PNM Wind Resource Integration Study

1. Electric Services Transmission Operations PNM Wind Resource Integration Study Preliminary Results Abraham Ellis Public Service Company of New Mexico

2. PNM Balancing Authority • Small, not much flexibility • 2500 MW summer peak, 1200 MW spring off-peak • A few units in service at the time (mainly large, slow coal units) • Market structure not fully developed • Bilateral transactions • Hourly energy market, tags • Hard to find market-based regulation product • Windy present and future • 294 MW installed, 204 MW within BA (NMWEC) • 350 MW signed IA, >8000 MW queued

3. PNM Wind Integration Study • Principal Concerns • Reliability: CPS-2 performance • Impact on operating cost • Impact on thermal unit wear-and-tear • Study Goals • Quantify integration cost with increased penetration • Identify strategies to reduce operating cost • Provide guidance and training tools for BA operators • Use study methodology that takes into account PNM’s special circumstances

4. Study Scenarios

5. High-Resolution Wind Time Series • NMCC Database X - # 601 McKinley 100 MW Union / Harding 200 MW X - # 603 X - # 602 Torrance X - # 604 100 MW X - # 605 Guadalupe / DeBaca 100 MW X - # 606

6. Instructor Control Component Events Simulation control Load Model Power Flow Solution Topology Processing e-terra Simulator (DTS) Overview AREVA e-terrasimulator (standalone) Instructor/Analyst Chronological Input Data Load, wind generation, schedules Power System Simulation Component Prime movers Performance Output Data Production cost, Frequency, CPS1, CPS2, regulating reserves, unit starts/stops, etc Relays EMS Component Data retrieval Controls Network Applications SCADA Applications Generation Applications Simulation could at 20x real-time (in theory…) Trainee/Analyst

7. Lessons Learned • DTS platform holds much promise • Analytical investigations • EMS and AGC optimization • Training • Complexity of the environment is an obstacle • Software • Application • Alternate approach had to be used to estimate impacts • See next slide

8. A Different Approach to Estimate Incremental Reserve Requirements • WECC methodology (Operating Reserves White paper) provides basis that can be extended for wind generation • Elements • Actual variability • Short-term uncertainty (forecast error) • Should capture within-the-hour impacts more realistically than a simple statistical analysis

9. Regulating Reserve Requirement Incremental Regulating Reserve Requirement Average Std. Deviation of Case Hourly Regulating Reserve Regulating Reserve NOTE: PRELIMINARY RESULTS Requirement Requirement Load Only 49.9 MW 6.3 MW - 200 MW 55.7 MW 6.9 MW 5.8 MW 300 MW 63.6 MW 8.1 MW 13.7 MW 400 MW 80.8 MW 10.2 MW 30.9 MW (*) Scenarios may exceed physical capability of PNM’s Balancing area. 700 MW * 112.3 MW 10.2 MW 62.4 MW 1200 MW * 167.8 MW 16.0 MW 117.9 MW

10. Short-Term Ramping Requirement NOTE: PRELIMINARY RESULTS Possible impact on CPS-2

11. Preliminary Conclusions • With existing PNM generation mix, cost of regulating a “large” amount of wind in PNM’s control area is “very high” • Regulation cost for 400MW total wind 5 times higher compared to cost of regulating 200MW total wind • Operating models show that physical limits are reached with approximately 700 MW of wind generation • Much more wind can be added with Dynamic Scheduling • Follow-up questions • Cost recovery under transmission tariff • What about market-based regulation capacity? • How to reduce impacts • ADI, Dynamic Scheduling, Flexible generation, Markets