Transmission for Renewables - The New England Blueprint and Interconnection-Wide Planning

1. Transmission for Renewables-The New England Blueprint and Interconnection-Wide Planning Paul J. Hibbard, ChairmanMassachusetts Department of Public UtilitiesRoundtable March 2010

2. Overview • New England Blueprint • Quick reminder • Current status • Eastern Interconnect Planning • JCSP, EWITS, EIPC/EISPC • Modeling approaches • Observations • Potential Role in the Federal Context

3. TheBlueprint’s Path • September 2008 • NEGC Resolution • February 2009 • Governors write to President Obama, Congressional leaders • March 2009 • States request ISO-NE perform technical analysis • July 2009 • ISO-NE issues draft Renewable Development Scenario Analysis • September 2009 • NEGC Adopts Blueprint

4. States asked ISO-NE to study “significant sources of renewable energy available to New England, the most effective means to integrate them into our power grid, and the estimated costs” and then developed study assumptions ISO-NE conducted RDSA Looks out 20 years 9 conceptual transmission scenarios Focus on wind resources Up to 12,000 MW of wind in New England 7,500 MW onshore & 4,500 MW offshore Incremental cases from 2,000 to 8,000 MW Policy Choices Informed By Data

5. Conclusions • The New England region has a vast quantity of untapped renewable resources • More than 10,000 MW (nameplate) on & off-shore wind power potential • If developed at conservative levels, there are ample renewable resources to enable New England to meet renewable energy goals • More aggressive development could enable New England to export renewable power to neighboring regions

6. New England Governors’ and NEG/ECP Resolutions

7. Charge to Energy Officials • Consider available renewable resources identified in the Blueprint • New England onshore • New England offshore • Canada • Investigate mechanisms for competitive procurement and development • Coordinated or joint solicitations • Coordinated/collaborative siting • Workable contract and pricing structures • Regulatory approval mechanisms

8. Status, Timeline • Initial policy review • Vast resources • Siting processes similar; coordination feasible • Contract approval mechanisms in place • Common theme: competitive procurement, lowest possible cost • Current efforts • Workplan – report to Governors by summer • Drafting RFP, considering procurement levels • Developing price structure alternatives, model terms and conditions • Deeper review: contract approval processes

9. Bottom Line • Region has a long history of working cooperatively to address energy and environmental policy issues • Recognize untapped renewable potential • Interested in “out-of-box” thinking on supporting renewable development • …without compromising commitment to markets, competition • Successful progress, promising outlook

10. The Federal Context • Urgency around climate change • Problem: much of national terrestrial renewable potential is geographically-challenged • Concern: financial signals from cap/trade, RES not sufficient for investment calculus • Other issues/opportunities: • Integration of intermittent resources • Better capacity utilization • Seams elimination; loop flows; congestion relief • Jobs, economic benefit • Can widescale, coordinated planning help? • JCSP, EWITS, EIPC/EISPC

11. EWITS • Emerged from JCSP; model for EIPC? • Northeast has some concerns • Goal: review technical integration of large amounts of wind • Review costs, quantify benefits • But weight of analysis seems more focused on economic integration of wholesale electricity markets across the Eastern Interconnect • Confusion in the messaging?

12. EWITS: NESCOE Comments • Model Approach – focused more on transmission for all generation in Midwest, rather than integrating wind. • Coal By Wire: Transmission expansion likely to increase generation from Midwest traditional sources, undermining the goals of carbon control • Messaging In The National Context – Framed to suggest transmission should be charged to electricity customers, rather than generation owners that benefit • Production Profits Charged to East, Accrue to Midwest – All scenarios likely result in massive increases in generation from (and associated revenues to) power plants in the Midwest, relative to now • Limits Off-Shore Wind Potential – No more than six (6) miles off shore; no deep water wind resources • Canadian Provinces Neglected – Minimal expansion of Canadian resources • Feasibility and Cost of Underlying Network? – Scenarios could require significant in-region infrastructure

13. EWITS • Steps in analysis • Existing system, load grown to 2024 • Pick “best” wind resources to meet 6%, 20%, 30% goals, with some regional allocation, ascribed 20% capacity value • EGEAS-based capacity addition for remaining needs • “Copper Sheet” dispatch of EI; determine economic power flows • Design transmission to accommodate this “economic” result (Even in the “Reference Case”) • Identify economic benefits by comparing to constrained dispatch • Identify wind integration issues (reserves)

14. EWITS - Conclusions • Basic results: • We can integrate a lot of wind… • Provided we build massive transmission… • Which will deliver economic benefits to consumers by lowering LMPs… • Because it will move massive amounts of energy from Midwest fossil, nuclear, etc. generation to the East, displacing gas. • But wait! Wasn’t this supposed to be about wind??

15. EWITS - Conclusions • Economic benefits (PROMOD IV) • Driven by price differential between midwest and eastern power markets • Increases in midwest generation, decreases in eastern gas (hundreds of TWh annually) • Lost generation revenues in East; gains in the Midwest • Net revenues to Midwest generation likely to exceed transmission cost • Does this help answer the cost allocation debate?

16. JCSP/EWITS: Price Separation… JCSP, April, 2007

17. JCSP/EWITS: …Drives Power Flow Outcomes JCSP, April, 2007

18. JCSP: Resulting Shift in Generation JCSP, April, 2007

19. EWITS: Same Result… EWITS Report

20. Dictates Transmission EWITS Report

21. EIPC/EISPC • Long Overdue • Interregional transmission plan coordination; greater cooperation across planning authorities • Review seams, loop flow issues, identify technical fixes • Consider projects to help integrate greater quantities of intermittent resources • Identify interregional projects to address intraregional reliability issues • Help quantify cost of policy approaches • Provide “scenario analysis” guidance for policy makers and stakeholders • Value of EE, renewables, nuclear, CCS • Info for development ventures

22. EIPC/EISPC: Caution • Emerging context: Federal integrated resource planning, federal siting, mandated cost allocation to load • Senate legislation: Begins with an Interconnect-wide plan • EIPC/EISPC meets the specs • Could this “scenario analysis” exercise turn into a federally-endorsed plan? • Need to get the analysis right • Real base case, in same year as “scenarios” • Clear identification of purpose (carbon? renewables? reliability? economic transfer?) • States must have primary role in guiding and interpreting analysis • EIPC analysis must be closely coordinated with EISPC • State share of EIPC stakeholder group

23. Wrap Up • Blueprint represents a unique collaboration among the New England states; focused on competitive mechanisms to deliver renewables; progress continuing • Federal context: similar goals in principle • New England experience with joint state-ISO Blueprint development is an excellent model for federal effort • EIPC can provide great value to the nation, provided • Goals are clear at the outset • Modeling is suited to the task, answers right questions • States provide guidance commensurate with public interest role

24. Paul J. Hibbard, ChairmanMA Department of Public UtilitiesOne South StationBoston, MA www.mass.gov/dpu