By Rikki Stancich in Paris

The push for renewable energy supplies, coupled with a restructuring of electricity markets in a large portion of the northeastern US, has led the way for greater integration of wind resources into the nation’s grid. However, more work is needed. 

In 2004, many northeastern US states switched from a bilateral system of electricity trading to an auction market. Instead of utility dominated, physical point to point trading, trade began to be mediated through centralised markets, which aggregated buyers and sellers, determined market-clearing prices, and handled settlements.

In New York State for instance,  an ‘organised’ market approach whereby a centralised market is administered by an Independent System Operator (“Regional Transmission Organization or ISO/RTO”), has made it easier for wind energy generators to participate in electricity markets and gain access to the grid. 

“Organised markets have established rules that allow wind generation to compete on a comparable basis to other resources – the tariffs are clear and there is no preferential treatment for gaining transmission access, given that it is on a ‘first come, first served’ basis,” explains Terron Hill, director of transmission policy and RTO coordination, National Grid USA.

In most other regions of the United States, wholesale electricity markets operate as a decentralized, bilateral trading system. In the western states, for example, generators are required to purchase physical capacity point-to-point, explains Hill.

By contrast, organized markets are based on bidding and centralised clearing prices. “Wind can bid into the system at zero - or even negative in some RTOs – and exemptions to scheduling penalties recognize the unique characteristics of these resources,” says Hill.

Stabilising wind

However, the transmission system operator does have to ensure against variation – and if variation becomes too great, wind is often curtailed. So what is being done to make wind more stable?

“We implemented a system in New York two years ago that uses meteorological data to forecast wind. This helped maximize wind output on the system and helped network operators give better direction to these resources to know when to ramp up or stand down. These days, operators have a daily schedule,” explains Hill. “National Grid is a huge proponent of forecasting technology,” he adds.

Recent reports, such as NREL’s Western Wind and Solar Integration Study (WWSIS) and its Eastern Wind Integration and Transmission Study (EWITS), have called for greater balancing area cooperation and planning. To achieve this, forecasting systems are paramount, says Hill.

Earlier this month, the Federal Energy Regulatory Commission (FERC) held a conference examining the various technologies that could address the issue of stability. Flywheel systems, designed primarily for balancing system supply and demand over milliseconds to minutes rather than hours or days, featured largely.

Beacon Power, a company that designs flywheel energy storage systems, and National Grid, recently teamed up to assess the potential of fly wheel technology for fast-response frequency regulation, and for wind-related ramp mitigation (to minimise energy fluctuation).

Another way to address the issue of variability, is to build additional ‘headroom’.

“Energy deliverability needs to be built into the transmission planning process that would allow transmission owners to build out the system to meet the maximum potential of wind energy output on high wind blowing days and recognise State Renewable Portfolio Targets”, says Hill. “This is not a problem now, but when the capacity of New York State reaches 6-8GW, or 2-3GW in New England, it will be a problem.”

Who pays?

Currently several studies are underway that attempt to resolve the transmission issue – namely, how to integrate renewables into the grid smoothly and cheaply. The New England States Committee on Electricity’s (NESCOE) study aims to identify significant sources of renewable energy available to New England, the most effective means of integrating them into the power grid, and the estimated costs.  

New England’s coastline alone boasts one-fifth of the East Coast’s offshore wind energy potential, and according to NESCOE, the state  has over 10,000 MW of potential on and offshore wind power.

The New York State Transmission Assessment and Reliability Study (STARS) also addresses improved integration of renewables and how best to assess and replace ageing transmission infrastructure. 

But as Hill points out, the problem lies less with wanting to build new infrastructure than how such build-out will be paid for. For the most part, wind energy developers are responsible for paying for their direct interconnection to the grid.  

If the development is relatively close to the load, this is not a problem. However, wind developments are often in more remote locations, far from the main load or transmission lines - which makes connection costly.

“In the past when we have built transmission, a handful of  utilities paid for transmission facilities that ultimately everyone benefited from the use of. There has to be a new approach to funding upgrades, to spread the cost burden”, stresses Hill.

New England is one of the first regions to spread the cost of new transmission to all end users, via a regional network service charge, where the cost is shared among all New England’s load serving entities.

 “It’s like postage stamp rights – no matter where you mail it to, it costs the same price. Here, it is the same principal – everybody pays the same and benefits from the transmission system,” he explains.

This works well on a state-by-state basis, but when it comes to cross-border transmission, the case is less straightforward. This is because renewable energy portfolio standards (RPS) vary between states.

“There is a need to work out the cost allocation of transmission build-out so that the benefits reach each region, but it must also be fair,” says Hill.

“The EWITS, WWSIS, NESCOE and STARS studies all clearly state what the needs are, and we all agree that our renewable targets should be met, but we must also agree that a transmission build-out is needed in order to do so,” he adds. 

The next step is to work out who will pay and how that cost will be allocated. So how will this be determined?

Hill argues: “Concrete energy legislation is required to get us out of this state of flux – there are currently a lot of players trying to determine which way to go. We are all in agreement that renewable energy and energy efficiency is the way forward, and so improved transmission infrastructure is needed. To achieve this, we need either a firm cost allocation policy, through legislation, or we need something from the FERC that provides clear, consistent rules.”

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Rikki Stancich: rstancich@gmail.com