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Integrating More Renewable Energy in the Grid

Integrating More Renewable Energy in the Grid. Bert Garvin. Vice President, Regulatory Affairs. July 21, 2008. NARUC Summer Meeting July 22, 2008. The United States has abundant wind resources.

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Integrating More Renewable Energy in the Grid

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  1. Integrating More Renewable Energy in the Grid Bert Garvin Vice President, Regulatory Affairs July 21, 2008 NARUC Summer Meeting July 22, 2008

  2. The United States has abundant wind resources It is estimated there are 8,000 GW of wind energy that can be economically delivered to customers….

  3. No country—in a single year—has added the volume of wind that the US put in service last year Rising concerns over climate change and public policies favoring wind generation are spurring the tremendous growth in wind energy…

  4. 60 49 50 44 40 40 35 31 30 27 23 20 20 16 12 9 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 The U.S. wind market is growing rapidly and is forecasted to continue Compound Annual Growth Rate of 19% Installed GigaWatts (GW) The U.S. wind market is expected to double from 2006 to 2009, and double again by 2015 Source: Emerging Energy Research

  5. Texas still leads all states in wind growth by a wide margin Source: AWEA; Cumulative megawatts (MW)/As of 1/08

  6. Wind development is expected to be robust for the foreseeable future

  7. FPL Energy operates wind generating facilities in 15 states and in Canada Langdon Stateline Wilton North Dakota Oliver WPP93 Oliver II Vansycle Montfort South Dakota Waymart Mill Run Lake Benton II Mower Wyoming Endeavor Diablo Wind WPP90 WPP91 WPP91-92 WPP92 Green Ridge Green Mountain High Winds Hancock Peetz Table Cerro Gordo Somerset Meyersdale Mountaineer Gray County Mojave 3 & 5 Mojave 16/17/18 Sky River TPC Victory Garden Oklahoma New Mexico WPP93 Weatherford Capricorn Ridge Cabazon WPP94 Red Canyon Green Power Callahan Divide Delaware Mt. Horse Hollow (HH) Southwest Mesa Woodward Mt. Indian Mesa King Mt. FPL Energy’s wind portfolio at year end of 2007

  8. FPL Energy is the U.S. leader in wind development FPL Energy was largest developer again in 2007 • U.S. market leader with 30% market share • 5,077 net MW in operation at 1/1/08 • 1,100+ MW expected to be added during 2008 • FPL Energy wind investment ~$8 billion by year end 2008 • Adding 8 – 10,000 MW in 2007 – 2012 • $19 - 22 billion expected new investment

  9. New players are emerging in the U.S….. Top 10 U.S. Wind Developers Source: Emerging Energy Research 2007 Installed Wind Capacity The number of large wind developers is growing as US wind market tops over 5,000 MW added in 2007

  10. And more are on the way….

  11. Ensuring greater wind growth requires policymakers to address well known regulatory and transmission challenges • Who will build? • What is the cost? • Who decides • Who pays? • How to maintain reliability? Surging wind growth is forcing policymakers to confront old challenges with new sense of urgency

  12. Transmission is the critical path for wind development Wind faces unique challenges • Location constrained resource • Resource constrained interconnection points • Resource remote from load • Transmission lines needed to support this variable resource

  13. Transforming the transmission system for wind Key Regulatory Challenges • Queue Management • Transmission Planning & Investment • Cost Allocation & Cost Recovery • Transmission Siting Eliminating barriers to greater transmission investment will determine pace and direction of renewable development in US

  14. The interconnection process created in FERC Order 2003 is broken The Interconnection Problem • First-come, first-served” queue management • Minimum deposits • Minimal Land Control Requirements • 3-year, no-cost suspension period Lengthy process (Years) “Real” projects are unable to interconnect to grid State RPS Policies now at risk

  15. The interconnection bottleneck is a national problem There are over 200 GW of wind interconnection requests mired in queues across the country

  16. Wind interconnection queue is stalling wind development in the Midwest Slide title in Arial 24 bold underlined Wind now makes up 85 % of roughly 80,000 MW of interconnection requests in Midwest ISO queue

  17. FERC & RTOs are leading efforts to reform the interconnection process Finding a path forward on queue reform • FERC • December 2007 Technical Conference • Midwest ISO Proposed Tariff Changes (June 2008) • CAISO Proposed Tariff Changes (July 2008) • Other RTOs to File Proposed Tariff Changes by December 2008 • Key Short Term Reforms • Meaningful Financial Milestones • Increased Deposits • Promotion of Conditional Energy Resource Service

  18. Greater transmission investment is the long-term challenge Getting more lines built is the common denominator for getting more renewable resources to consumers

  19. Transmission fixes have to occur in Midwest to harness wind’s potential According to Midwest ISO, wind farms and lines capable of delivering 16,000 MW of wind energy to consumers in East means 5,000 miles of new 765kV lines at a cost $13 billion

  20. The CREZ process in Texas will deliver long term solutions for wind generation and transmission expansion Texas • Competitive Renewable Energy Zones (CREZ) • Will set course for future transmission growth in Texas • PUCT approved significant transmission expansion ($4.9B for 11.5GW) last week • Largest build out in US history CREZ process ensures transmission development critical to renewable growth will continue

  21. Benefits of transmission build out are clear Benefits far exceed the costs Transmission costs make up less than 10% of delivered cost of energy

  22. Uncertainty over cost allocation is hampering transmission development across the country Cost Allocation & Cost Recovery • Who pays? • Proving a “direct benefit” of oversized line for your ratepayers is high hurdle • Postage stamp or License Plate? No one wants to pay for something that benefits many others….

  23. Fractured siting processes is stalling transmission development across the country No Silver Bullet on Transmission Siting • Who Decides? • State jurisdiction • Federal backstop authority Getting more clean energy on the grid will take more aggressive solutions on siting needed transmission lines

  24. Renewed emphasis on regional planning to access renewables Greater Focus on Planning • FERC Order 890 • Regional Efforts • State Efforts Success or failure of efforts will be measured by getting more lines built

  25. QUESTIONS?

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