POWER January 2011 - 21

Steven F. Greenwald
I
Jeffrey P. Gray
Solving the Renewable
Integration Puzzle
n November, California voters overwhelmingly rejected an initiative
that would have put the brakes on AB 32, the state's
ambitious greenhouse gas (GHG) emissions reduction law. Given
the role that California has played in climate change policy,
that such a vote took place only four years into the law's implementation
process and 10 years before the emissions reduction
targets were to be met was a reality check on climate change
policy for those on both sides of the issue.
Had the initiative passed, the effects would likely have reverberated
across the country, undermining ongoing intraregional
efforts to encourage and coordinate the development of new
renewable resources and strengthening the case against comprehensive
national legislation. While the results of the election
evidence a continuing commitment in the West to move forward
with climate change policy (notwithstanding the economy),
questions regarding how policy objectives will be met and at
what cost loom larger than ever.
A Massive Build-out
Thirty-four states and the District of Columbia have either mandatory
renewable portfolio standard (RPS) requirements or have
adopted renewable energy goals. Many have also passed or are
considering additional GHG emissions reduction measures, which
could create a need for even more renewable resources. Meeting
these goals will require significant investments in new generation
and transmission across the country.
In 2008, the North American Electric Reliability Corp. projected
that more than 145,000 MW of new variable renewable generation
would be added to the North American bulk power system over the
next decade-a 700% increase in the amount of variable resources
existing at that time. Connecting these resources to the grid will
require significant additions to the transmission system.
For example, in the Western Interconnection, renewable developers
with an eye on the California market have been active developing
wind projects in Montana and Wyoming. The economic
viability of many of these projects, however, hinges on new interstate
transmission infrastructure, such as the proposed Zephyr
and TransWest Express transmission projects-each of which carries
a $3 billion price tag. Costs for new in-state transmission
lines can be significantly higher. In California, the cost for new
transmission infrastructure required to meet a 33% RPS target by
2020 is estimated to be $12 billion, exclusive of the cost of the
underlying generation.
Transmission Is Only One Piece
In addressing the challenges of integrating new renewable generation,
the focus for many regulators to date has been on the transmission
lines needed to connect these resources to the grid. The Federal
Energy Regulatory Commission's (FERC's) current rulemaking to consider
changes to the transmission planning process is the most recent
attempt to break through the transmission siting logjam that has had
state regulators, generators, and utilities banging their heads against
20
the wall for years (see " FERC Proposes an Improved Path for New
Transmission, " POWER, August 2010).
Although fixing the transmission planning process remains an
immediate need, regulators such as the California Public Utilities
Commission have recently turned their attention to the other
piece of the integration puzzle: identifying the operational requirements
and resource options necessary to reliably operate the
grid in an RPS world.
To ensure reliability, dispatchable resources with specific loadfollowing
capabilities, ramp rates, and regulation capacity will
be necessary to successfully integrate the variable renewable resources
needed to satisfy RPS and GHG emissions reduction targets.
Identifying the right mix of resources to meet these needs
poses a significant challenge for regulators and has major cost
implications for ratepayers.
Maximizing Value from the Existing Fleet
The projected costs associated with the amount of new renewable
generation expected to come online over the next decade,
and the number of transmission lines needed to connect this
generation to the grid, are enormous. Add in the cost of new
dispatchable resources needed to reliably integrate this renewable
generation and it becomes clear that steps must be taken to
reduce integration costs.
Smart grid technologies, demand response, and more energy
efficiency measures are important tools but cannot be expected
to fully address renewable integration issues absent dispatchable
generation. Leveraging the capabilities of the nation's existing
generation fleet will be one way to ensure that the needed operational
flexibility is procured in the most cost-effective manner.
The first step, however, is figuring out what we have.
In California, parties are trying to identify what, if any, untapped
operational flexibility can be obtained from the existing fleet through
modest capital investments. One straightforward way of doing so is to
allow existing generation to participate in long-term resource solicitations.
Allowing competition between new and existing generation
resources should identify the ability of the existing fleet to meet
integration requirements. Current utility procurement practices, however,
often preclude existing generation from participating in such
solicitations, making it more difficult to compare the relative value of
new and existing dispatchable resources and identify the least-cost
procurement options. These practices need to change.
As the nation continues its march toward lower GHG emissions
over the next decade and beyond, we will see significant energy
infrastructure investment. Given the magnitude of this investment,
it is critical that steps be taken to encourage the most
cost-effective ways to integrate renewable generation resources.
Maximizing the value of the existing fleet should be an important
first step in this process. ■
-Steven F. Greenwald (stevegreenwald@dwt.com) and Jeffrey
P. Gray (jeffgray@dwt.com) are partners in Davis Wright
Tremaine's Energy Practices Group.
www.powermag.com
POWER | January 2011
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POWER January 2011

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