Dale Osborn

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• ISU Tour
• MISO

• Dale Osborn

• July 18,2011

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MISO Services

• Oversee the flow of power over the high voltage
  wholesale transmission system in all or part of
  13 states
• Provide independent wholesale transmission system
  access
• Manage power congestion
• Reliability coordination
• Regional transmission planning
• Operate day-ahead and real-time energy markets
• Independent market monitor
• Set reserve margin requirements

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MISO Wind

• MISO has about a 800,000 MW potential for wind
  generation development- Eastern Interconnection
  Load is 960,000 MW
• Supply greater than demand by a factor of 40
• What can be done?
• MISO has 9,400 MW of Wind Generation Connected
• Almost all wind has a purchaser- Preferred
  Provider Agreement as part of a Renewable
  Portfolio Standard or goal
• Prices in MISO too low for a merchant plant
• Gas prices are too low to sell surplus energy
  except over existing transmission
• Transmission to PJM( east) and others is limited

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Like on highways, when the wires are too small
there is congestion which raise prices
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Whose Wind Generation Is Chosen?

• Wind Generation cost about the same-1,800,000/MW
• Wind energy depends on location
• 40 Capacity factor-orange-80/MWH no tax credits
• 30 Capacity factor-yellow-100/MWH no tax
  credits
• The difference could be use to build transmission
  to deliver wind competitively for an RFP
• 200 miles is roughly the competitive distance
  with 345 kV transmission- 500 MW to load line
• 1200 miles is the maximum possible today with 800
  kV HVDC with 19,000 MW required to load a three
  line system that would not affect the underlying
  system.
• MISO can take about a 1500 MW contingency for
  resource loss, single HVDC lines limited to 1500
  MW to be confirmed with a study

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Wind Generation RFP Competitive
Zone 30-40Capacity Factor Change
345 kV Minneapolis 500 MW
345 kV Chicago 500 MW
800 kV HVDC NYC 19,000 MW
Set circle center on wind location to determine
the Marketing Zone
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Factors Affecting Wind Energy Marketing

• Wind energy is a social choice not an economical
  choice in most parts of the U.S.- RPS or goals
  determine the amount of wind being installed
• The price of natural gas determines the
  competitive level
• Present price 4/MBTU- Prices level across U.S.
• Price two years ago 8-14/MBTU-Prices high in the
  east
• Price difference between regions pay for
  transmission
• Economic Development and Jobs keep wind supplies
  local
• Present values of 856,000 per MW of wind
  generation for Economic Development cannot be
  offset by the better performance of with the
  transmission cost
• Pancaked transmission costs exclude areas from
  competition- ND, SD, RTO borders except MISO-PJM

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New Transmission Creates Jobs

• U of Minnesota Duluth Bureau of Business and
  Economic Research studied the economic impact of
  700 miles of transmission Lines in MN, ND, SD, WI
  CAPX2020 from 2010 to 2015 at cost of 2B
• 3.4 Billion in sales generated from construction
  related activity
• 1.6 Billion in construction related wages
• 149 million in local, state and federal tax
  revenue
• 1.93 returned to economy for each dollar spent
  on project
• Nearly 8,000 jobs in peak construction year
  (2013) including construction and indirect jobs
• Full study at www.capx2020.com

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For what levels of wind generation are there MISO
plans?

• The Renewable Portfolio Standard for the year
  2025 is 23,000 MW
• The Generation Interconnection Queue is 50,000 MW
• The Regional Generation Outlet Study(RGOS)
  established
• Renewable Energy Zones to locate 23,000 MW of
  wind gen
• Midwest Governors Association
• State Regulators
• Stake Holders
• A overall transmission plan to deliver 23,000 MW
  of wind energy
• Economic information about the plan in the 2010
  MTEP

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All Energy Zones
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Lowest cost options
600 1200 1300 2600
5400 5300 6400
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Loop Flow Patterns
Interface Flows with an Overlay including HVDC
Interface AC Flows without an Overlay
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Without Overlay
P R ICE
Load Savings
With AC Overlay
With HVDC Overlay
Gen Revenue Difference
Distance
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HVDC Is Easier To Regulate Than AC

• Users are identifiable
• Terminals look like generators( supply-injection)
  and loads( receipt-withdrawal)
• Existing AC system processes can be used to
  allocate AC costs
• DC costs linked to the schedule and who scheduled

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HVDC Easier to Operate than AC for Long Distance
Power Transfers

• HVDC can be loaded to its limit
• Cannot be overloaded due to contingency- easier
  to operate-always know what is available for
  power transfer
• AC power delivery may be decreased due to
  contingencies in intervening systems- power
  transfer capabilities can change hourly
• HVDC only dependent on AC near terminals

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HVDC Can Do Things That AC Cannot

• HVDC can skip over congested areas without having
  to pay a toll to fix the transmission system in
  intervening areas that are not involved in the
  market transactions
• HVDC can inject energy strategically

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MISO Wind Variability Management

• Wind rich areas do not have much load or
  generation to manage the variability of the wind-
  problem
• Managing wind variability at presently projected
  levels is a political and organizational problem
  not a technical problem- cooperation solves a
  good part of the problem
• 5-6 energy curtailment of wind
• Solutions
• MISO is one area of about 100,000 MW
• MISO has a 5 minute dispatch period
• Less error can occur if adjustments are made
  every 5 minutes than every hour
• Total wind output cannot change too much in 5
  minutes
• Geographic diversity of wind and load

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Wind Diversity
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Calculated from data provided though the DOE
Eastern Wind Integration and Transmission Study
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MISO Wind Diversity

• Capacity credit in 2009 8
• Capacity credit in 2011 12
• Difference due to wind in Michigan, Indiana and
  Illinois in addition to Buffalo Ridge in
  southwest Minnesota
• Adding more generation in an area with
  significant wind generation decreases the
  capacity credit as the probability of loss of a
  larger amount of generation is increased.

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Transmission and Wind Diversity

• It may be possible to build HVDC transmission of
  about 1500 MW in capacity to exchange the
  diversity of wind
• Possibly paid for by
• Reduction in generation capacity and fuel needed
  to manage wind generation
• Improvement in the capacity credit for wind that
  reduces the need for other types of generation
• Reduction in load on peak compared to the sum of
  two areas a long distance apart
• Savings in the operational cost of other
  generation due to cycling that causes thermal
  stresses and increased maintenance
• HVDC could span the East-West ties and make wind
  more manageable in the west also

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Inputs

• Economic development costs- U of Illinois State
• 650,000 per MW for wind for construction
• 38,000/yr for maintenance
• HVDC line, terminal, ac substation costs
• CT Generation costs, OM, heat rates
• Wind Generation costs
• EWITS Wind Diversity factors for variability and
  capacity credit
• Annual carrying charge 15- annual values
• Discount factor-8- used for present value

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Why Economic DevelopmentShould Be Includedin
Analysis
First Year Benefit/Cost Scenario
20.2 Wind Economic Value including Economic Development values
1.8 Without Wind Economic Development
3.1 Without Wind Economic Development but with carbon dioxide elimination credit supported by transmission
15.8 With transmission economic development.
Governors and legislatures have recognized the
value of economic development for wind
generation, but the regulation function has not
used it. Projects could be justified and carbon
dioxide production reduced if economic
development were allowed.
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Price and Quantity of Sources and Sinks Determine
Transmission Requirements
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Transmission Overlay Design WorkshopExample
Interface Duration Curve
Transmission Capacity designed to deliver 80 of
desired energy flow
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20 Strong Offshore
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20 Strong West
20 Distributed
Most Economical RPS
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What Can Be Done with the Surplus

• Reduce the generation
• Paying for the generation but not fuel
• Must have transmission to deliver renewable
  energy to the load. The system was designed to
  deliver from the fuel generation that most likely
  in another location.
• Sell the surplus for a profit
• Profit helps reduce the generation payments
• Need to be able to deliver energy to the market-
  pay for transmission-need above 6/MBTU to pay
  for transmission in the energy market, other
  products may allow justification of transmission
  with lower gas prices.
• Need access to the markets- need a seller and a
  buyer pair
• Store the energy
• Use surplus off peak capacity to drive a CAES
  plant with a 50 capacity factor- would work in
  the west today
• Manitoba offers a way to store energy, need
  transmission in ND,SD

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Questions

• Dale Osborn
• Principle Advisor
• Regulatory and Economic Studies
• Email dosborn_at_misoenergy.org
• Phone[phone]