Renewables replacing renewables, Again!

Eighteen months ago, Windaction.org reported that First Wind's Stetson wind facility (58-megawatts) in Maine would add no new renewable energy to the New England grid due to transmission constraints.

Last month, New York's Public Service Commission took an important first step toward understanding whether enormous new transmission deployment in the State to deliver renewable energy was warranted. In its October 20 order, the Commission acknowledged that of the nearly 1300 megawatts of wind energy installed in the State the majority of the development "occurred in a very small area(s) geographically and depended on the same bulk electric facilities to move the wind energy toward loads." The order went on to state that "these same facilities carry significant amounts of energy produced by hydro and combined cycle plants and that the renewable energy goals for the State will not be realizable if the energy from new renewable resources just replaces the energy produced by existing renewable resources." [Emphasis added]

New York's transmission policy is based on FERC's Standard Market Design ("SMD") which uses energy market prices to discourage power plants from being built long distances from New York City, the largest user of electricity. In simple terms, generators are paid less for their energy if their plant is located far from load. The intent of SMD is to ensure the most efficient use of transmission, to manage congestion, and to limit the development of costly power lines. Slide 14 of this presentation highlights the success of New York's policy where 80% of the new generation installed in the State since Y2000 was located close to the City.

Yet, State and Federal subsidies that encourage renewables regardless of where they're located or when they generate, are running counter to SMD. These generous subsidies are skewing the market such that renewable and wind energy facilities can afford to be located in remote areas despite the locational price penalties of SMD. The result? Rather than trying to keep the deployment of transmission to a minimum, wind energy facilities are fueling the race to build miles of new transmission capacity where none was needed before. Thousands of miles of new power lines are now proposed in New York and the Northeast alone with costs well into the billions for the purpose of delivering wind to urban areas. This same scenario is playing out all over North America.

In its order, the NY PSC prescribed a methodology for renewable project developers to detail their transmission needs, explain whether their output might be curtailed due to congestion on the power line, and what other power facilities might be displaced should their energy get on the grid.

The PSC states in its order that "by requiring a quantification and qualification as to whether other renewable energy will be displaced by a particular project and in what amounts, and by prescribing a methodology for project developers to use in providing such quantification and qualification, we can make more informed decisions and will have a metric to compare with study results to see if the industry is developing as projected. New transmission resources are expensive and, of equal importance, impose environmental costs in the form of land use effects, visual impacts, etc. Deployment of new transmission needs to be based on accurate knowledge."

A key statement in the order asserts "Provision of displacement information will assist us in determining the need for new facilities and guide the proper investment of ratepayer resources while ensuring minimum land use impacts."

The October 20 order makes clear that every megawatt hour of wind energy on the grid will NOT necessarily displace a megawatt hour of fossil fuel generation. Windaction.org suspects that of the nearly 1300 megawatts of wind installed in the State, the actual amount of fossil fuel displaced by wind is considerably less than what's currently assumed.

The NY PSC is on the right track by placing the public's interests ahead of those trying to build wind in the State. Windaction.org encourages the PSC to go further and look at adjusting the State's renewable subsidies to pay a better price to those renewables that can be built closer to load and able to meet peak electricity needs.