too much of a good thing: the dilemma of renewable energy oversupply and wind energy development...

7/30/2019 TOO MUCH OF A GOOD THING: THE DILEMMA OF RENEWABLE ENERGY OVERSUPPLY AND WIND ENERGY DEVELOP

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TOO MUCH OF A GOOD THING:THE DILEMMA OF RENEWABLE ENERGY OVERSUPPLY AND WIND ENERGY

DEVELOPMENT IN THE PACIFIC NORTHWEST

By

Andrew R. N. Phillips

I.INTRODUCTION

Humans have used wind to power our world for a quite some time.1 A long time

reallybut never quite like it is used today. Today the nations economy is powered by a

vast and complicated network of partially interconnected electrical grids2 that must

carefully balance the amount of electricity generated and the amount of electricity

delivered to its users. In recent years the electricity generated from wind in the United

States has increased dramatically from 5,593 MW in 2000 to 94,647 MW in 2010.3 The

electrical grid in Oregon has seen its share in this increase, as Oregon and Washington

have the fifth and six highest amount of wind generation capacity in the United States.4 In

addition to this wind energy, Oregon and Washington have significant amounts of

hydroelectric dams.5 Both wind turbines and hydroelectric dams benefit from large

seasonal variability and spring storm systems that bring wind to flow through the wind

turbines and rain and water to drain into rivers and flow through hydroelectric facilities.

1Humans first began using wind to power ships around 1000 B.C. KISSELL,THOMAS E.,

INTRODUCTION TO WIND PRINCIPLES 5, tbl. 1-1. By 200 B.C. wind machines were used inwhat is now Iran to pump water and grind grain.Id.2Id. at 20-21. The nations grids are split into three main grids called interconnects, TheWestern Interconnect, the Texas Interconnect, and the Eastern Interconnect.Id. at 151.3 U.S.DEPARTMENT OF ENERGY,ENERGY EFFICIENCY &RENEWABLE ENERGY, 2010RENEWABLE ENERGY DATA BOOK 58 [hereinafter RENEWABLE ENERGY DATA BOOK],available at http://www.nrel.gov/analysis/pdfs/51680.pdf4Id., at 63. Oregon and Washington each have 2104 MW of installed wind capacity.Id.

Id., at 89. Oregon has the nations third highest installed capacity of hydroelectric powerand Washington has the nations largest installed capacity of hydroelectric power.Id.


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In Oregon, however, many of the hydropower facilities are located in the same general

region as the wind turbines and both consequently may produce their maximum peak

amount of energy simultaneously while operating on the same set of transmission lines.

In about one out of three years this total peak exceeds consumer demand for electricity

for a month or more.6 This overlap in energy generation poses significant policy

dilemmas because one or both of these renewable electricity sources must be limited to

prevent the electric grid from becoming unreliable. Limiting the output of either

hydroelectric dams or wind turbines can have significant economic and environmental

impacts on their respective industries. This article explores the causes and implications of

this overlap and offers possible solutions to balancing these resources. At the heart of

solving the dilemma posed by wind power is reducing wind powers variability and

unpredictability. Through a mix of improved policy, technology, and planning this

conflict can be resolved. This article explores these solutions and discussed methods for

further integrating unpredictable wind electricity generating into an electric system that is

largely built on seasonably varying and periodically constrained hydroelectric resources.

II.WHY DOES OVERLAP OCCUR?

When and where does the wind blow? When does the water swell the Columbia

River? These are the basic questions that any study of electricity oversupply and wind

integration in the Pacific Northwest must consider.

Wind is an intermittent and unpredictable resource. There are, however, general

principals that help determine when and why the wind blows. Wind is influenced

6BONNEVILLE POWER ADMINISTRATION,NORTHWEST OVERGENERATION:

AN ASSESSMENT OF POTENTIAL MAGNITUDE AND COST 2(2011), available athttp://www.bpa.gov/corporate/AgencyTopics/ColumbiaRiverHighWaterMgmnt/BPA_Overgeneration_Analysis.pdf.


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primarily by pressure and wind is created as air moves from one pressure to another. 7

Wind generation, therefore, can surge when air pressure changes, and consequently

surges dramatically as storm systems move over and through wind turbines. Wind is also

affected by temperature and slows in the Pacific Northwest in periods of extreme heat or

extreme cold.8

Wind is also affected by geography. The best wind resources for generating

electricity are those that have strong winds with smooth topography and low vegetation

to minimize turbulence.9 Wind can also be amplified as it passes through certain areas

that channel the wind into a corridor much like a funnel, such as the mountain gaps in

Oregons ranges.10 Coastal areas also have a significant amount of wind energy

potential.11

Lastly ridges perpendicular to prevailing winds in the Basin and Range areas

of southeastern Oregon have significantly strong wind resources.12 Figure 1 shows the

diversity of wind resources in Oregon and reveals the patterns just discussed. The darker

colors indicate a higher wind speed, translating into a more cost efficient and productive

wind turbine. In Figure 1 below, you can see the high wind speed along the cascades

running roughly down the 122-degree longitude line. Figure 1 also shows the Basin and

Range areas as a potentially large resource for wind development.

7 KISSELL, supra note 1, at 33.8

NORTHWEST POWER AND CONSERVATION COUNCIL, THE NORTHWEST WINDINTEGRATION ACTION PLAN 18 (2007) [hereinafter NORTHWEST WIND INTEGRATIONACTION PLAN], available athttp://www.nwcouncil.org/energy/Wind/library/2007-1.pdf9Id., at 15

10 KISSELL, supra note 1, at 35.11Id.12

Id.


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Figure 1. Annual Average Wind Speed in Oregon as measured 80 meters abovethe ground.13

Despite the geographic diversity of wind resources in Oregon, however, much of

the installed wind turbine capacity is located along the Columbia River just east of the

Columbia River Gorge.14 The area east of the Columbia River Gorge can be found in

Figure 1 between 121 and 119 degrees longitude and 46 and 45 degrees latitude. As

Figure 1 shows, this area is one of the better places for wind in Oregon, but is by no

means the only place with potential for wind development. In fact there are many other

13 U.S.DEPARTMENT OF ENERGY,NATIONAL RENEWABLE ENERGY LABORATORY,OREGON -ANNUAL AVERAGE WIND SPEED AT 80 M,http://www.windpoweringamerica.gov/pdfs/wind_maps/or_80m.pdf (last visited April 1,2012).14 NORTHWEST WIND INTEGRATION ACTION PLAN, supra note 8, at 16. Forty percent ofthe wind resources in the Northwest are located just east of the Columbia River Gorge. Id.


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areas with better wind resources for possible wind energy development in Oregon.15 The

placement of wind turbines is not driven solely by the quality of the wind resources there.

Instead the wind development east of the Columbia River Gorge is driven by the

availability of high-voltage transmission lines that ultimately carry electricity to

consumers. While considerations such as sufficient space, absence of sensitive species,

habitat areas, cultural features, and aesthetic qualities are important to successfully

siting wind energy projects, nearby transmission lines are so critical to wind energy

development siting that it has emerged as the key driver of [wind] project location in

the Northwest.

16

It is no coincidence that transmission lines run along the Columbia River. The

hydroelectric dams along the Columbia River are operated by the Bonneville Power

Administration (BPA) and have historically provided a considerable share of electricity

to Oregons electric market. Currently 44% of Oregons electricity comes from

hydroelectric dams,17 many of which are located along the Columbia River. Several

transmission lines exist to carry this hydropower electricity to Oregons main population

centers east of the Cascades. The transmission lines that are used to carry the

hydroelectrically generated electricity are also the same transmission lines that wind

power producers have flocked to for transmission of their wind-generated electricity.

It is not only that the transmission lines from these wind and hydro facilities

overlap geographicallythe production of electricity that must be carried over these lines

15Id., at 17.

16Id., at 15, 17.

17 OREGON DEPT OF ENERGY,STATE OF OREGON ENERGY PLAN 27, fig. 8, available athttp://www.oregon.gov/ENERGY/docs/reports/legislature/2011/energy_plan_2011-13.pdf.


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can also overlap temporally. Waterlike windis still subject to variability. Much of

the water that runs through the Columbia River falls as snow that later melts and

produces large volumes of annual spring run off that must flow through the dams.18

Spring storm systems also bring additional variation to water availability. The same

spring storm systems that produce wind also create precipitation. When this precipitation

falls as rain the resulting water must also flow through the several dams along the

Columbia River. When these events occur both the wind turbine and hydroelectric

generation are producing large amounts of power. Because significant amounts of water

must pass through the dams electrical generating turbines and because of the limitations

discussed later in Part III, these unexpected surges in wind output occur when

hydroelectric facilities are least flexible and least able to reduce their generation.19

BPA estimates that overgeneration will occur and last more than one month in

one out of three years.20 If both dams and wind power producers insist on operating at

full capacity during these events the overall reliability of the electrical grid will suffer and

lead to inconsistent power supply. Because these events are so likely to occur on a

recurring basis the electrical system must develop policies to balance these two

renewable resources, and limit them accordingly.

18NORTHWEST POWER AND CONSERVATION COUNCIL,SIXTH NORTHWEST CONSERVATION

AND ELECTRIC POWER PLAN 6-17 (2010), available athttp://www.nwcouncil.org/energy/powerplan/6/final/SixthPowerPlan.pdf.19

NORTHWEST WIND INTEGRATION ACTION PLAN, supra note 8, at 25.20 BONNEVILLE POWER ADMINISTRATION,NORTHWEST OVERGENERATION:AN ASSESSMENT OF POTENTIAL MAGNITUDE AND COST,supra note6, at 2.


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III.HOW IS POWER LIMITED?

Because of the above overlap, the next question is how to limit the power from

either the wind turbines or the hydroelectric dams during times of oversupply. This

limitation can be done in a variety of ways depending on the method of generation. As

one might expect, the water that powers the dams is generally a more constant resource

and could theoretically be favored over wind resources in times of oversupply. Each set

of resources, however, brings its own complexities that make limiting eithers output a

complicated affair.

A dam operators discretion is limited in determining how much water to spill

because of the Endangered Fish Species passing through the dam. If a dam spills too

much water the Total Dissolved Gas levels in the water may harm the fish. If the dam

does not spill enough not enough water, then the dam impedes necessary fish passage.

The limitation ofa dam operators ability to strike a careful balance is particularly

difficult in times of oversupply when additional water cannot be spilled and there is

nowhere for electricity produced from the dam to go unless some non-hydro generators

are shut down.

Limiting wind power production on the other hand is physically easy to

accomplish, but economically much more difficult to achieve. The main incentives

driving the modern surge in wind power installationRenewable Energy Certificates and

the Production Tax Creditreward and incentivize maximum production because they

only pay if a wind power producer is actually creating and selling energy. The result of

these incentives is that wind power producers, unlike other power producers, have no

interest in curtailing productions in times of oversupply.


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A. Limiting Hydropower Production and its ConsequencesEndangered

Fish Passage and Total Dissolved Gas Levels

Hydroelectric dams are fairly simple in concept. Dams operate by storing water

behind the dam until a height differential is created between the water level behind the

dam and the level in front of the dam. Water is then run through a turbine below the dam

to generate the electricity and the water is released into the river. In hydroelectrically

developed systems such as the Columbia River water may flow through several dams and

generation turbines as it makes its way to the ocean. Water may also be spilled over the

dam without generating electricity or, where available, pumped up into additional storage

so it may run through the turbines at a later time when the power is needed.21

The fish that must flow through the dam, however, complicate the seeming

simplicity of dam operation and presents obstacles to both the fish and the dam operators.

Many of the fish that live in and pass through the Columbia River Basin are endangered

or threatened salmon and steelhead species22 listed under the Endangered Species Act.23

Salmon and steelhead are anadromous fish, meaning they are born in the freshwater

rivers, migrate to the ocean as juveniles, and later return to the freshwater rivers to

spawn.24 In order to move to and from the ocean the salmon and steelhead must be able to

pass one or more dams on the Columbia River. Juvenile fish pass these dams going

21See Part IV. B infra for further discussion of pumped storage.22 BONNEVILLE POWER ADMINISTRATION,MANAGING THE COLUMBIA RIVER SYSTEM TOHELP FISH 3 (2012), available athttp://www.salmonrecovery.gov/Files/Managing%20the%20Columbia%20River%20system%20for%20fish%20-%20Sept%202010.pdf. There are nine runs of salmon andsteelhead in the mainstream Columbia and Willamette rivers.Id.23 Endangered Species Act of 1973, 16 U.S.C. 15311544 (2006 & Supp. IV 2011).24 BONNEVILLE POWER ADMINISTRATION,MANAGING THE COLUMBIA RIVER SYSTEM TOHELP FISH, supra note 20, at 1.


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downstream by passing over the spillway, through surface bypass systems, through the

turbines, or can pass the dam after being collected and shipped via barge.25

Spilling water

to allow downstream fish passage is so effective and important to successful fish

migration that the dams have been under court order to spill sufficient enough amounts of

water during the spring salmon and steelhead migration to allow greater fish passage

rates and to decrease juvenile fish mortality.26

Despite the importance of spilling water for fish migration, dams may not spill too

much water without producing electricity. As water is spilled significant amounts of

dissolved gases become trapped in the water as it passes, consequently increasing the

concentration of the Total Dissolved Gases (TDG).27 If high enough, these gases cause a

condition known as gas bubble trauma, and can result in injury or death to the fish.

Because of the competing priorities of fish migration and TDG levels dams must

carefully determine how much water can be spilled at any one time.

In times of oversupply of runoff the primary limitation on the dams is the

permissible level of TDG in the spilled water. The options for moving water downstream

in an oversupply situation, therefore, are binaryeither spill the water and increase the

TDG or run the water through the turbines and generate additional energy.

25Id., at 1.26 National Wildlife Fed'n v. National Marine Fisheries Serv., No. CV 01-00640-RE,2011 WL 3322793, at *2, *12 (D. Or. Aug. 2, 2011) (ordering dam operators toimplement spring and summer spill operations consistently with courts previous spillorders).27

BONNEVILLE POWER ADMINISTRATION,FCRPSBIOLOGICAL OPINION UPDATE 2008-2018,at 2, available at,http://www.salmonrecovery.gov/Libraries/hemlock_doc_lib/FINAL_High_flows_TDG_Effects_Fact_Sheet_051711.sflb.ashx.


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B. Limiting Wind Power Production and its ConsequencesRenewable

Energy Certificates and the Production Tax Credit.

Wind turbines also have methods to limit their electrical output. The blades on

many turbines may be feathered to allow some wind to be spilled and decrease the blade

speed.28 Similarly the entire turbine head may be pointed slightly off-wind to reduce

blade speed.29 Lastly, in times of extreme wind speeds a turbines blades may be stopped

entirely with hydraulic brakes and enter into a protection mode until wind speeds return

to safe operating speeds.30

Limitations on curtailing wind power come mostly in the form of economic

constraints, as opposed to the environmental considerations relevant to curtailing

hydropower. In the traditional electric market hydropower electricity becomes so cheap

and plentiful in times of oversupply that the utilities and independent power producers

will shut down their coal or natural gas generators and buyor take for freethe

hydropower instead.31 Wind turbine operators, however, work under a different set of

economic incentives that only reward the operator when the turbines are spinning and

producing power.32

These incentives include Renewable Energy Credits (RECs) and

Production Tax Credits (PTCs), and these credits are discussed in further detail below.33

28 KISSELL, at 37.29Id.30

Id.31 BONNEVILLE POWER ADMINISTRATION, BPAS PROPOSED OVERSUPPLY MANAGEMENTPROTOCOL, at slide 2 (February 14, 2012), available athttp://www.bpa.gov/corporate/AgencyTopics/ColumbiaRiverHighWaterMgmnt/20120207-proposed-protocol/Feb14WorkshopPresentation.pdf.32Id.33

Id.


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RECs are a tradable credit that represents the non-electricity aspects of the

renewable energy.34

That isthey represent the environmental benefits of the renewable

energy, but not the physical unit of electricity used to power machines and the like.

Because of their abstract nature, RECs, unlike the actual electricity moved over grids,

may be traded freely across geographic boundaries without requiring physical

transmission. In this way RECs may be purchased by parties who may not in the end use

the actual electricity generated by the wind turbine, but wish to pay for the environmental

benefits of the electricitys production.35

RECs, however, are only created when a qualifying production unit is actually

producing energy that is sold on the electric market. A wind operator, therefore, may not

trade a REC unless the blades are spinning on the turbine, something that does not occur

if a turbines blades are locked. Even without a complete shutdown, a wind turbine is

only able to trade as many RECs as correspond to actual energy produced. So this way

even if the blades are spinning at partial capacity, the wind power producer is still not

receiving the normal REC income generated by the unit.

The Production Tax Credit (PTC) acts in a similar way to the RECs. The PTC was

originally created by the Energy Policy Act of 2002,36 and was most recently

reauthorized by the American Recovery and Reinvestment Act of 2009.37

The Production

34 ENVIRONMENTAL PROTECTION AGENCY,EPAGREEN POWER PARTNERSHIP,RENEWABLE ENERGY CREDITS 1 (2008), available athttp://www.epa.gov/greenpower/documents/gpp_basics-recs.pdf.35See id.36

Energy Policy Act of 1992 1914(a), 106 Stat. 2776, 3020 (codified at 26 U.S.C. 45(c) (1992)).37 American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111-5, 123,123 Stat. 115 (2009). For further discussion on the PTC See Christopher Riti, ThreeSheets to the Wind: The Renewable Energy Production Tax Credit, Congressional


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Tax Credit is calculated based on the grid-connected electrical output of the wind

turbine.38

The tax credit generally lasts for ten years and equals 2.2 cents per kilowatt-

hour (kWh).39 Given the 2012 average cost per kWh in Oregon for retail consumers was

8.33 cents40

, this tax credit can make up a substantial share of the amount the wind power

generator receives for their investment. But like the RECs, the PTC requires the

electricity from the wind power to be connected to the grid and sold. If a wind turbine is

stopped or slowed the turbine operator is losing the value afforded by the PTC. It should

be noted, however, that the PTC is set to expire at the end of 2012 and future of the PTC

is both in doubt andat the time of this writinghotly contested in the U.S. Senate.

41

Because both RECs and the PTC require actual energy production these systems

incentivize wind energy operators to operate their turbines at full capacity regardless of

whether there is a market for their energy in times of high demand. The structure of both

RECs and PTCs then put the wind operators in competition with the hydroelectric

facilities for generation and transmission in times of oversupply. The combination of

Political Posturing, and an Unsustainable Energy Policy, 27 PACE ENVTL.L.REV. 783,790 (2010).38 WORLD RESOURCES INSTITUTE,THE BOTTOM LINE ON RENEWABLE ENERGY TAXCREDITS 1, available athttp://pdf.wri.org/bottom_line_renewable_energy_tax_credits_10-2010.pdf.39 Database of State Incentives for Renewables & Efficiency (DSIRE),http://dsireusa.org/incentives/incentive.cfm?Incentive_Code=US13F (last visited Mar. 5,2012) (DSIRE is partially funded by the U.S. Department of Energy).40

U.S. Energy Information Administration, ELECTRIC POWER MONTHLY MARCH 2012, at110, Tbl. 5.6.A. Average Retail Price of Electricity to Ultimate Customers by End-UseSector, by State, January 2012 and 2011 (2012), available athttp://www.eia.gov/electricity/monthly/pdf/epm.pdf41See Liz White, Senate Finance Panel Debates Extending Incentives for RenewableEnergy Sectors, Daily Environment Reporter (BNA March 28, 2012)(explaining that theU.S. Senate continues to debate whether to extend the PTC).


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wind powers lack ofmarket sensitivity and hydropowers physical constraints creates

this conflict at a time when the grid system is least likely to be able to accommodate it.

IV.HOW CAN WE CONTROL EXCESS ENERGY WHEN IT OCCURS?

Because neither the current markets nor physical factors will allow for a quick

resolution of the issues, there must be a change to one or both so compromise may be

reached. There are several different avenues that may be pursued, and many or all of

these avenues may be pursued simultaneously. The first of these avenues has been hotly

contested in litigation, while the later avenues and options reflect longer-term goals to

balance out the surging effect of wind resources on the electrical grid.

A. Negative Pricing Schemes

One avenue that has generated a significant amount of news recently is the

possibility of using negative pricing schemes. At heart, a negative pricing scheme is a

pricing policy that effectively pays a power producer not to produce power. For example,

in times of high spring runoff and high TDG levels a hydroelectric dam would pay

another power producer not to produce electricity and deliver free hydro-generated

electricity to that power producers customers. In this way the hydroelectric dam would

be able to stay within acceptable TDG levels and the non-hydro power producer would be

compensated for its loss.

The Federal Energy Regulatory Commission (FERC) recently issued an opinion

inIberdrola Renewables, Inc. et al. v. Bonneville Power Administration that appears

favorable to such a negative pricing scheme. 42 FERC is authorized to regulate interstate

transmission of electricity. The case centers on BPAs first attempt to resolve the

42 Iberdrola Renewables, Inc. et al. v. Bonneville Power Administration, 137 FERC 61,185. (Dec. 7, 2011).


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oversupply issue that essentially shut down wind turbine operators without compensation

in times of oversupply. BPA is a federal authority and is responsible for operating and

maintaining the transmission lines discussed in Part II. BPA can, subject to the Open

Access Tariffs approved by FERC, modify its agreements with individual power

producers and can require certain conditions be met before BPA will transmit the

electricity from these producers.43

In this case, BPA developed an Environmental Redispatch Policy44

that addressed

how BPA prioritized access to the transmission lines in times of oversupply. As a

condition of transmission the wind operators agreed follow BPAs instructions on

redispatch orders and agreed to reduce their generation as BPA ordered.45 The

Environmental Redispatch Policy worked mainly by temporarily substituting Federal

hydropower, at no cost, for wind power or other generationin the BPAs balancing

area.46 In essence the BPA environmental redispatch policy allowed BPA to unilaterally

substitute its own hydropower for the wind power to maintain system balance and to

avoid spilling water. This unilateral substitution had the effect of removing the value of

both the REC and PTC from the wind operator because the wind turbines were not

producing any electricity and the Environmental Redispatch Policy made no offer to

compensate for this lost revenue.47

43Id. at 7.

44 Bonneville Power Administration, Environmental Redispatch Policy, available athttp://www.bpa.gov/corporate/pubs/RODS/2011/ERandNegativePricing_FinalROD_web.pdf.45 Iberdrola Renewables, Inc. et al., 137 FERC at 7.46Id. at 4.47

Id. at 6.


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The wind power operators filed the complaint with FERC and argued the BPA

should be required to engage in a negative pricing scheme that would essentially require

BPA to pay the wind power operators to reduce or stop their energy production.48 The

wind power operators argued the Environmental Redispatch Policy was unduly

discriminatory pursuant to Section 211A of the Federal Power Act49 because the policy

shifted all of the costs of the over generation away from BPA and BPAs customers and

moved it onto the wind power operators.50

The commission agreed with the wind generators that the BPAs approach

unfairly discriminated against the wind facility owners.

51

FERC found that BPA had used

the Environmental Redispatch Policy between May 18, 2011 and July 10, 2011 to

redispatch a total of 97, 557 MWh of wind generation, which equals 5.4% of the

1,760,905 MWh ofpower produced by wind generators in BPAs service area.52 Based

on these numbers the Commission estimated the Environmental Redispatch Policy had

cost wind generators $2.15 million dollars in lost RECs and PTCs.53

On February 12, 2011, a few months after the FERC decision, BPA released a

proposed oversupply management protocol that would ultimately compensate wind

generators for lost RECs and PTCs.54 On March 6, 2012, BPA submitted a Compliance

48Id. at 6, n. 14, 8.49 Federal Power Act, 16 U.S.C. Sec. 824j-1(b) (2006).50 Iberdrola Renewables, Inc. et al., 137 FERC at 8.51

Id. at 62.52Id. at 63, n. 99.53

Id.54

BONNEVILLE POWER ADMINISTRATION, Fact Sheet: BPAPROPOSES RESOLUTION TOELECTRICITY OVERSUPPLY 1, (February 12, 2012), available athttp://www.bpa.gov/corporate/pubs/fact_sheets/12fs/FS-BPA-proposes-resolution-to-electricity-oversupply-Feb-2012.pdf.


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Filing describing the Oversupply Management Protocol.55 The new policy would, in

order of necessity, maximize the availability of transmission lines, spill water up to the

permissible TDG levels, reduce generation of any facility that does not receive RECs or

PTCs to minimum generation levels, and then lastly replace any electricity from non REC

or PTC dependent facility with free federal hydropower.56 If none of the above cure the

overgeneration, BPA would begin to displace REC and PTC dependent generators in

order of least cost and will compensate these generators for actual losses so they remain

economically whole, but do not profit when their generation is curtailed.57 As BPA has

only recently filed this Oversupply Management Protocol, FERC will have another

chance to determine whether this solution is satisfactory.

One solution to take away from the FERC decision inIberdrola Renewables, Inc.

et al. v. Bonneville Power Administration, is that to avoid overgeneration or spilling

water through the dams hydro producers must ultimately engage in negative pricing

schemes and pay wind producers and other variable rate producers to cut power. A

negative pricing scheme is certainly one approach, but there are also several other

available, mutually acceptable, and long-term solutions that focus on leveling out the

fluctuations in wind energy production. This leveling of wind power production would

help mitigate the difficulties of integrating variable wind electricity into a largely

seasonal hydroelectric market.

55Compliance Filing Of The Bonneville Power Administration, No. EL11-44-000

(March 6, 2012).56Id.57

Id, at 1-2.


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B. Pumped Storage and Other Storing Power Methods.

Another suite of options to reduce and control the overgeneration of hydropower

is through a number of methods that use the hydro resources in times of oversupply to

store power for later use. These options include pumped storage, compressed air,

batteries, and flywheels.58 All of the above options take hydro-generated electricity and

move the energy into another form for storage. Once the energy is stored in this manner it

can be used to generate electricity when the overgeneration ends.

Pumped storage is the most efficient of these options and is best for long-term

energy storage.

59

Pump storage has been used since the 1890s

60

and works by using

excess hydro-generated electricity to pump water uphill to a storage reservoir.61 When the

electricity demand increases or oversupply ends, the water may then be run back down

and through the turbines to generate electricity.62 The process of moving the water results

in a turnaround efficiency of about 70-85%.63 This means that anywhere from 15-30% of

the original energy from that water is wasted in the process. This loss of efficiency is not

significant in times of oversupply though, because there is simply too much water to be

58 BONNEVILLE POWER ADMINISTRATION,PUMPED STORAGE AND PUMPED STORAGEINTEGRATION OF RENEWABLE EVALUATION RESOURCES, at slide 13 (Feb. 11, 2010)[hereinafter PUMPED STORAGE], available athttp://www.nwhydro.org/events_committees/Docs/2010_Annual_Conference_Presentations/Thursday/NWHA%202010%20Conf%202-18%20Pumped%20Storage%20Jones.pdf;Yuri V. Makarov et al., Sizing Energy Storage to Accommodate High Penetration ofVariable Energy Resources, PNNL-SA-75846, 1 (2010), available athttp://energyenvironment.pnnl.gov/ei/pdf/Sizing%20energy%20storage.pdf.59Id., at slide 14. See also A.G.TER-GAZARIAN, ENERGY STORAGE FOR POWER SYSTEMS85 (2

nd. ed. 2011).

60 TER-GAZARIAN,supra note 59, at 85.61

U.S.DEPARTMENT OF THE INTERIOR,BUREAU OF RECLAMATION,POWER RESOURCESOFFICE,RECLAMATION:MANAGING THE WATER IN THE WEST,HYDROELECTRIC POWER12 (2005), available athttp://www.nwhydro.org/resources/docs/pamphlet.pdf.62Id.63

TER-GAZARIAN, supra note 59.


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spilled, the process still results in a net energy gain, and the energy is not produced until

there is a demand for the electricity.

Pump storage does have some limitations. First, the water must be physically

pumped uphill before it may be released again, and this pumping requires a significant

amount of time. This time lag delays the ability to quickly use or quickly store these

reserves. Secondly, pumped storage facilities are generally small64 and their limited size

means they may not be able to hold sufficient quantities of water to mitigate the inflow of

excess water capacity in high runoff periods. New pumped storage would also require a

significant capital outlay because of the amount of construction involved.

Another technology available to store excess energy is through compressed air.

The concept is theoretically similar to how pumped storage and batteries operate.65

In this

system electricity generated through hydropower is used to compress air and then the air

is injected into a storage container. The storage container can be in a tank, or for larger

projects, a stable rock formation. When energy is again needed the compressed air is

released, heated, and then run through a turbine to generate electricity.66

One limitation to compressed gas systems is the expense required to build an

electrical facility that is in effect is a net electricity consumer. As with pumped hydro,

there is a loss of efficiency for this process because energy must be expended to

compress the air and store it, and fuel must be burned to head the air as it is released.

There is also limited data available on compressed air facilities because few currently

64 U.S.DEPARTMENT OF THE INTERIOR, supra note 61.65Id.66

TER-GAZARIAN, supra note 59, at 10203.


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exist. One such facility has been planned in Iowa that was designed with storage of

excess wind power in mind.67

Flywheels may also be used to temporarily store energy. In this situation a large

flywheel is sped up to rotate at extremely high speeds. When the generator needs

electricity it can use the energy from the spinning flywheel to generate electricity.

Flywheels may be ramped up and down quickly to respond to power needs, but they are

not particularly efficient storage devices and are generally only effective for very short

time periods.68 A flywheel has a turnaround efficiency of 85% for very short term storage,

but only a 45% turnaround efficiency after twenty four hours.

69

Lastly, batteries70 may be used to temporarily store excess hydropower in times of

oversupply or when there is a lack of demand. Batteries take electricity and store that

electricity chemically for later removal. Batteries are able to give and receive power

quickly, but can be bulky and expensive.71 There are, however, several competing battery

designs that may promise to bring down both the bulk and the expense of these battery

systems. Despite the promise of these developing systems, this approach remains a costly

method of storing power in times of oversupply.

C. Smart Grid Technologies and Demand-Side Response Programs

Another possibility now exists through what is known as the smart grid.

Historically the utility has only been able to influence the power consumption level of its

consumers through price signals, which are in turn set by regulation. There are some

67NORTHWEST WIND INTEGRATION ACTION PLAN, supra note 8, at D-2.68 PUMPED STORAGE, supra note 58, at slide 13.69TER-GAZARIAN, supra note 59, at 83.70Batteries for the purposes of this article refer to Electrochemical energy storagesystems in general.71

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exceptions to this, such as agreements with large-scale electricity consumers, but utilities

are generally unable to control short-term electricity demand in any meaningful way.

New technology and the encouragement provided by the Energy Independence and

Security Act of 2007,72

however, have opened up the possibility that a utility can

communicate directly with electricity consumers and their appliances.73 Direct

communication with various machines in a consumers house or business would allow

the utility to increase or decrease power consumption in response to the needs of the

grid.74 During times of oversupply the utility would be able to turn on certain necessary

appliances to use up excess energy. Essentially a smart grid allows for this two-way

flow of information and increases the efficiency of power production and distribution.75

One possible future development revolves on using the batteries in electric cars as

buffers to grid variability. In this situation a utility would be able to communicate directly

with an electric car as it charges. When there is excess electricity the utility may send

electricity to charge the cars battery, and when there are short periods of peaking

electricity demand the utility could send some of the cars power back into the grid.

Many other examples of these smart grid technologies could exist in a typical residential

home including water heaters and home thermostats that turn up and down depending on

electricity supply and demand, as well as a utilitys ability to temporarily power down the

72Energy Independence and Security Act of 2007, 42 U.S.C. 17001-17386, 17381-

17386, Pub. L. No. 110-140, 121 Stat. 1492 (2010).73

U.S.DEPT OF ENERGY,THE SMART GRID:AN INTRODUCTION 11, available athttp://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/DOE_SG_Book_Single_Pages%281%29.pdf.74Id.75

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heating element in a consumers dryer.76 With the addition of these improvements

electricity generators can not only smooth out their supply as they have traditionally done,

but they can now also smooth out demand.

V.HOW CAN WE EASE THE INTEGRATION OF WIND POWER?

Negative Pricing Schemes, Storage, and Smart-grid technologies can help control

and absorb energy as it is produced, but there are additional strategies that focus on the

long-term and will help make wind power less variable and, therefore, easier to predict

and integrate into the electrical grid. While these solutions are not directly responsive to

solving oversupply in the short term, they are very much related to successfully merging

variable wind power into a system dominated by seasonal hydroelectric electricity.

A. Regional Diversification of Wind Energy Production

One such long-term method of successfully integrating wind energy into the grid

isperhaps counter intuitivelybuilding additional wind capacity. Building additional

wind capacity in the same place east of the Columbia River Gorge, however, would not

solve this problem. More important than the amount of installed wind capacity for overall

grid reliability is how a grids wind capacity is diffused and spread over geographically

diverse areas. Gaining this regional diversification will require new transmission lines,

but there may be some avenues that mitigate the impact and costs associated with their

construction.

The primary reason that Oregons wind turbines are located east of the Columbia

River Gorge is because of the transmission availability there.77 Part of why BPA has such

a difficult time integrating wind energy into the electric grid is because the wind blowing

76Id.77

NORTHWEST WIND INTEGRATION ACTION PLAN, supra note 8, at 17.


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through the mass of turbines largely rises and falls simultaneously, exacerbating the

surges and drops in wind power production. Regional diversity of wind generation has a

natural balancing effect that reduces the overall variability of wind that makes planning

around wind power so difficult.78

In order to balance the ever-increasing load of turbines

built east of the Columbia River Gorge there must be a correspondingly significant

increase in wind generation elsewhere in the grid to achieve the calming effect that

regional diversity promises for the electric grid.

The same limitations that put all of the wind in the same spot east of the Columbia

River Gorge still exist; the lack of diverse regional transmission capacity remains the

primary limitation on achieving this geographic diversity.79 This increased transmission

capacity will, however, require significant transmission line construction and the capital

expenditure for this construction will ultimately be born by the regional electric

ratepayers.80

One possible way to reduce these costs is to modify the way in which wind

generation facilities plan for transmission. Currently projects begin their planning process

by gaining access to enough dedicated firm transmission to ship out the maximum

amount of electricity the wind facility is capable of producing. Firm transmission

essentially means the project developer is reserving the right in advance to pass the

electricity on for transmission as it produced. But despite this reserved access, wind

turbines rarely achieve 100% of their potential electricity production and instead

produces on average approximately 5% of the turbines capacity at a time.This is known

78Id., at 27.79Id., at 26.80

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as the capacity factor of wind.81 For example, a 100 MW wind farm has the capacity to

produce 100 MW of power at any given moment. Some of the time though the wind will

not blow hard enough to produce 100 MW of power. Using the above capacity factor of

5% the wind farm in this scenario would only produce 5 MW of power on average.

Given this constraint one potential solution would shift facilities away from

obtaining 100% firm transmission to lesser amounts of firm transmission rights. Because

of wind powers low capacity factor, wind power producers do not end up using all of the

firm transmission rights. Under this approach a wind power producer would obtain a mix

of transmission rights including firm, nonfirm or conditional firm transmission.

82

This

approach, without more, is likely to be unattractive to wind power producers because it

effectively limits the ability to sell the total amount of electricity generated during times

of high wind and high energy production. Undershooting the transmission requirements

for new wind power in this way, however, would have the dual effect of keeping costs

low for regional ratepayers and gaining the geographic diversity that wind energy

requires for stability.83

B. Improved Wind Forecasting

One last important technological improvement that will allow for more efficient

integration of wind into the grid is improved wind forecasting. Generating electricity

from wind is challenging not just because of winds variability, but how unpredictably

wind varies. If grid managers and power producers knew how much wind was going to

81Id., at 47 (defining capacity factor as a measure of the actual annual energy output of

a generating resource divided by the theoretical maximum output if the machine wererunning at its rated capacity during all 8,760 hours of a year).82Id., at 11.83

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come in to the grid well ahead of time, they would be able to better prepare for these

sudden surges and lulls.84

A key tool in gaining this knowledge is through improved wind

forecasts.85 To predict how the wind will blow, data is collected from weather stations,

radar systems, aircraft, and satellites.86

This data is then run through computer models to

simulate the future state of the atmosphere, and the likely resulting winds.87 The data,

however, is only as good as the quality of the original data and the accuracy of the

computer simulation.88

Despite the lack of completely accurate or comprehensive data,

improved wind forecasting significantly reduces the cost of wind generation and

improves the ability of the grid to reliably integrate more wind energy into the system.

VI.CONCLUSION

The environmental benefits of hydropower energy and wind energy are real. At

times, however, these two renewable resources come in to conflict because of physical,

economic, and environmental considerations. Oregon and the Pacific Northwest have

relied on hydropower for decades. Only recently has wind power made a noticeable

impact on the electrical markets here. While there are no easy win-win solutions to this

dilemma to overgeneration there are various changes that will decrease the overall

volatility of the two energy sources and as a result create a strong electrical grid. A

negative pricing policy is a start, but such a policy has clear economic winners and losers.

84Mark Ahlstrom et al.,Atmospheric Pressure Weather, Wind Forecasting, and Energy

Market Operations, November/ December Issue IEEEPOWER &ENERGY MAGAZINE 97,98 (Oct. 2011).85

Id.86Id.87Id.88

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If the status quo continues without increasing the geographical diversity of wind

resources, wind energy will continue to be a worrisome uncertainty in a system regularly

overburdened with variable electrical capacity. While building infrastructure for this

diversity may also be controversial it will significantly improve Oregons electrical grid

and increase the amount of renewable electricity generated in the state. This diversity

combined with technological improvements to energy storage, smart grid communication

and improved wind prediction, will go far to ease the current conflict.