the new administration wants to ju energybiz january/february 2009 here come renewable energy zones...

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  • 30 EnErgyBiz January/February 2009

    HERE COME RENEWABLE ENERGY ZONES

    By PAM RAdtke RusseLL

    ILLuSTRATION By JRgEN MANTZKE

    the new administration wants to jumpstart investments in renewable energy, it can look west for examples of how to encourage new wind, solar and geothermal energy.

    Texas, California, Colorado and Minnesota are all in various stages of initiating the construction of new trans-mission lines to areas they have dubbed as renewable energy zones where new renewable generation is expected. Texas is leading the efforts, with an approved plan to build $4.9 billion in transmission to bring more than 18,000 megawatts of West Texas wind to the population centers of the state.

    The state-led efforts avoid the chicken-and-egg problem that has plagued many renewable projects: Who is going to take the risk first, the transmission or the generation company?

    Companies didnt want to spend the millions of dollars to build wind farms and not have transmission, and trans-mission companies didnt want to go get the easements and build transmission without a guarantee wind farms would be built, explained Paul Sadler, executive director of The Wind Coalition, speaking of the logjam in Texas. it literally was,

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  • www.energycentral.com EnErgyBiz 31

  • 32 EnErgyBiz January/February 2009

    stAtE griD initiAtivEs

    You go first.; No, you go first. The coalition advocates for wind power in Texas and six other South Central states.

    Texas was able to push renewable transmission plans forward because of its independence from the rest of the nations electric grid. Other efforts, including those taken by the federal government, will be more difficult because of cost allocation and siting issues.

    i think its a model that can be adopted, said Paul hudson, a former Texas Public Utility Commission chairman and commissioner, speaking of the Texas zones. i think that the federal government is going to have to do it in conjunction with state siting authorities. They need to take some time to reach out to those state authorities.

    Sen. harry Reid (D-Nev.) introduced legislation last year that emulates Texas renewable zone model. Michael Goggin, an analyst with the American Wind Energy Association, said that its inevitable that such national zones be designated, but the details of such a program, including who assigns the rights to build and costs, will be difficult to work out.

    Likewise, the concept of encouraging transmission for renewables in Texas was easy to grasp. Working out the details, however, took some time. State legislation was approved in 2005 to start the process. Construction on the transmission lines isnt expected to start until next year, at the earliest.

    in some respects, its like watching the grass grow, said Sadler.

    After the Texas Public Utility Commission initiated the renewable energy zone process, the Electric Reliability Council of Texas conducted a lengthy study to determine where the renewable power in the state would be developed. initially, 20 possible zones were identified. Those were eventually narrowed down to five zones in West Texas capable of producing massive amounts of wind power. The PUC demanded financial assur-ances from wind developers that they would develop wind in those zones before finalizing its decision.

    T. Boone Pickens Mesa Power, Shell WindEnergy, Luminant Power and E.ON Climate & Renewables North America are among companies that have announced plans to build in the renewable energy zones, though many of those plans have been delayed because of economic conditions.

    in July 2008, the PUC selected a plan to build 2,300 miles of new 345-kilovolt transmission lines. Now, the PUC is sorting through applications from companies to build all or parts of the needed lines. A decision on the winning applicants is expected in January. Even after the lines are sited and built, hudson said Texas isnt finished with competitive renewable energy zones. i am not sure weve undertaken the last CREZ. This is just the first round of buildout.

    While there has been some worry that the credit crisis will delay or even kill plans for the lines, the PUC has given no indication it will back away from its plans. hudson says the public response has been generally favorable because of a desire for diversification of fuel and lower costs. According

    to ERCOT, even with natural gas at $7 per million British thermal units, the transmission lines will result in an average fuel-cost savings of about $38 per megawatt-hour.

    California, which started its renewable zone process more than a year after Texas, is still in the process of choosing its renewable energy zones. But the Renewable Energy Transmission initiative will work at an expedited pace under orders from Gov. Arnold Schwarzenegger that the zones be finalized by March 31. A working group has identified about eight in-state zones and two out-of-state zones that could be cost-effectively tapped with transmission lines to provide solar, wind and geothermal power to meet the states goal of 30 percent renewable power by 2020. The majority of Californias lines are likely to be built in the southern half of the state, where the population and access to solar power make line construction most cost effective.

    Colorado and Minnesota are still working to identify their renewable energy zones, while they are in planning stages to develop their own renewable energy zones.

    hudson is hopeful that the new administration will institute policies that will push fledgling efforts along, or even develop federal renewable zones.

    Transmission is an investment that we have to make nationally and its not just about wind. We need a stronger national transmission grid, and wind and other renewables gives us a viable set of reasons to do it.

    focus on collaboration

    Regulators Take Aim

    BY PAM RADTKE RUSSELL

    TheFederalenergyregulatoryCommissionandthe National Association of Regulatory Utility Commis-

    sioners are looking for a smarter way to implement smart meters and the smart grid. Early last year, the two groups collaborated to focus attention on smart grid systems, and by the middle of this year, their efforts should pay off with a nationwide database of advanced meter and smart grid pilot programs.

    Utilities are deploying massive quantities of these meters in lots of places. What kind of meters work, and what kind of rate structures work? asked Frederick Butler, a New Jersey public service commissioner, NARUC president and co-chair of the FERC and NARUC smart grid collaboration. An estimated 34 states have pilot smart meter programs, he said.

    The collaboration, which includes members from 20 states, plans to award a contract early this year to a group that will

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  • 34 EnErgyBiz January/February 2009

    stAtE griD initiAtivEs

    put information about the pilot programs in a usable form. The Edison Electric institute is already collecting much of the data about the pilot programs. The clearinghouse information should be available in the middle of the year, Butler said.

    The information will allow regulators and utilities to structure better pilot programs, or decide whether a pilot program is even necessary before rolling out smart meters. Sharing information is vital to show that the programs work in the right form, Butler said.

    Utilities and regulators cannot increase customers bills to pay for the smart meters without first establishing a rate structure that allows end-users to cut their costs through demand-response. Knowing which rate structures worked in other places will be a good starting point.

    This is too important to screw up, Butler said. We really do need a more digital and sophisticated grid to allow people all the kinds of information they need to manage their energy use.

    The collaboration approved the study at the NARUC annual convention in November, where smart grid was an underlying topic at many sessions. Advanced grids are critical for the new plug-in electric vehicles that will be rolled out beginning this year. Without the ability for consumers to access real-time rates, many of the benefits of electric vehicles, such as reducing carbon emissions, could be lost, said panelists from utilities, FERC, state commissions and even General Motors.

    Electric transportation cant move forward without smart grid, said Rob Chapman, a vice president at the Electric Power Research institute.

    A smart grid is also necessary to allow the electric vehicles to act as regulators on a grid, storing wind energy, for instance, at night when there is little demand, and feeding that power back into the grid during the day.

    Plug-in hybrid electrics are going to really change the way the whole system works, Butler said. We have to be rea

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