Transmission and Clean Energy in the Western US Dave Olsen Governors Wind Energy Coalition November 3, 2011

1. Transmission and Clean Energy in the Western US Dave Olsen Governors Wind Energy Coalition November 3, 2011 Seattle • Salt Lake City • Denver • Helena • Phoenix • Sacramento • Portland • Las Vegas

2. Agenda • Regional Cooperation • WREZ Development Zones • Renewable Energy Exports-Imports • Regional Transmission Expansion Plan • Importance for Governors • Clean Energy Vision for the West • System Planning and Public Consent

3. Western Grid Group • 200 years state regulatory experience Former chairmen, staff of 8 western PSCs • 50 years experience as wind, solar, geothermal, hydroelectric power developers • Non-profit NGO; works with Governors, utilities, regulators, agencies, advocates • Formed 2003 to develop policies to accelerate transition to sustainable electricity, win transmission access for clean resources

4. Moves Toward Regional Cooperation

5. Limitations on Transmission Development • RPS-driven procurement • Projects target coastal markets • One-way flow to West coast • CA >50% western demand; limits imports • In-state only energy development • Every state wants economic benefits • States reluctant to import—even lower cost power • Narrow view of opportunities

6. But: Regional Cooperation Opportunities • Develop renewables in zones • Western Renewable Energy Zones (WREZ) • Retire coal, use freed-up transmission for renewables • Every state an exporter and importer • Coordinate system operation to reduce costs, improve reliability • Optimize siting to reduce variability

7. WREZ • WGA initiative, funded by DOE • Zone development minimizes transmission need, economic and environmental cost • Zones of common interest to utilities • Facilitates transmission development • Combined procurement justifies interstate tx • Basis for cost allocation decisions • Planners discount remote, lower-cost power because transmission development uncertain

8. WREZ areas of highest renewable resource supply potential

9. Add: New Ways to Optimize Wind Siting • Reduce aggregate variability, integration costs; maximize output • Northrop Grumman-MORE Power; LS Power • Dispersed renewables help keep system balanced • Smart from the Start environmental siting • Every state an exporter and importer • Requires new transmission infrastructure

10. Exports from All Regions Retiring old coal creates new demand Supports project, supply chain investments across the region => Regional transmission topology

11. Regional Cooperation Priorities Energy Imbalance Market Balancing Area coordination Faster schedules, dispatch Improved forecasting WECC Regional Transmission Expansion Plan (RTEP) Regional markets

12. Importance for Governors • Regional development creates larger markets, to economic benefit of all states • Improved reliability • Lower costs • Shared reserves • Most efficient units run more, less efficient less • Least-cost system balancing

13. Clean Energy Vision for the West

14. Western Grid 2050 Compare Business as Usual (BAU) and Clean Energy Vision (CEV) trajectories $200 billion investment next 20 years Choices today determine infrastructure in 2030, 2050 Begin west-wide discussion of goals for electric system performance

15. Clean Energy Economy Goals for Electric System Performance Drive job creation, economic development, competitiveness More secure, sustainable More reliable Less expensive Reduce emissions, water use Improve public and ecosystem health

16. Modernizing Electric Service • More reliable • More diverse, much more decentralized • Wind, solar higher mechanical availabilities • Modern communications, control technologies • Less expensive • No/low fuel costs pay back investment in clean resources, reduce system cost • More secure, lower risk, higher quality

17. Sustained, Orderly Transition • Build on Energy Efficiency, Renewables policies now in place • Add Distributed Generation, Demand Resources to decentralize, diversify • Schedule coal retirement years ahead • Don’t invest in upgrading old plants • Compensate remaining book value • Incentives for utilities to diversify; use freed-up transmission for renewables • Regional markets and cooperation

18. Earning Public Consent: New Principles for System Planning

19. Earning Public Consent • Infrastructure development contentious • History of major planning failures by experts • Skepticism re: social need vs. private interests • Address public concerns: • Jobs, economic development • Security; Health; Local, environmental impacts • Key to better-planned projects, faster approvals, less litigation • Builds broader appreciation of benefits

20. System Planning Principles • Planning the system, not just transmission • Expands NWCC 2004 Transmission Planning Principles • Builds on FERC Orders 890, 1000 • Stakeholder involvement produces better plans • Planning identifies project beneficiaries, builds record cost recovery can be based on

21. New Planning Metrics Economics • Job creation; economic development • Protection from fuel price risk, volatility • Efficient utilization of existing grid • Comparable treatment of demand and supply resources Local and Environmental Concerns • Emissions; Water Use • Protection of Wildlife, Habitat and Ecosystem Integrity • Robust Stakeholder Participation Energy Security • System vulnerabilities, risks • Reliance on indigenous, inexhaustible resources • Vehicle electrification

22. Planning Principles—Next Steps Can public interest System Planning Principles facilitate wind project siting, transmission development? Are they politically feasible? What entities should sponsor discussions to develop and promulgate them?

23. Dave Olsen dave@westerngrid.net(805) 653-6881 Clean Energy Vision Report, MaterialsWestern Clean Energy Advocates,Western Grid Group, at: www.westerngrid.net Seattle • Salt Lake City • Denver • Helena • Phoenix • Sacramento • Portland • Las Vegas