Control

Definitive Interconnection System Impact Study• $150,000 (€112.500)• *Demonstration of Project Seriousness

Facilities Study

Generator Interconnection Agreement• Shared upgrades cannot be suspended• Suspension limit of 18 months, $5,000,000

(€3.750.000) deposit due at 6 months.

*Demonstration of project seriousness means one of the following: Letter of Credit for Network Upgrades, Power Purchase Agreement, evidence of a “Designated Resource”, Purchase Order for Generating Equipment, Application for Air Permit, Filing of FAA Notice

Revenue Credits• Generators are

reimbursed as the network upgrades are used for transmission service.


Customer chooses where to enter process

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CaISO: California Independent System Operator

Interconnection Request• $250,000 (€190.000)

• $100,000 (€ 75.000) is not refundable• Site Exclusivity or an additional $250,000 (€190.000)

Phase I Interconnection Study

Phase II Interconnection Study• The Lesser of

• 15% of network upgrade cost or• $20,000/MW (€15.000/MW) or• $7,500,000 (€5.600.000)


Direct repayment• Over a 5 year period


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PJM Interconnection

Interconnection Request• $100 - $200/MW (€75 - €150/MW) up to $100,000

• Plus $10,000 - $30,000 (€7.500 - €22.500) Depending on timing in 3 month submit window

• Demonstration of site control

Feasibility Study

System Impact Study• $50,000 (€37.500)

Facilities Study• $100,000 (€75.000)

Interconnection Service Agreement

No.


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ERCOT:Electric Reliability Council of Texas

Generator Interconnection Request• $1,000 - $5,000 (€750 - €3.700)

• Not refundable

Security Screening Study

Full Interconnection Study• Cost dependent upon project and utility• Demonstration of Site Control


Yes.• Security is required,

but the utility funds network upgrades


Can delay up to 180 days

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Agenda

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Clipper Snapshot




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Often the interconnection rules/tariff change mid process making it critical to attend ISO/RTO stakeholder meetings.

Midwest ISO• 2008: Interconnection Process Task Force (IPTF) Change from first in/ first

out to milestone based queue process, suspension no longer allowed, and up to $120k to enter queue plus $520k to complete studies

• 2009: Regional Expansion Criteria and Benefits Task Force (RECBTF)—change from 50% reimbursement for network upgrades to 0% if less than 345kV, 10% if 345kV and above

SPP• 2009: Generator Interconnection Task Force (GITF) changed from first in/

first out to milestone based queue process, suspension limited and more costly, higher deposits required

CAISO• 2008/2009 Generator interconnection changed from serial to cluster study,

two phase process with $250k to enter queue and up to $7.5M security required to enter Phase II study


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© 2010 Clipper Windpower, Inc. and subsidiaries. All rights reserved.21

The challenges faced by the US wind industry cannot be met by individual companies. Industry Organizations play a critical role in responding to policies that create barriers to wind development

• Wind on the Wires (“WoW”) – MISO, Midwest• The Wind Coalition – SPP, ERCOT• AWEA Transmission Committee – National• Center for Energy Efficiency and Renewable Technologies – CAISO and West• CALWEA—California Wind Energy Association – CAISO• Interwest Energy Alliance – West• Mid Atlantic Renewable Energy Coalition• RENEW New England – ISO-NE• Renewable Northwest Project (“RNP”) – BPA• Alliance for Clean Energy New York – NYISO• NWCC-Northwest Wind Coordinating Committee

Thank You

Rhonda Peters, Ph.D.Grid Interconnection and Transmission EngineerTel: +1 (805)-576-1188Email: [email protected]

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navigating interconnecion and transmission in the major us markets

Business

sgrid interconnection

interconnection requests

wind project development

new project

load pay

project drops

state wind

wind turbine manufacturing