20070924Gardner Comments.pdf

SEP-21-2007 02: 57P FROM: BOISE STATE COEN 2084264800 TO: 83343762
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TO: The Idaho Public Utilities Commissioners
ZaO7 SFP 2 j Prl 4: 45FROM: John F. Gardner, Ph., P., Professor of Mechanical Engineering
2700 Harmony St , Boise, 1083706 IDNIO F)UBUC
208.336.0767 UTILITiES COMMJSSIOi
jfgardner~cableone.net
HECE!
RE: AVU-O7-
Date: 21 September 2007
I offer these comments regarding the above-referenced case currently before the
commission dealing with the future of wind energy projects under the provisions
of the federal PURPA law.
I am a professor of mechanical engineering, currently at Boise State University,
but have been an active professor for over 20 years with more than 50 referred
publications and 2 textbooks to my name. For the past 4 years, my research has
been focused on wind turbine technology. Most recently, my team has been
focusing on local energy storage for wind farms, a technology that has the
potential for mitigating the intermittency problems which lie at the root of the
cases you now consider.
I am considered an expert in dynamic modeling of energy systems and I have a
thorough understanding of the intricacies involved in the issues presented here. I
have read the wind integration studies offered by the utilities as well as several
others commissioned throughout the country in the past years.
I have no financial interest (that I know of) in a wind farm, current or planned.
Neither am I a shareholder (to the extent that I'm aware. some of my retirement
investments may well hold some stock in one of the utilities) in any of the
companies who are party to the complaint.
I offer my comments as a state employee who has particular expertise in the
matter in front of the commission and I do so in a sincere attempt to be impartial
and unbiased.
That said, I would like to address the request of this petition point-by-point.
Point 1: Reducing the published avoided cost rates applicable to purchases by
vista of electric power from wind-powered QFs by 12%, as a percentage
reduction to be applied against scheduled avoided cost rates in those
circumstance, except where the QF developer agrees in the power purchase and
sale contract with vista to deliver QF output to vista on firm hourly schedule
in which case the percentage reduction shall be 6%;
SEP-21-2007 02: 58P FROM: BOISE STATE COEN 2084264800 TO: 83343762 ,e: -::~
This, of course, is the core of the complaint. The interconnect plans
commissioned by Avista and Idaho Power concur that a) the cost associated with
wind energy rises with the market energy costs and b) those costs are currently
in the neighborhood of $10/MWhr. As I'm sure you re aware. these results stand
in stark contrast with the vast majority of the results of similar studies done
throughout the United States in the past 5 years. In particular, I refer you to a
study done by the National Renewable Energy Laboratory, part of the US
Department of Energy, summarizing the recent results of wind interconnect
studies, summarized in Table I.
Table I: Key Results from Major Wind Integration Studies (2003-2006)
",,---,- - - - ,--" - --- '~'------- "---,----_..,--,,,------,------"'--'-'--",,,--"--'-----"--
Wind Cost ($/MWh) ,
Date Study Capacity
.. Regulation Load Unit Gas TOTALPenetrationFollowingCommitmentSupply
- - --.. ----." ......" "'---- -..- ,...... .._-- --....,....
2003 i Xcel-UWIG 1.85
2003 : We Energies 1.12 1.90
2003 : We Energies 29%
2004 Xcel-MNDOC 15%
2005 PaclfiCorp 20%
2006 " CA RPS (multi-year)45* trace
2006 : Xcel-PSCo 10%
2006 ; Xcel.PSCo 15%
j..
2006 : MN-MISO 20%31%41**
--.----....-....------------...---........"
year average
,..
hIghest over 3-Y88r evaluation period
So4Jrce: N.ftlonl/ R8IItWIIM EnllT/Y LII/JorIIrHy.
Note the total cost of integration per MWh (right-most column)ranges between
$1.85 and $4.97. This is consistent with the results of the study done by the
Bonneville Power Administration in which the cost of wind integration was found
to vary from $1.90 (at 5% wind penetration) to $4.60 at 30%. Finally, the study
commissioned by the Minnesota Public Utilities Commission in 2005, in which the
utility companies took part, arrived at a cost of $4.20 per MWhr.
One of the patterns that emerge from consideration of these varying studies is
that the lower numbers tend to come from studies commissioned by independent
and government agencies. Whereas studies commissioned by the utilities
themselves tend to result in higher numbers.
A reasonable and probable explanation of this correlation is that the utilities are
attempting (as well they should) to find the best way to integrate wind , both into
SEP-21-2007 02: 58P FROM: BOISE STATE COEN 2084264800 TO: 83343762
their technical management plan and their business model. I have no doubt that
the studies commissioned by Idaho Power and Avista are accurate projections
based on the assumptions and constraints provided by the utilities at the outset
of the study.
Additionally, both the Avista study and the Idaho Power study are simulations run
under the same assumptions and algorithms currently in place today, with little
wind on their grids. For example, the Avista study refers to their optimization
algorithm which uses a linear programming technique to optimize their
operations. The question the report fails to answer is: What is being optimized?
Clearly the results will be different if the optimization is attempting to minimize
rate payer costs than if the goal is to maximize company profit. While both are
worthy endeavors, the reality is no doubt some weighted average of the two. It
seems reasonable to assume that small changes in the optimization target will
bring about different results.
In conclusion , it is interesting to note that PacifiCorp s related petition sets the
cost of integration at $5.04/MWhr, which is much more in line (albeit still slightly
higher) with the national average. In an effort to provide a uniform environment
for wind development throughout Idaho , I would argue that the integration rate
requested by Pacificorp be implemented for all PURPA wind projects in the state.
One final comment on this point It's unclear to me why, if the QF can provide
hourly firm power, there should be any integration costs at all. I believe that the
utility has failed to make the case for this point ant it should be rejected out of
hand.
Point 2: Removing the requirement that the 90'%/110% performance band
requirement not be applied to purchases from wind-powered QFs;
On this point, most people are in complete agreement. My colleagues involved
in wind energy research (not commercial operations) across the country are
perplexed and troubled by the existence of this requirement. It requires that
small wind farm operators (spanning in size from the approximately 300 kW
Lewandowski Farm to the 10.5 MW Fossil Gulch installation) predict the wind
conditions 4 to 6 months in advance. Anyone who watches the nightly weather
report and looks out the window the following morning understands the
impossible nature of that requirement. Finally, it's important to note that
according to the very best experts in the field of wind forecasting, the best current
predictor of wind is persistence. That is, your highest chance of being correct in
prediction what the wind will do in the next hour is to say that it will continue to do
what it has been doing in the previous hour. Clearly, such a prediction is often
wrong, yet we still can do no better than that
SEP-21-2007 02:59P FROM:BOISE STATE COEN 2084264800 TO: 83343762 : ;, .' ~
Therefore. I would argue that the rule should be eliminated regardless of the
other actions by the commission. It provides no real value to the utilities or the
OF operators and serves only to penalize the operators of small wind farms, and
does so in an arbitrary and unpredictable manner
Point 3: Authorizing vista to purchase state-of-the-art wind forecasting services
to provide vista with forecasted wind conditions in those geographic areas in
which wind generation resources are located, provided that QFs will reimburse
vista for their share of the on-going cost of the wind forecasting service, in
proportion to their percentage share of the wind-generator capability being
supplied to vista from that area.
Some of my concerns with this issue stem from my comments related to point 2.
It is unclear that such 'state of the art' forecasting models are effective enough to
justify their cost. But more to the point , there are several problems associated
with this requirement. First, it would provide an unfair barrier to the early
developers of PURPA wind farm in Idaho. The language is unclear, but it might
be a reasonable interpretation that 'their fair share' of the costs of a single wind
farm would be 100%. It's also not clear how these forecasting efforts relate to
similar efforts that must be carried out for larger wind farms with separate PPA'
Clearly there is opportunity for economy of scale here. I believe the utilities need
to make a better case and be more explicit about both the efficacy of these
models, the actual costs associated with them , and how they are to be charged.
Point 4: Requiring QFs to deliver mechanical availability guarantee " to Avista
to demonstrate monthly, except for scheduled maintenance and events of force
majeure or uncontrollable force, that the QF was physically capable and available
to generate full output during 85% of the hours in month;
This request seems both reasonable and prudent.
Point 5: Clarifying the rules governing the entitlement to published rates to
prevent all QFs, whether wind or non-wind, capable of delivering more than 10
aMW per month from structuring or restructuring into smaller projects solely for
the purpose to qualify for the published avoided cost rates
This point deals with legal and business issues which lie far outside my
expertise.
Point 6: Clarifying that the cap on entitlement to published avoided cost rates
shall be raised to 10 aMWonly until Avista s total wind portfolio from all sources
totals 400 MW
I have had insufficient time to form a well-informed opinion on this point.
SEP-21-2007 02:59P FROM:BOISE STATE COEN 2084264800 TO: 83343762
, , ,':-:
In closing, I respectfully remind the commissioners of the 2007 Idaho Energy
plan , which calls for the following actions:
1. Idaho utilities should acquire reliable, diverse, cost effective and
environmentally sound resource portfolios sufficient to meet their customers' long-
term electricity needs.
2. Idaho utilities should have access to a broad variety of resource options
consistent with Idaho s policy objectives, including both renewable and
conventional resources.
5. When acquiring resources, Idaho and Idaho utilities should give priority to: (1)
Conservation, energy efficiency and demand response; and (2) Renewable
resources; recognizing that these alone may not fulfill Idaho s growing energy
requirements.
7. It is Idaho policy to encourage the development of customeriJowned and
community-owned renewable energy and combined heat and power facilities.
10. Idaho and Idaho utilities should encourage technologies that minimize
emissions of harmful pollutants and consumptive use of water.
11. Idaho and Idaho utilities should prepare for the possibility of federal regulation
of greenhouse gas emissions.
Clearly, any policy that encourages the development of wind farms in Idaho is
consistent with all of these policy goals. Conversely, policies which discourage
or preclude the economic viability of, wind farms in Idaho stand in direct conflict
with these goals.
Finally, I encourage the commission to take a long view in debating these
requests. The question we should ask is: What path will lead to lower power
rates 5 or 10 years from now? like any prudent investment portfolio, an
approach in which geographic, fuel source and ownership is diversified is the
most conservative and safest approach.
I would be pleased to make myself available to the Commissioners or the staff of
the Public Utilities Commission at any time in the future.
f:~
John F. Gardner, Ph., P.
Professor of Mechanical & Biomedical Engineering