Midwest Transmission System to Support a Clean Energy Future

www.windonthewires.org

Midwest Transmission Systemto Support a Clean Energy Future

April 21, 2010

Opportunities, Challenges, Risks


OverviewA clean energy future will include important increases in efficiency, demand response, distributed generation, renewable energy, & coal retirements

The Midwest has an aging, inefficient, dirty coal fleet that is already running at near capacity and has some excess natural gas capacity.

Significant new wind generation is needed to reach regional clean energy goals

Integration of large amounts of variable clean energy resources, both local and remote, requires aggregation over large regions

Wind generation is currently backing down coal in Midwest markets but transmission congestion is leading to increased wind curtailments

Lack of Midwest transmission is the primary obstacle to increased wind generation

Additional study is needed to identify grid opportunities from coal retirements together with other clean energy resources

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Midwest Coal Generation

Aging – average plant is ~40 years oldRunning at near capacity – generates ~75% of Midwest electricity

– average annual capacity factors are ~70% (2008) compared with potential of ~80%

Inflexible – minimum generation limits, slow ramp rates, minimum run times

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Coal fleet is:

Number Number Avg Age2 Generation Capacityof Plants of Units Yrs GWh Factor3

Illinois 30 84 32 16,386 97,376 67.8%Indiana 25 74 37 20,472 131,093 73.1%Iowa 19 37 31 6,444 40,994 72.6%Michigan 23 63 41 10,609 63,249 68.0%Minnesota 13 30 38 5,600 29,126 59.4%Missouri 18 36 39 11,804 71,574 69.2%North Dakota 7 11 32 4,231 30,216 81.5%Ohio 29 82 41 22,735 133,155 66.9%South Dakota 1 1 35 497 3,729 85.7%Wisconsin 17 48 36 7,442 42,122 64.6%

39 69.0%Notes:1. EIA- 860, Annual Electric Generator Report, 2008 and EPA Clean Air Markets Data, 2008, Units > 40 MW2. Weighted by sizein MW3. (Total annual generation) / (Max Capacity x 8760 hours) March 2010

CapacityMW

Max 2008Coal-Fired Electric Generation Plants


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Displacing Coal with Existing Natural Gas

Source: Synapse Energy Economics / EPA 2008 CAMD

Natural gas fuels about 5% of Midwest electricitySynapse evaluated existing unused natural gas generation that could potentially be used to displace coal generation

– Estimated potential displacement of about 10% of coal generation in the Midwest (MRO East & West, SERC Midwest, RFC West)

– Some of this ‘unused’ natural gas capacity is tied up for reserves

Economic displacement of coal begins at about $5 to $5.5 per MMBtu natural gas


Midwest Wind Generation

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~10,000 MW of wind generation currently (MISO & western PJM)Large amounts of developable wind generation throughout the Midwest

– Significant difference in quality of wind resource from west to east

MGA goal requires equivalent of 75 to100 GW of wind generation

10% 20% 25% 30%MISO PJM 2015 2020 2025 2030

MW MW MW MW MW MW

Illinois 1,547 4,700 14,250 5,057 10,114 12,643 15,171

Indiana 1,036 2,900 6,750 3,741 7,482 9,352 11,223

Iowa 3,670 12,600 1,392 2,784 3,480 4,175

Michigan 143 3,000 200 3,699 7,398 9,248 11,097

Minnesota 1,809 17,600 2,105 4,210 5,262 6,315

Missouri 309 3,900 2,951 5,901 7,377 8,852

North Dakota 1,203 6,700 1,500 338 675 844 1,013

Ohio 7 250 5,350 5,574 11,147 13,934 16,721

South Dakota 313 10,100 10,500 298 597 746 895

Wisconsin 449 600 2,452 4,904 6,130 7,356

Total 10,486 62,350 38,550 27,606 55,213 69,016 82,819

Notes:1. Nameplate MW, American Wind Energy Association, http://www.awea.org/projects2. MISO and PJM Interconnection Queues, April 3, 2010, Active wind generation projects3. Nameplate (rated capacity) of wind to supply % of electric energy consumed; net annual wind capacity factor approximated by state; Total state electric energy sales, Energy Information Administration, 2000 - 2008 EIA-861, Projected annual growth rate of electric energy sales at 1% annually from 2008 to 2015, No load growth after 2015 March 2010

MW12/31/2009Existing1

% Electric Energy from Wind3

Interconnection Queues2Wind Generation


MISO State RES Requirements (May 2009)

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MISO existing wind: ~8,000 MWMISO State RESs: ~25,000 MWMISO-wide 20% wind: ~50,000 MWMGA 30% by 2030: 75-100,000 MW


Interconnection Queue – Midwest ISO

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Wind in the MISO Queue

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There is a huge amount of proposed wind generation in the interconnection queue that is stuck due to transmission constraints


Integration of Variable Renewable Energy All wind and solar generation introduce variability and uncertainty into the power system in the time frames of seconds, minutes, and hoursAt moderate penetration levels (10%), small but measurable increase in regulating or ramping requirement can generally be met by existing generation with some modest cost increaseAs penetration levels increase, operational issues can be handled by:– Capturing geographic diversity (over hundreds of miles)– Large, deep, liquid real-time energy markets (energy, ancillary

services, price responsive load)– More flexibility in load and conventional generation

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Integration of Variable Renewable Energy

Midwest markets facilitate wind generation– Large, consolidated balancing areas– 5 minute energy and ancillary services market– Load following

Wind displaces coal– Wind has the lowest marginal cost; runs first in the real time

market

Because much of the value of wind comes from reducing existing coal plants generation, these players are pushing back as wind generation levels grow

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Integration of Variable Renewable Energy Variable renewable energy (wind, solar) and load participation (demand response, efficiency, dg, etc) are great partnersLarge interconnected power systems can accommodate variable generation (wind & solar) penetration levels exceeding 30% if we get the infrastructure right– None of the domestic or international wind integration studies, even

at 30% penetrations or more, have found a “hard limit” to wind saturation

Integration of large amounts of variable renewables requires a robust and flexible transmission system– Ties together regional generation and load to capture benefits of

geographic wind diversity, netting uncorrelated wind and load variability, and following the regional net variability with flexible load and generation

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Flexibility supply Curve

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MarketsFlexible

GenerationTraditional

Storage

Wind

CurtailmentStorage

Real-Time Markets

Day-Ahead Markets

Price Responsive Load

Demand Response

Simple Cycle GT

Combined Cycle GT

Hydro

Pumped Hydro

Gas Storage

In Range of

1 or 2%

High Flexibility Low Flexibility

LowCost

HighCost

Batteries

Flywheels

SMES

CAES

Capacitors

PHEV


Key Technical Transmission IssuesSystem Reliability – Contingencies, Stability, Reserves– NERC requirements

Congestion– Existing wind generation is experiencing increased curtailments due

to transmission congestion

Interconnection & Delivery– Large amounts of proposed wind generation is stuck in

interconnection queues due to lack of transmission

Integration– Operating impacts of variable renewable generation (wind & solar)

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Regional Transmission PlanningMidwest ISO– Transmission Expansion Planning (MTEP 2010)

• Regional Generation Outlet Study (RGOS)• Top Congested Flowgate, Cross Border Congested Flowgate Studies

PJM– Regional Transmission Expansion Planning (2010 RTEP)

DOE– Eastern Interconnection Planning Collaborative

Eastern Interconnection States Planning Council

Additional inputs to regional planning“Strategic Area Midwest Transmission Study”– ATC, AEP, MidAmerican, Exelon, Xcel, Northwestern– Study of transmission needed to deliver 55 GW of total wind

“Green Power Express”, ITC, Proposal to deliver 12 GW of wind

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Lack of Transmission is the Primary Obstacle to Development New Wind Resources

Transmission development timeline – about 8 to 10 years from identification of need– Contrasts with 2 to 3 year development for wind projects– Interstate transmission requires multiple approvals

Coal retirements are expected to facilitate a small amount of transmission capacity for new wind generation– Need to replace energy, capacity, and grid support– Many potentially retired coal plants are in densely populated and

low wind areas– Transmission serving remote coal plants in the Dakotas is

thermally and stability limited– Wind resources enabled by coal retirements will likely be within

close proximity (e.g. within about 25 miles of retired coal plant)

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Study Recommendations

Prioritize coal plant retirements– Age, heat rate, air permits / emissions, economics

Analyze grid capacity / constraints with models that include high levels of wind generation, load participation (efficiency, demand response, reserves), & coal retirements– Production cost analysis with system dispatch & transmission

constraints (Security Constrained Economic Dispatch – e.g. PROMOD or GEMAPS)

– Power flow analysis

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Key PointsRegional power system development will include important increases in:

– Efficiency, demand response, distributed gen, renewables (wind, solar, biomass), & coal retirements

Significant new wind generation is needed to reach regional clean energy goals– MGA goal of 30% by 2030 will require 75 to 100 GW of wind power

The Midwest has an aging, inefficient, dirty coal plant fleet that is already running at near capacity and has some excess natural gas capability generation capacity

Midwest markets can facilitate wind generation– Market can facilitate integration of wind generation (large balancing area, 5 minute market, load

following, etc) – Wind generation is currently backing down coal plants and reducing coal plant emissions but

transmission congestion is leading to increased wind curtailments

High levels of Midwest wind generation and high levels of load participation (efficiency, demand response, dg, etc) are great partners

– Increased wind generation and efficiency will both have an immediate impact on aging coal plants making them increasingly less economic through reduced capacity factors

– Increased load participation and a robust grid will provide important flexibility for variable renewable generation (wind & solar)

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Key PointsLack of Midwest transmission is the primary obstacle to increased wind generation

– The Midwest grid is currently congested– Transmission is needed to interconnect and to deliver aggregate wind generation (large & small,

local/dispersed & remote) to Midwest customers– Transmission is needed to aggregate and operationally integrate large amounts of wind generation

(capture diversity of regional wind resource, consolidate large balancing area to absorb variability of wind, facilitate reserves)

– Coal retirements are expected to facilitate a small amount of transmission capacity for new wind generation near the retired plants (e.g. for wind resources within ~25 miles of retired coal plant)

Additional study is needed – Prioritize coal plant retirements

• Age, heat rate, air permits / emissions, economics– Analyze grid capacity / constraints with models that include high levels of coal retirements, wind

generation, efficiency, & demand response• Production cost analysis with system dispatch & transmission constraints (Security Constrained

Economic Dispatch – e.g. PROMOD or GEMAPS)• Power flow analysis

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A robust and flexible regional grid is required to support a Midwest clean energy future!


Appendices

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Generation Fleet is Aging – Midwest ISO

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Existing Coal Plants in Midwest ISO


Wind Capacity Factors – 10 year

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Regional Generation Outlet Study - MISO

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Developing transmission projects that will facilitate the state renewable energy mandates in the Midwest ISO footprintPhase I (North Dakota, South Dakota, Minnesota, Wisconsin, Iowa, Illinois)– Started May 2008; Final report posted March 5, 2010– 15 GW & 25 GW; UMTDI Scenarios plus IL zones & existing wind

Phase II (added Missouri, Illinois, Indiana, Michigan, Ohio; incorporates results for RGOS I)

– Referred to as ‘RGOS’ going forward (from December 2009)– The development of zones is complete; ~ 40 GW of total wind– Iterative development of transmission plans under way; options will

include 345 kV, 765 kV, and HVDC– Analysis will include power flow, production cost models

(PROMOD), and business case / value metrics– Goal is to deliver one plan to Appendix B of the MTEP 2010 Report


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Regional Generation Outlet Study - MISO


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Aggregate variability of wind generation is significantly reduced with geographically diverse wind resources.Reliability will also benefit from a more geographically diverse system. A robust transmission system is needed so that these benefits can be realized.


“Green Power Express”

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Proposed Overlay Still In Development


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“Strategic Midwest Area Transmission Study”

Proposed Overlays Still In Development

Source: Quanta Technology 2/18/10


Regional Transmission Organizations

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Source


Average On-Peak Electricity Spot Prices 2009 ($/MWh)

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FERC Electric Market Overview


322009 MISO Hourly Interchange DataCross Border Top Congested Flowgates Study

Documents

Midwest Transmission System to Support a Clean Energy Future