SPP, Wind, and Transmission Expansion

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SPP, Wind, and Transmission Expansion
Oklahoma Clean Energy Independence
CommissionFebruary 25, 2010 Les Dillahunty,
Senior Vice President, Engineering and Regulatory
Policy
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Introduction
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Our Beginning

• Founded 1941 with 11 members
• Utilities pooled resources to keep Arkansas
  aluminum plant powered for critical defense
• Maintained after WWII for reliability and
  coordination

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3 Interconnections / 8 NERC Regions
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Operating Region

• 370,000 square miles service territory
• 50,575 miles transmission lines
• 69 kV 16,182 miles115 kV 10,041
  miles138 kV 9,284 miles161 kV 4,469
  miles230 kV 3,831 miles345 kV 6,662
  miles500 kV 106 miles

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Members in nine states

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56 SPP Members
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Quick Statistics

• 66,175 megawatts capacity resources
• 847 plants 6,079 substations

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Wind Integration and Transmission Expansion
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Wind In Service 2001
2009
Source NREL
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Wind Installed by Year (2002-2009)
Source SPP
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Renewable Energy Standards By State
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Source SPP
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w/ HVDC Proposals
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Generation Interconnection Requests
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Generation Interconnection Clusters and Major
Cities
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To Scale Height Comparison
Produced by Midwest ISO
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Correlation Between Wind and Load
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Wind Status in Oklahoma

• 865 MW installed through 3Q 2009
• 3 wind generation in 2008
• Ranks 12th total wind installation

Source AWEA, NREL
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Oklahoma Weatherford Wind Energy Center

• 300,000 in annual lease payments to landowners
• 17 million in property taxes over 20 years
• 147 MW
• 150 workers during construction peak 6
  full-time OM positions

Source NREL
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Oklahoma CPV OU Spirit project

• Annual allocations from addition of 2.3 MW
  Siemens turbines
• 1,057,000 in new tax dollars for two school
  districts
• CareerTech allocation from county revenue will
  increase by 227,000
• County general funds will increase by 190,000
  will assist with building new jail
• EMS services will receive 57,000 increase
• County Heal services will receive 20,000 increase

Source Woodward County Assessor
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Oklahoma, Wind, and Economic Development

• Economic benefit of 1,000 MW 1.25 billion
• 5,530 construction jobs, 215 permanent jobs
• Average wages in component manufacturing industry
  40,709 - 15 higher than average state wage
• Strong correlation between Western OK counties
  that have lost population in recent decades with
  counties that have significant wind resources
• In many cases, land suited for wind development
  has lower per-acre returns for agricultural use
• Sooner Survey of 600 registered voters
• 72 of Oklahomans willing to pay more for
  wind-generated electricity
• 91 approve of further development of wind farms

Source NREL Cole, Hargrave Snodgrass, and
Associates Oklahoma Department of Commerce
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Component Manufacturing-Oklahoma, Kansas

• Bergey WindPower (Oklahoma)
• Employs 42, manufactures one turbine per day
• DMI Industries (Oklahoma)
• Employs 215
• Siemens (Kansas)
• Broke ground September 2009
• Will invest 50 million in new facility
• Expected to employ 400 workers by 2012 _at_
  gt16/hour
• Planned annual output 650 nacelles

Sources NREL, Wichita Eagle
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Arkansas Becoming Manufacturing Hub

• LM Glasfiber
• Employs 300 workers _at_ 12-15/hour
• Invested 95 million in Little Rock
• Mitsubishi Power Systems
• Announced October 2009
• 100 million plant will bring 400 jobs in 2011
• Nordex
• Sept 2009 - Broke ground on 100 million plant
• Expected to employ 700 by 2014
• Emergya Wind Technologies/Polymarin
• Plans to invest 16 M and create 830 jobs _at_
  15/hour

Installed Wind
Existing Manufacturing
Announced manufacturing
Sources NREL, AR Economic Dev. Commission,
Nordex, Arkansas Business
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SPP is Building Transmission
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Transmission Expansion - Costs
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Transmission Expansion - Miles
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Draft EHV Overlay
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Priority Projects
Group 2
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Quantitative Benefits

• Study quantified NPV benefits of 1.5 billion
  over 40 years
• B/C Ratio of 0.74

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Qualitative Benefits
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Examples of Other Transmission Benefits

• Fuel Diversity
• Market Liquidity Improvements
• Ability to Idle High Cost/Environmental Impact
  Resources
• Energy Capacity and Ancillary Market Facilitation
• Storm Hardening
• Increased Competition
• Extreme Reliability Event Mitigation (n-1) and
  (n-2) Weather Wind
• Ability to Serve New Load
• Capacity Factor Improvement of Wind Resources
• Reserve Margin Reduction
• Export and Import Improvement
• Improved Operational Efficiencies

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Larger Transmission Reduces Right of Way
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Cost Allocation
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RSC and CAWG
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Highway/Byway Cost Allocation
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Current and Future Markets
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What kind of markets does SPP have now?

• Transmission Participants buy and sell use of
  regional transmission lines that are owned by
  different parties
• 2009 transmission market transactions 486
  million
• Energy Imbalance Service (EIS) Participants buy
  and sell wholesale electricity in real-time
• Market uses least expensive energy from regional
  resources to serve demand (load) first
• SPP monitors resource/load balance to ensure
  system reliability
• 2009 wholesale market transactions 1.14
  billion

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Transmission Service
As Sales Agents, we administer

• Provides one-stop shoppingfor use of regional
  transmission lines
• Consistent rates, terms, conditions
• Independent
• Process gt 12,000 transactions/month
• 2009 transmission market transactions 486
  million

a 1,621 page transmission tariff on behalf of
our members and customers.
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Transmission Service
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Transmission Service
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EIS Market Operation
SPPs energy market is like the NYSE

• Monitors supply/demand balance
• Ensures economic dispatchwhile meeting system
  reliability
• Provides settlement data
• 2009 wholesale market transactions 1.14
  billion

and follows over 200 pages of market protocols.
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Benefits of current real-time energy market
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SPP Pricing Zone Information
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Impact of Congestion on Locational Prices
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Impact of Congestion on Locational Prices
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Why develop new markets?

• SPP conducts complex cost-benefit studies before
  beginning any new market development
• Under Regional State Committee oversight
• 2005 Charles River and Associates (CRA) analysis
  of the EIS market
• Estimated benefit of 86 million for first year
• Actual benefit of 103 million for first year
• New markets will bring estimated average
  additional benefits of 100 million
• According to 2009 Ventyx analysis

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What type of new markets is SPP implementing?

• Day Ahead SPP determines what generating units
  should run the next day for maximum
  cost-effectiveness
• Ancillary Services Market to buy and sell
  reserve energy that
• Meets emergency needs
• Regulates instantaneous load and generation
  changes
• Maintain electricity quality (keeping voltage up,
  etc.)

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Day Ahead market makes regional generation
choices
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Day Ahead market offers regional diversity
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Benefits of Ancillary Services market

• Greater access to reserve electricity
• Improve regional balancing of supply and demand
• Facilitate the integration of renewable resources

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Perfect Storm of Complex Issues
Greenhouse gas emissions
Growth in demand
Political and technical challenges
Aging infrastructure
Challenges with integrating renewables into grid
Trade imbalance
Lengthy permitting for new generation
Lack of transmission
Rising gas prices
Growth in uncommitted capacity
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Source EPRI
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Summary/Recommendations/Next Steps

• Know the players
• Is it local, state, national, or international?
• Are you really green?
• Know the facts take a position.