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Plummeting Curtailment, More Low-Cost Wind: CREZ Transmission Policy Already Reaping Big Returns

by Michael Goggin

While wind energy curtailment has received a great deal of attention of late, thanks in part to a controversial New York Times article, the real story is that nationwide wind energy curtailment is rapidly on the decline. Wind curtailment was nearly cut in half last year, from 4.9 percent of potential wind energy in 2011 to 2.7 percent in 2012, and down from a high of 9.7 percent in 2009, according to data in the U.S. Department of Energy’s (DOE) 2012 Wind Technologies Market Report for the regions that make up a large share of the nation’s total wind curtailment. Curtailment refers to the practice of reducing the output of wind projects when there is insufficient transmission capacity to carry their electricity to consumers.

Nowhere has the decline in wind curtailment been more rapid than in Texas. In 2009, the main Texas grid operator, ERCOT, curtailed 17.1 percent of potential wind energy production in the state, while by 2012 that figure was down to 3.7 percent. For a sense of scale, the wind energy that was thrown away in ERCOT in 2009 roughly equals the annual output of 1,500 MW of installed wind capacity. By the end of this year, wind curtailment should be virtually nonexistent in ERCOT.

Policy is Key
How has ERCOT solved the curtailment problem? Most importantly, the state has always had transmission policies that enable the cost of needed transmission to be allocated to the consumers who benefit from the new lines. These policies recognize that the reliability and economic benefits of transmission greatly outweigh its cost, and that transmission is essential for maintaining a competitive electricity market.

In 2005, Texas solved the other major piece of the transmission puzzle when the state legislature tasked ERCOT with proactively planning transmission to access renewable energy resource zones. The subsequent Competitive Renewable Energy Zone (CREZ) process has resulted in about 2,400 miles of new transmission lines that will be completed by the end of this year.  Several major lines have already been energized.

In addition to allowing the full output of existing wind projects to reach consumers, the new lines will also enable thousands of megawatts of new wind energy development in the Panhandle and Western parts of the state. Wind project developers are chomping at the bit to take advantage of the newly available transmission capacity reaching to very high quality wind resource areas. ERCOT already has signed interconnection agreements for 5,529 MW of new wind energy capacity, most of it in parts of the state that will be served by the new lines. That represents well over half of the incremental transmission capacity added by the CREZ lines.

While waiting for the CREZ lines to be completed, ERCOT has also reduced curtailment by using the existing grid more efficiently. There was a major drop in wind energy curtailment in the middle of last year when ERCOT began using a new tool called real-time stability analysis. Instead of using conservative assumptions about how much power transmission lines can safely carry without risking system collapse in the event of an unexpected grid failure, faster computers now allow ERCOT to calculate that limit every hour and thereby operate the lines just as reliably while carrying more power. That step alone has added hundreds of megawatts of additional transfer capacity out of the windy parts of West Texas, saving tens of millions of dollars per year by reducing wind curtailment.

Successful Model gets Exported
Other regions are following Texas’s lead in making long-needed grid upgrades that will benefit consumers while also reducing wind curtailment and enabling new wind development. The Midcontinent Independent System Operator (MISO) has adopted similar broad cost allocation policies for a set of transmission lines, called the Multi-Value Projects, that will potentially integrate nearly 15 gigawatts of new wind capacity. The Southwest Power Pool has similarly adopted a Highway/Byway transmission cost allocation policy and is making progress towards building a set of wind-serving lines called the Priority Projects. However, other parts of the country still lack the transmission cost allocation and planning policies that are essential for enabling transmission investment.

It may have taken a few years, but in many parts of the country the grid is finally catching up with wind energy’s astronomical growth.

Michael Goggin is Senior Electric Industry Analyst at AWEA.