20070924Gardner Comments.pdf

SEP-21-2007 02: SSP FROM: BOISE STATE CoEN 2084264800 TO: 83343762
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RECEi"iE:
TO: The Idaho Public Utilities Commissioners
2007 SEP 2/ Pf1 4: 45
FROM:
IDAHO FJUBLIC
John F. Gardner, Ph., P., Professor of Mechanical ~.f,~MEr~~fOr,HAISS!Oi:
2700 Harmony St , Boise, 1083706
208.336.0767
jfgardner~cableone.net
RE: IPC-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 a 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 , 1 would like to address the request of this petition point-by-point.
Point 1: Raising the cap on entitlement to published avoided cost rates for
intermittent wind powered small power production facilities that are qualifying
facilities QFs) under Sections 201 and 210 of the Public Utility Regulatory
SEP-21-2007 02:SSP FRoM:BoISE STATE CoEN 2084264800 TO: 83343762
. ., "
Policies Act of 1978 PURPA'1 from the current level of 100 kWto 10 000 average
kWs per month ("average MWs/mo " or "10 aMW'
The lowering of the cap for wind-powered PURPA projects to 100kW effectively
halted all development of small wind farms in the state of Idaho. This seems to
run counterto the current Idaho Energy plan (2007) which calls for, among other
things, the protection of "Idaho s public health, safety and natural environment
and conserve Idaho s natural resources" (objective 3) and the promotion of
sustainable economic growth , job creation and rural economic development"
(Objective 4). In addition, the development of wind-powered projects under the
provision of PURPA promotes a distributed , diverse and robust power generation
system in Idaho. Finally, as the country and the world moves toward a system of
constraining the way in which carbon dioxide is introduced into the atmosphere,
we should be embracing and encouraging the development of energy systems
not subject to the inevitable constraints (and related price increases) that will be
placed on fossil fuels. I would welcome the granting of this request.
Point 2: Reducing the published avoided cost rates applicable to intermittent
wind powered QFs to compensate for the increase in system costs due to wind
variability. The Company proposed new published avoided cost rates are set
out in Attachment enclosed with this Petition;
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 $11/MWhr. As I'm sure you re aware , these results stand
in stark contrast with the vast majority of the results of similar studies done
throughout the United States in the past 5 years. In particular, I refer you to a
study done by the National Renewable Energy Laboratory, part of the US
Department of Energy, summarizing the recent results of wind interconnect
studies, summarized in Table I.
SEP-21-2007 02: SSP FROM: BOISE STATE CoEN 2084264800 TO: 83343762
Table I: Key Results from Major Wind Integration Studies (2003-2006)
. ... -.--.. .. _.. ,- -. - ..-- --
Wind
Date Study . , Capacity
' ---- --- .': '
. Penetration:, Regulation
_..
h.__.- 1
--.-. -.-. - ...- -.
.-...--.u -
-.- .- -
: 2003 Xcel-UWIG 3.
,2003 We Energies
2003 We Energies 29%
2004 Xcel-MNDOC 15%
2005 PacifiCorp 20%
i 2006 CARPS (multl~year)
, 2006 ; Xcel-PSCo 10%
2006 i Xcel~PSCo 15%
2006 MN-MISO 20% 31 %
yea, average
...
highest ove, 3-yea, evaluation period
SoI.rmI: NnJomtIIlBImI'IbIB EIlII'IlY L.tbmiD1y.
1.12
45"
Load
following
trace
Cost ($/MWh)
... Unit Gas
Commitment Supply44 69 75 37
1.45
~ ,, . ,
TOTAL
1.90
! 0.45
41**
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 MWh.
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
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.
More to the point, however, both studies have serious drawbacks which bring
their conclusions under suspicion. The Idaho Powerinterconnect study contains
at least one serious flaw which was actually explicitly admitted in the Executive
Summary (page 4):
SEP-21-2007 02: S6P FROM: BOISE STATE CoEN 2084264800 TO: 83343762
Simulations for calendar year 2000 revealed very high
integration costs , which after additional analysis were
determined to be a function of the anomalous market
prices that were the result of the California power crisis.
Finally, 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.
Point 3: Authorizing Idaho Power to purchase state-of-the-art wind forecasting
selVices that will provide Idaho Power with forecasts of wind conditions in those
geographic areas in which wind generation resources are located. The order
should further provide that QFs will reimburse the Company for their share of the
on-going cost of the wind forecasting selVice.
It's important to note that , according to the 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 can do no better than that.
Therefore. 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 request. First, it would provide an unfair barrier to the early
developers of PURPA wind farms 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 is 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 and the actual costs associated with them, and how they are to be
charged.
Point 4: Authorizing the Company to include mechanical availability
guarantee " in all contracts with new intermittent wind powered QFresources. The
mechanical availability guarantee would require wind powered QFs to
demonstrate monthly that except for scheduled maintenance and events of force
majeure the QF wind project was physically capable and available to generate at
full output during 85% of the hours in the month.
This request seems both reasonable and prudent.
SEP-21-2007 02: S7P FROM: BOISE STATE CoEN 2084264800 TO: 83343762
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Point 5: If the Commission orders the changes to the published rates presented
in Attachment 2, authorizes the acquisition and funding of the wind forecasting
services and authorizes the inclusion of mechanical availability guarantees in
future contracts for purchases of energy from intermittent wind powered OFs
Idaho Power proposes that the Commission remove the requirement that the
90%/110% performance band be included in new contracts for energy purchases
from intermittent wind powered QFs.
On the elimination of the 90/100 rule, 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
installations) 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.
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. A more cynical observer than
myself might conclude that the Idaho Power is using this as a 'bargain chip' to
encourage support of their position regardless of the substance of the request.
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 polley 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 fulfi1lldaho s growing energy
requirements.
7. It is Idaho policy to encourage the development of customer-owned 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.
SEP-21-2007 02: S7P FROM: BOISE STATE CoEN 2084264800 TO: 83343762
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.
Sincerely,
))A I#-
John F. Gardner, Ph.O., P.
Professor of Mechanical & Biomedical Engineering