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Economic Transmission Case Study: Champlain Wind Link

Economic Transmission Case Study: Champlain Wind Link. Vermont System Planning Committee March 10, 2010. Champlain Wind Link (“CWL”). Potential project expanding PV-20 path 230kV into Vermont Capital intensive, across control areas Scoped/developed by VELCO and Anbaric Transmission, LLC

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Economic Transmission Case Study: Champlain Wind Link

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  1. Economic TransmissionCase Study: Champlain Wind Link Vermont System Planning Committee March 10, 2010

  2. Champlain Wind Link (“CWL”) • Potential project expanding PV-20 path • 230kV into Vermont • Capital intensive, across control areas • Scoped/developed by VELCO and Anbaric Transmission, LLC • Value proposition: several potential components • Power supply working group • Initial thoughts on benefits/risks • Research & findings

  3. Potential Value Components • Power supply value to project owners/subscribers • Cost-effective power source, vs. New England alternatives • Regional reliability benefits • NY Central-East interface • New England single-import limit • Local (?) reliability benefits • Address needs that Vermont reliability projects would otherwise need to address • Multiple facets • Each one complex • Multiple beneficiaries • Some winners & losers

  4. Power Supply Working Group • DU power supply staff, VELCO, Anbaric • December 2009 to February 2010 • Review the CWL from the perspective of a potential power supply resource • Not other considerations like system reliability, return on invested capital • Confidential • Gather information about potential sources of power over the CWL • Identify principal elements of the power supply value proposition, and associated risks

  5. Working Group Goals • Inventory benefits / risks unique to imported power over the proposed CWL • Solicit indicative proposals from potential NY suppliers • Gauge types of available resources, approximate pricing & terms • Conduct preliminary research on primary risks related to imports • Screening-level assessment of potential viability & cost-effectiveness of purchasing new power supply resources over the CWL

  6. Initial Thoughts:Potential Power Supply Benefits • New York renewable resources • Perceived cost advantage of NY wind vs. equivalent New England wind • Access to additional renewable resources • Access to lower-cost market power (energy & capacity) from northern NY • Price “spread” between the NY and NE markets • Negotiating leverage vs. other potential suppliers

  7. Initial Thoughts:Potential Power Supply Risks • Uncertainty regarding permitting / timing of CWL versus capacity market and supplier contract timelines • Complexity of the potential transactions (i.e., intermittent wind “firmed” by other resources) • Issues related to imports & intermittent wind • Capacity market penalties applicable only to imports • Requirements for external resources to sell Renewable Energy Credits in New England • Potential scheduling penalties related to imports • Future changes in market rules / rule differences between New York & New England

  8. Request for Proposals • Distributed to potential suppliers December 2009 • Mix of generation owners and other market participants • On behalf of the Vermont DUs, up to 150 MW • Seeking long-term resources • Wind and “firming” power • Individually or together • Indicative proposals

  9. Concept of Wind & “Firming” Power via the CWL

  10. RFP Findings & Observations on Power Supply via CWL • Didn’t find compelling power supply benefits • Not enough “spread” vs. New England options • Other basis for expecting CWL power supply value? • Historical data & consultant projections indicate a wholesale price “spread” from northern NY to Vermont • But probably not enough to cover full CWL transmission costs • The transaction concept (wind + firming from NY) is quite complex to evaluate and implement • Combination of intermittent resource & imports • A unique combination of transactions; outside the experience of Vermont DUs (and most market participants)

  11. A Few Observations on Economic Transmission • Importing power entails incremental risks (compared to resources internal to New England) • Capacity market, scheduling, REC eligibility • Many of these would not apply for an economic transmission project within New England • If power supply value derives from proposed projects, timelines can present extra challenges • Proposed power plant, output to be transmitted via proposed CWL • Substantial time & cost to evaluate • Project scoping & initial design • Transmission reliability/planning impacts • Power supply impacts for participants, non-participants • LMP effects • Multiple areas of expertise

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