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HomeMy WebLinkAbout20131129DIRECT P.DeVol.pdfBEFORE THE TDAHO PUBLIC UTILITIES COMMTSSTON IN THE MATTER OF THE APPLICATION OF TDAHO POWER COMPANY TO UPDATE TTS WIND INTEGRATION RATES AND CHARGES. CASE NO. TPC-E-I3_22 ) ) ) ) ) IDAHO POTnIER COMPANY DIRECT TESTIMONY OF PHILIP B. DeVOL 1 Q. Please state your name and business address. 2 A. My name is Philip B. DeVol- and my business 3 address is !227 West Idaho Street, Boise, Idaho 83702. 4 Q. By whom are you employed and in what capacity? 5 A. I am employed by Idaho Power Company ("Idaho 6 Power" or "Company") as the Resource Planning Leader. 7 Q. Please describe your educational background 8 and work experience with Idaho Power. 9 A. In May of 1989, I received a Bachelor of 10 Science Degree in Mathematics from Miami University in 11 Oxford, Ohio. I then received a Master of Scj-ence Degree 1,2 in Biostatistics from the University of Mlchigan in May of 13 1991. 74 O. Please describe your work history at Idaho 15 Power. 76 A. I began my employment with Idaho Power in 2001, 77 as an Engineering Specialist in the Water Management 18 Department. In this position, I was responsible for 19 modeling of the Idaho Power hydroelectric system for the 20 Integrated Resource Pl-an ("fRP") and relicensing studies. 27 In 2004, I became a Water Management Operations Analyst 22 where I continued to be responsible for hydroel-ectric 23 system modeling. 24 In 2005, I became a Planning Analyst in the Power 25 Supply Planning Department. fn this position, I was DeVOL, DI 1 Idaho Power Company t_ 2 3 4 5 6 7 8 9 10 11 L2 13 L4 15 16 t1 18 t9 20 2t 22 23 24 25 responsible for the compilation of the Idaho Power long- term operating plan prepared on a monthly basis as part of the Company's plan for managing risk. My duties in this position also expanded to include the study of wind integration. I became the Power Supply Planning Leader in 20L0 and Resource Planning Leader in 2073. My duties i-n these positions have included project management for the most recent Idaho Power wlnd integration study. I have been involved in regional and national proceedings related to the study of wind integration. I partici-pated in methodology discussions for the 2007 Wind Integration Actj-on Plan produced by the Northwest Wind Integration Forum. I have attended numerous Utility Wind Integration Group ("UWIG") workshops, and presented at UWIG workshops in Okl-ahoma City in 2006 and Portland, Oregon, in 20A7. I al-so presented to the Idaho Wind Working Group at their September 207L meeting. Eina11y, earlier this month, I presented at a Centre for Energy Advancement through Technol-ogical Innovatj-on (*CEATI") workshop focused on forecasting uncertainties for renewable energy supply. O. What is the purpose of your testimony in this matter? A. Idaho Power is Public Utilities Commission requesting that the Idaho ("Commission" ) author j-ze the DeVOL, DI 2 Idaho Power Company 1 2 3 4 5 6 7 I Y 10 11 t2 13 74 15 76 I7 18 19 20 21 22 23 24 25 Company to update its wind integration rates and charges consistent with its 20L3 Wind Integration Study Report. The purpose of my testimony is to provide the Commission with information regarding the design and execution of the study and to provide the resul-ts. I. 2OL3 IIIITD INTEGRATION STUDY O. Has Idaho Power updated the initial wind integration study that was filed, along with its addendum, in 2007? A.Yes. Idaho Power has conducted an updated wind integration study (*2013 Study"). Idaho Power filed this wind integration study with the Commission on Eebruary 14, 2013, with its 20Ll IRP Update informational filing, Case No. IPC-E-11-11. The 201,3 Study is attached hereto as Exhibit No. 1. O.Has the 20L3 Study been updated to incorporate inputs from the 20L3 IRP? A.Yes. The 201,3 Study was conducted using inputs from the 20Ll IRP. Subsequent to the development of the 20L3 Study, the Company has filed its 2013 IRP. The Company has updated the 2013 Study based upon inputs from the 2013 IRP, including the load forecast, Mid-C electric market prices, natural gas prices forecast, and the coal- price forecast ("Updated 2013 Study"). DeVOL, Df 3 Idaho Power Company 1 Q. Please provide a high level descripti-on of the 2 Company's 20L3 Study. 3 A. The Company's 2013 Study determined wind 4 integration costs for installed capacities of 800 megawatts 5 ("MW"); 1,000 MW; and 1,200 MW. Synthetic wind generation 5 data and corresponding day-ahead wind generation forecasts 1 at these build-outs were provided by 3TIER and Energy 8 Exemplar (formerly PLEXOS Solutions). 9 The 2073 Study employed the foll-owing two-scenario 10 design: 11 o Base scenario for which the system is not t2 burdened wlth the incremental bal-ancing reserves necessary 13 for integrating wind; and 14 o Test scenario for which the system is 15 burdened with the incremental balancing reserves necessary 76 for integrating wind. L7 System simul-ations for the two scenarios were 18 identi-cal-, except that generation scheduling for the test 19 scenario incl-uded the condition that dispatchabl-e thermal 20 and hydro generators must provide the appropriate amount of 27 incremental balancing reserves. 22 System simul-ations were conducted for a 2071 test 23 year. Customer demand for 2077, ds projected for the 20LL 24 IRP, was used in system modeling. To investigate the 25 effect of water conditions on wind integration, the 20L3 DeVOL, DI 4 Idaho Power Company 1 Study also considered Snake River Basin stream flows for 2 three separate historic years representing 1ow (2004), 3 average (2009) , and high (2006) water years. Fina11y, the 4 natural gas price and Mid-C wholesale electric market 5 prices as forecast for 20L1 in the 201-7 IRP were used in 6 the system simulations. The forecast gas and market prlces 7 were converted to year 20L0 base dol1ars. O. Why was the 20L1 test year selected? A. The primary reason for sel-ecting the 201-7 test 10 year was the 2077 IRP's projected in-service date of 2016 11 for the Boardman to Hemingway transmission (*B2H") project. 72 By sel-ectj-ng the 2017 test year, it made sense in the study 13 to evaluate integration costs for a system under two 14 scenarios-with B2H and without B2H. The Company now 15 expects B2H will- not be completed prior to 2020. L6 O. Why are there costs associated wlth t7 integrating wind generation on an electrical system? 18 A. Due to the variabl-e and intermittent nature of 19 wind generation, an electrical system operator must provide 20 operating reserves from other dispatchable resources that 21 are capable of j-ncreasing or decreasing generatj-on on short 22 notice to offset changes in the non-dispatchable wind 23 generation. The effect of having to hold operating 24 reserves on dispatchable resources is that the operation of 25 those resources is restricted and they cannot be DeVOL, DI 5 Idaho Power Company I 2 3 4 5 6 1 't 9 10 11 L2 13 L4 t_5 76 71 18 79 20 21 22 23 24 25 economicalJ-y dispatched results in higher power to their fullest capability. This supply costs that are subsequently passed on to customers O.Are hydroelectric generators good resources to use to integrate wind? A. Yes. Operationally, the quick response capabillties of a hydro unit makes it ideal- for responding to changes in wind generation. However, many people believe that because operationally hydro resources are good resources for integrating wind, the cost of using them for this purpose shoul-d be low; however, this is not the case. The flexibility and quick response characteristics of hydro units, especially when coupled with a storage reservoir that can be used for shaping generation over longer time periods, provides considerabl-e operational value as well as economic value when water can be stored or shaped so that it is used to produce electricity at times when it is the most val-uabl-e. The figure below, which depicts model results from Idaho Power's ]atest wind i-ntegration study, shows this impact on hydro generation at Idaho Power's Hel-Is Canyon Complex during a typical week in June. The teal- line represents how the generators woul-d be operated if additional operating reserves were not necessary due to In comparison, the red l-ine DeVOL, DI 6 Idaho Power Company wind generation on the system 1 2 3 4 5 6 8 9 10 11 72 13 74 15 t6 l1 18 79 20 27 22 23 24 25 shows how the range of generation j-s limited both upwards and downwards in order to provide reserves for intermittent wind resources. The result is less water can be run, and el-ectricity generated, during heavy load hours when it is more valuable. Impact of Wind Generation on Hydroelectric Generators 1,400 1,200 1,000 800 600 400 200 n1v I i --- Jun-5 .lun-6 Jun-7 Jun-8 Jun-9 Jun-10 Jun-11 Jun-12 O. Are natural gas and coal units used to integrate wind? A. Yes, they are. However, they are not able to respond as quickly as hydro units. Natural gas units can respond to changes in wind generatj-on, but they have to be operating to do so. Because natural gas Combined-Cyc1e Combusti-on Turbine (*CCCT") units are typically on the margin relative to market prices, there are times when they do not operate. Simple-Cycle Combustion Turbine ("SCCT") units are typically operated as "peaker" plants due to their lower efficiency/higher heat rate, and operate much DeVOL, DI 7 Idaho Power Company I less frequently than CCCTs. The cost of using natural gas 2 resources to integrate wind increases substantially when 3 the electrical- system operator has to operate natural gas 4 units for the sole purpose of providing operating reserves, 5 at times when the gas unit would otherwise not be 6 dispatched due to economics. 7 Coal units can also be used to integrate wind; I however, operationally they are not able to rapidly change 9 generation output. Therefore, generation from coal- units 10 will typically be used l-ast and only if a sizeable 11 adjustment in total generation is needed to account for 72 changes in wind generation. 13 O. Are the costs to i-ntegrate wind affected by L4 B2H? 15 A. Later in my testimony, I will- provide wind 76 integration costs found from Idaho Power's analysis based 71 on a system without B2H. Idaho Power's analysis indicates 18 that B2H reduces integration costs by 5 to 8 percent. Both t9 sets of costs are provided in Exhibit No. 1. 20 It is important to point out that the modeling 21, performed for the 201,3 Study indicates that the primary 22 reason for the integration cost reduction is simply that 23 B2H al-lows greater access to wholesale market 24 opportunities, and is not related to operating reserves 25 provided by B2H. DeVOL, DI I Idaho Power Company 1 2 3 4 q 6 1 8 9 10 11 72 13 l4 15 1,6 11 18 79 20 2L 22 23 24 25 O. Is Idaho Power's wind integration study design the same method used by all utilities to calculate the cost of wind integration? A.fdaho Power desj-gned its wind integration study with the objective of isolating in its operations modeling the effects directly related to integrating wind generation. While this is a common study design used towards meeting this objective, it is not a "specific" design used by al1 utilities.' I do not believe it is possible to detail a "specific" method because of differences in electrical systems and the available analysis tools. However, I think as a general principle, the concept that has been used by various utilities is the same-comparing the cost of operatJ-ng the electrical- system both with and without intermittent wind generation on the system. In addition, while many utilities have done wind J-ntegration studies, not all utilities use the same computer model- when modeling their electrical systems. Therefore, it woul-d be difficult to define a specific method due to potential limitations on the capabilities of each model. O. Have wind integration study methodologies I changed dramatically from study to study, potentially resulting in large changes in the calculated reserve requirements and wind integration costs? DeVOL, DI 9 Idaho Power Company 1 2 3 4 5 6 7 I 9 10 11 t2 13 L4 15 76 71 18 19 20 2L 22 23 24 25 A.No. In fact, the basic framework of the Idaho Power study has remained the same sj-nce 2008. Idaho Power's study recognizes that a load-serving entity must operate its dispatchable resources differently when wind is part of its fleet. The study isol-ates the effects of wind on the operation of the dispatchable resources by looking at two scenarios. Eirst, the study models the operation of dispatchabl-e resources when they are burdened with incremental balancing reserves caused by wind generation. Second, the study runs the same model without the additional balancing reserves. This study design was the model for Idaho Power's first wind integration study, and has remained the mode1 for the second study. Eor the Company's latest study, Idaho Power did make one change to allow the model- to consider scenarios where integration was not possibl-e. The Company made this change because Idaho Power's dispatchabl-e resources are not always capable of providing the bal-ancing reserves necessary to integrate wind given the rapid expansion of instal-l-ed wind capacity on Idaho Power's system. Even with this change, however, the basic framework designed to estimate the costs of modifying the operation of dispatchable resources such that they are ready to respond to wind is unchanged. 0.In your opinion, how often should wind DEVOL, Dr 10 Idaho Power Company integration studies be updated? 1 2 3 4 5 6 7 I 9 10 11 1,2 13 1,4 15 16 t7 1B 19 20 2L 22 23 24 25 A.Generally, I believe that wind integration studies shoul-d be updated every three years. Three years is sufficient time to prepare the next study, yet short enough that results are 1ikely to remain relevant between studies. That said, it may be possible to update wind integration costs on a more frequent basis if the update is l-imited to updating only the load forecast, natural gas prj-ces, and forward market prices. Under this scenario, future wind buil-d-outs and wind data would remain unchanged from the original study. It may also be necessary to fulJ-y update wind integration studies more frequently based on changes in the Company's instal-1ed wind capacity. Erom a long-term plannlng perspective, it has been challenging to predict the expansion of installed wind capacity. With the exception of the Elkhorn Valley wind project, which resul-ted from the 2004 IRP's identification of a utility- scale wind project in the preferred resource portfolio, the wind projects connecting to Idaho Power's system have been deveJ-oped as Qualifying Eacility ("QF") projects outside of an IRP process. Wind fleet expansion has been characterized by fits and starts, with periods where wind penetration remains fairly stable, followed by periods with very rapid growth. It is difficult to predict whether wj-nd integration studies in the coming years will- need to be DEVOL, Dr 11 Idaho Power Company 1 2 3 4 5 6 7 I 9 10 11 72 13 74 15 16 L1 l_B 19 20 2L 22 23 24 25 updated frequently to keep up with rapid wind development when or if it occurs. Other factors may also trigger the need for an updated study. For example, systemic changes to el-ectric market practices, the impJ-ementation of new regional balancing initiatives, significant fuel price changes, or the addition of new generating or demand-side resources, particularly flexible resources providing wind-balancing capability, may aII result in the need for a new integration study. O. Would the creation of an Energy Imbalance Market ("EIM") facilitate wind integratj-on and reduce costs and impacts? A. Idaho Power has been participating in a detailed analysis by the Northwest Power Pool ("NWPP") of potential EIM designs. This analysis suggests that the benefits of an EIM market on a NWPP-wide scal-e slightly outweigh the costs necessary to implement and run such a market. However, because of a degree of uncertainty with the costs and benefits, an EIM shoul-d not be deveJ-oped without caution. Eor an EIM to perform correctly, a reasonably large footprint involving a large number of NWPP participants would be necessary; Idaho Power by itself cannot control- the development of an EIM. From a wind integratj-on perspectj-ve, dn EIM woul-d facilitate sharing DEVOL, DI 72 Idaho Power Company 1 2 3 4 5 6 7 I 9 10 1t_ t2 13 14 15 76 77 18 19 20 2t 22 23 24 25 wind diversity across a much greater footprint, so the capacity necessary to service a wind fl-eet shoul-d be 1ower However, the effect of an EIM on integration costs depends on many factors related to the EIM program desJ-gn. Most of these factors have yet to be finalized; therefore, the existence of an EIM in the near term was not considered i-n the 2073 Study analysis. o.Idaho Power's wind study calculates balancing reserve requirements based on day-ahead schedule errors as opposed to hour-ahead schedule errors. Can you explain the significance of both day-ahead scheduling and hour-ahead scheduling as they rel-ate to wind integration? A. Yes. In both cases, the issue is uncertainty. Devj-ations between forecast and actual wind production must be covered by other resources in order to maintain the balance between supply and demand. Not surprisingly, longer l-ead forecasts are more uncertaj-n than shorter lead forecasts; therefore, deviations are typically larger for forecasts of day-ahead wind production versus hour-ahead wind production. Thus, the balancing reserve requirements are greater when using day-ahead scheduj-i-ng. o.Why does the Company use day-ahead scheduling to determine its wind integration costs? A. Idaho Power views the simulation of day-ahead scheduling as appropriate due to system scheduling DEVOL, DT 13 Idaho Power Company 1 practices. Day-ahead scheduling is reflective of the time 2 frame in which ldaho Power makes dispatching decisions and 3 is the reasonable and prudent tj-me frame in which to do so. 4 The use of day-ahead errors can be explained by considering 5 the implications of the alternative, where the amount of 6 balancing reserve is smaller because it is based on the 7 hour-ahead errors in forecast wind. As stated above, all 8 deviations between forecast and actual wind production need 9 to be covered. Thus, in scheduling the system day-ahead, 10 which is performed for each day, the dispatchabl-e 11 generators wou1d be scheduled to carry a smaller amount of t2 response allowing them to cover deviations as determlned 13 from analysis of hour-ahead forecast errors. The L4 dispatchable generators would not be schedul-ed to allow 15 them to respond to day-ahead forecast errors, meaning that L6 the response to these larger errors is only achieved by 17 some other means, which in Idaho Power's view would too 18 often translate to a risky reliance on the wholesale 19 el-ectric market. Consequently, the prudent simulation of 20 day-ahead system scheduling is to ensure that dispatchable 2I generators are capable of responding in real time to 22 uncertainty in wind production as determined by analysis of 23 day-ahead forecast errors. 24 O. Can you describe the source of the wind 25 generation data used in the wind integration study? DEVOL, DI t4 Idaho Power Company 1 2 3 4 5 6 7 I 9 10 11 72 13 74 15 16 L1 18 1,9 20 2! 22 23 24 25 A. Yes. As stated earlier, Idaho Power used synthetic wind generation data and day-ahead wind generation forecasts provided by 3TIER and Energy Exemplar (formerly PLEXOS Solutions). The geographic dispersion of the synthetic wind data used in Idaho Power's study is representative of the geographic dispersion of wind build- outs Idaho Power is like1y to integrate. The wind data used for the study was provided by 3TIER, an industry l-eader in renewable energy risk analysis. Indeed, 3TIER developed the data set that was used by the National Renewable Energy Laboratory for its Western Wlnd and Solar Integration Study (*WWSIS"), which when completed in 20L01 was one of the largest and most comprehensive studj-es of wind and solar resources to date. The WWSIS inc]uded data for more than 32,000 existing or hypothetical- wind project si-tes. For Idaho Power's study, 3TIER developed a new time series directly from the WWSIS data set for 43 locations requested by Idaho Power. These locations correspond to project sites that either have a current contract or have requested a contract with Idaho Power. The 43 locations are spread across a wide regi-on, with locations j-n five states-Oregon, Idaho, Utah, Wyoming, and Montana. The majority of the locations are in or peripheral to the Snake River plain in southern Idaho. DEVOL, Dr 15 Idaho Power Company I believe the methodology used to develop the wind 2 generation data used for the study ensures it accurately 3 represents wind generation that is currently connected to 4 and would likely be connected to ldaho Power's system in 5 the future. O. Is the cost of integrating wind considered in 7 Idaho Power's IRP when comparlng the costs of utility-owned 8 generation resources? A. Yes, it is. The cost of integrating wind is 10 incurred regardless of whether the wind resource is 11 utility-owned or contracted through a third party, and 1,2 ultimately j-ncreases power supply costs that are passed on 13 to customers. It would be inappropriate to ignore these L4 costs when evaluating new resources in the IRP. t_5 O. Is the cost of integrating wind generation the L6 same for anyone operating an el-ectrj-cal- system? L7 A. No, it is not. As I explained previously, the 18 costs associated wlth wind integration are specific and 19 unique for each individual- electrical system based on the 20 amount of wind being integrated and the other types of 2L resources that are used to provide the necessary operating 22 reserves. In general terms, the cost.of integrating wind 23 j-ncreases as the amount of nameplate wind generation on the 24 el-ectrical- system increases. 25 DEVOL, Dr 76 Idaho Power Company 1 2 3 4 q, 6 7 B 9 10 11 l2 13 L4 15 1,6 l1 18 t9 20 21- 22 23 24 25 o.What is unique about the Idaho Power system that influences integration costs? A.The operating reserves Idaho Power uses to integrate wj-nd are overwhelmingly provided by its hydroelectric system. As I stated earlier, hydroel-ectric generating faci-1ities, particularly those with large storage reservoirs, are very effective at quickly respondi-ng to wind's variability and intermittency. However, maintaining this capability to respond comes at a relatively high opportunity cost. If we consider as an example the need to hol-d un-dispatched generating capacity in reserve during on-peak hours, where this capacity is held to respond to wj-nd down ramps, then the cost to hol-d this capacity on hydroel-ectric generators is essentially equal to the market cost of power. On the other hand, if the reserve capacity is carried on thermal generators, then the cost of holding capacity in reserve is equal to the market cost of power -l.ess the variable cost to fuel and operate the generators. In short, operatlon of the hydroelectric system can be very effectively optimized, and the de-optimization needed to ready the system to integrate wind has noticeable and costly impacts. Idaho Power is also unique in the high level of wind generation on its system relative to its system loads and other availabl-e dispatchable generation. fdaho Power has DEVOL, Dr l1 Idaho Power Company 1 seen very rapid growth of wind generation on its system, 2 especially relative to system Ioad and other generation 3 resources. This has l-ed to the recognition that Idaho 4 Power's finite capability for integrating wind is nearing 5 depletion. Even at the current level of wind penetrati-on, 6 dispatchable thermal and hydro generators are not always 7 capable of providing the balancing reserves necessary to 8 integrate wind. This situation is expected to worsen as 9 wind penetration levels increase, particularly during 10 periods of l-ow customer demand. 11 72 II. 2OL3 WI![D INTEGRATION STT'DY REST'LTS O. Based on the resul-ts of the 20L3 Study, what 13 is the cost of integrating wind generation on Idaho Power's 74 electri-cal system? 15 A. As previously discussed, the 2073 Study 16 analyzed three different level-s of wind penetratJ-on: 7"7 800 MW; 1,000 MW; and 1,200 MW. The results of the 18 analysis, based upon 2077 IRP inputs, showed integration 79 costs of $8.06/megawatt-hour ('MWh"), $13.06/MWh-, and 20 $19.01/MWh, respectively. These wind integration costs are 2L associated with total wind generation at any given time, 22 not ;ust incremental additions. 23 O. How are the results different j-n the Updated 24 201,3 Study? 25 DEVOL, Dr 18 Idaho Power Company I 2 3 4 5 6 1 I 9 10 11 72 13 t4 15 L6 l1 18 L9 20 2L 22 23 24 25 A. As previously mentioned, subsequent to the development of the 2013 Study, the Company filed its 201-3 IRP. Because the 20L3 Study was developed using inputs from the 20Lt IRP, the Company has updated the determination of wind integration costs based upon the inputs in the 2073 IRP. o.What inputs were used from the 20L3 IRP in the Updated 20L3 Study? A.The Company updated inputs to determine the current wind integration costs using the 20L3 IRP load forecast, Mid-C market prices, natural gas price forecast, and the coal- price forecast. o.What was the resul-t of recafculating the wind integration costs based upon inputs from the 201,3 IRP? A.The resul-t of updating the inputs used in the study to those from the 201-3 IRP was a reduction in the wind integration costs. As before , for the 2017 test year, the updated integration costs per MWh associated with total wind generation at the 800 MW; 1,000 MW; and 1,,200 MW penetration levels were $6.83, $10.22, and $74.22, respectively. o.What would be the revised incremental- costs of wind integratj-on for the Updated 2073 Study? A.Maintalning the conservative assumption that all- 678 MW of current wind generation were assessed the cap DEVOL, Dr l_9 Idaho Power Company 1 2 3 4 5 6 7 8 9 10 11 \2 13 14 15 76 L7 18 L9 20 21, 22 23 24 25 of $6.50/lrtwh, the respective incremental costs integration woul-d be $8.67 , $24.00, and $34.70 o.How much wind generation capaclty of wind per MWh. does Idaho Power currently have on its system? A.Idaho Power currentl-y has 577 MW of wind generation capacity from Public Utility Regulatory Policies Act of 7978 projects and an additional 101 MW of wind generation capacity from the Elkhorn VaIIey wind project, for a total of 618 MW of wind generation capacity currently on-line. O.Do the wind J-ntegration costs identified for the three different 1evels of wind penetration represent the cost per MWh to integrate the ful-l- instal-l-ed wind at the respective penetratlon level-? Yes, the integration costs stated above represent the cost per MWh to integrate the fuII instal-led wind generation capacity at the respective penetration Ievels studied. For example, the resul-ts indicate that the fuI1 fleet of wind generators making up the 800 MW penetration level brings about costs of $6.83 for each MWh integrated. However, wind generators comprising the 618 MW of current i-nstal-led capacity on the Idaho Power system are assessed an integration cost based upon a percentage of the avoided cost rate contained in their power purchase agreement and is capped at only $5.SO/ltWfr. DEVOL, DI 20 Idaho Power Company A. 1 2 3 4 5 6 7 I 9 10 11 L2 13 l4 15 1,6 L7 18 19 20 21 22 23 24 25 0.Based upon a conservative assumption that all of the current 678 MW of wind generation were currently being assessed the cap of $6.sO/UWfr (which they are not) and that they woul-d continue to be assessed just $5.50/MWh, what then would be the j-ncremental cost of wind integration for new wind generation? A.In order to fuI1y recover the $6.83/MWh lntegration costs associated with 800 MW of installed wind capacity, wind generators in the increment between the current penetration level (678 MW) and the 800 MW penetration 1eve1 will need greater assessed integration costs. Study analysis indicates that if the current 618 MW of wind generation were to be assessed the ful-l- cap of $6.50/UWfr, and were to continue to receive this cdp, the new wind generators will need to recognize integration costs of $8.67ltqWh to al-l-ow ful1 recovery of integration costs associated with 800 MW of installed wind capacity. Similarly, generators between the 800 MW and 1000 MW penetration levels introduce incremental system operatj-ng costs requiring the assessment of lntegration costs of $24.00/MWh, and generators between 1000 MW and L,200 MW require incremental integratj-on costs of $34.70lMWh. The 2073 Study results and the Updated 2013 Study results are summarized in the tables beIow. I DEVOL, DI 2t Idaho Power Company 2013 STUDY (using 2OLt IRP inputs) Penetration Level 8OO MW 1,000 MW L,200 MW Allocated EquaIIy to alt_ Ir,Iind (/MWh) $8 06 $13.06 $19.01 Incremental Cost Allocation (/MWh) $15.70 $33.42 $49 .46 UPDATED 2OL3 STTDY (using 2OL3 IRP inputs) Penetration Level-8OO MW 1,000 MW L,200 MW Al-Iocated Equally al-I Wind (/MWh) to $6.83 $10 .22 $14.22 Incremental- Cost All-ocation (/UWn) $8.67 $24.00 $34.70 4 5 6 1 I 9 10 11 72 13 L4 15 L6 L7 18 79 O. Has Idaho Power proposed a similar integration charge for solar QFs? A. Not at this time. Idaho Power's proposal addresses only wind integration costs. However, upon completion of a solar-specific integration study, Idaho Power believes it woul-d be appropriate to assess a similar integration charge for solar QFs o.Does this conclude your testimony? Yes DEVOL, Dr 22 Idaho Power Company A 1 2 3 4 5 6 7 8 9 10 11 L2 13 L4 15 76 L1 18 19 20 2t 22 23 24 25 26 21 28 29 30 31 32 STATE OF IDAHO County of Ada SS. ATTESTATIOI{ OF TESTIMOIIY SWORN to before me this 29th day of T, Philip B. DeVol, havlng been duly sworn to testify truthfully, and based upon my personal knowledge, state the following: I am employed by Idaho Power Company as the Resource Plannj-ng Leader j-n the Water and Resource Planning Department and am competent to be a witness in this proceeding. I declare under penalty of perjury of the laws of the state of Idaho that the foregoing pre-filed testimony is true and correct to the best of my informatlon and bel-ief . DATED this 29th day of November 20L3. SUBSCRIBED AND November 20].3. DEVOL, Dr 23 Idaho Power Company Philip ooI rl f apo't'.C,ubl,' tary Public Residing at: expl-res:My commission BEFORE THE IDAHO PUBLIG UTILITIES COMMISSION GASE NO. IPC-E-13-22 IDAHO POWER COMPANY DeVOL, DI TESTIMONY EXHIBIT NO. 1 ^llmloNIPOIIIR- Wind lntegration Study Report February 2013 @ 2012 Idaho Power Exhibit No. 1 Case No. IPC-E-13-22 P. DeVoI, IPC Page 1 of 48 ldaho Power,1221W ldaho Street, Boise, ldaho 83702 ldaho Power Company Wind lntegration Study Report TneLe oF CoNTENTS Executive Summar... ................5 Balancing Reserves.... ..........5 Wind Integration Costs......... ..................7 Incremental Cost of Wind lntegration .......................8 Technical Review Committee. ..............12 Energy Exemplar Contribution................ ................13 Idaho Power System Overview... ................15 Hydroelectric Generating Projects.. ......15 Coal-Fired Generating Projects...... .......16 Natural Gas-Fired Generating Projects...... ..............16 Transmission and Wholesale Market................. ......16 Power Purchase Agreements .................18 System Demand .................18 System Scheduling. ............19 Balancing Reserves Calculations and Operating Reserves............... ...................23 Balancing Reserves for Variability and Uncertainty in System Demand..... ....................25 Contingency Reserve Obligation ..........25 Day-Ahead Scheduling ......27 Demand and Wind Forecasts ................28 Transmission System Modeling... .........28 Overgeneration in System Modeling .......................29 Exhibit No. 't Case No. IPC-E-'!3-22 P. DeVoI, IPC Page i Page 3 of 48 Wind lntegration Study Report ldaho Power Company Wind Integration Costs ......31 lncremental Cost of Wind Integration................ ........................32 Spilling Water........ ............33 Maximum Idaho Power System Wind Penetration......... ............34 Effect of Wind Integration on Thermal Generation. ...................36 Recommendations and Conclusions.......... ....................37 lssues Not Addressed by the Study... .......................38 Measures Facilitating Wind Integration.............. ........................39 Future Study of Wind Integration .........39 Table I Table2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table l0 Table I I Table 12 Table 13 Table 14 Table 15 Table Bl LIsT oF TABLES Balancing reserves requirements (MW) .....................6 Wind integration costs ($/MWh) .............7 Wind integration costs with the Boardman to Hemingway transmission line ($/\4Wh)................ ........7 Incremental wind integration costs (SA{Wh) .............9 Balancing reserve requirements (MW)..... ................25 Modeled transmission constraints (MW)...... ............28 Modeled transmission constraints-simulations with 500-kV Boardman to Hemingway transmission line (MW)................. .......29 Wind penetration levels and water conditions.......... ...................31 Integration costs ($/IrtWh)............... ......32 Integration costs with the Boardman to Hemingway transmission line(s^4wh) ..........32 Incremental wind integration costs ($A{Wh) ...........33 lncremental Hells Canyon Complex spill (thousands of acre-feet)...................................34 Curtailment of wind generation (annual MWh)........ ...................35 Annual generation for thermal generating resources for the test case(Gwh) ..............36 Integration costs ($/NIWh)................. .......................37 Monthly and annual capacity factors (percent of installed nameplatecapacitv).... ;;.;;*fu:Xil P. DeVol, IPC Page 4 of 48Page ii ldaho Power Company Wind lntegration Study Report Figure I Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10 LIST oF FIGURES Installed wind capacity connected to the Idaho Power system..... ....................5 Curtailment of wind generation (average annual MWh) ...............8 Integration costs with incremental integration costs ($/\4Wh)............... ..........9 Installed wind capacity connected to the Idaho Power system (MW)...............................11 Idaho Power transmission paths....... ......17 Wind-forecasting and generation data ......................23 Deviations between forecast and actual wind generation with monthly balancing reserves requirements (M\M) ....................24 Integration costs with incremental integration costs ($/\tIWh)............... ........33 Curtailment of wind generation (average annual MlVh) .............35 Curtailment of wind generation (average annual MWh) .............38 LIST OF APPENDTcES Appendix A. May 9,2012, Explanation on wind data............ ..........43 Appendix B. Wind data summaries.............. .................45 Exhibit No. 1 Case No. IPC-E-13-22 P. Devol, IPC Page iii Page 5 of48 Wind lntegration Study Report This page left blank intentionally. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVoI, IPC Page 6 of 48 Page iv ldaho Power Company Executive Summary ExecunvE SUMMARY As a variable and uncertain generating resource, wind generators require ldaho Power to modify power system operations to successfully integrate such projects without impacting system reliability. The company must build into its generation scheduling extra operating reserves designed to allow dispatchable generators to respond to wind's variability and uncertainty. Idaho Power, similar to much of the Pacific Northwest, has experienced rapid growth in wind generation over recent years. As of January 2013,ldaho Power has reached on-line wind generation totaling 678 megawatts (MW) of nameplate capacity. The rapid growth in wind generation is illustrated in Figure l. "-tt "C^od *C "-d "--s ^nnu' ,ond "d "-*-"^n€' ,ono'"d "*d"d "-d Figure I lnstalled wind capacity connected to the ldaho Power system This rapid growth has led to the recognition that Idaho Power's finite capability for integrating wind is nearing depletion. Even at the current level of wind penetration, dispatchable thermal and hydro generators are not always capable of providing the balancing reserves necessary to integrate wind. This situation is expected to worsen as wind penetration levels increase. Balancing Reserves This investigation quantified wind integration costs for wind installed capacities of 800 MW, 1,000 MW, and 1,200 MW. Synthetic wind generation data and corresponding day-ahead wind generation forecasts at these build-outs were provided by Energy Exemplar (formerly PLEXOS Exhibit No. 1 Case No. IPC-E-13-22 ';3ili';l'.? Page 5 Executive Summary ldaho Power Company Solutions) and 3TIER. Based on analysis of these dat4 the following monthly balancing reserves requirements were imposed in system modeling. Table 1 Balancing reserves requirements (MW) Wind Gen 800 Mw 1,000 Mw 1,200 Mw Reg Up Reg Down Reg Up Reg Down Reg Up Reg Down January February March April May June July August September Oclober November December 199 252 226 255 258 266 274 172 242 217 226 267 -262 -246 -295 -353 -290 -285 -256 -179 -219 -248 -336 -338 246 319 281 331 328 339 355 21s 309 275 277 326 -325 -297 -368 -450 -366 -363 -322 -224 -280 -308 421 424 295 379 339 395 392 409 423 257 371 329 333 394 -390 -351 -444 -540 439 436 -384 -267 -337 -367 -507 -510 The term Reg Up is used for generating capacity that can be brought online in response to a drop in wind relative to the forecast. Reg Down is used for on-line generating capacity that can be turned down in response to a wind up-ramp. The balancing reserves requirements assume a 90 percent confidence level and thus are designed to cover deviations in wind relative to forecast except for extreme events comprising 5 percent at each end. Study Design The study employed the following two-scenario design: o Base scenario for which the system was not burdened with the incremental balancing reserves necessary for integrating wind o Test scenario for which the system was burdened with the incremental balancing reserves necessary for integrating wind System simulations for the two scenarios were identical, except that generation scheduling for the test scenario included the condition that dispatchable thermal and hydro generators must provide the appropriate amount of incremental balancing reserves. Having the prescribed balancing reserves positions these generators such that they can respond to changing wind. System simulations were conducted for a2017 test year. Customer demand for 2017, as projected for the 201I Integrated Resource Plon (lW), was used in system modeling. To investigate the effect of water conditions on wind integration, the study also considered Snake River Basin stream flows for three separate historic years representing low (2004), average (2009), and high (2006) water years Exhibit No. 1 Case No. IPC-E-I3-22 P. DeVoI, IPC Page 6 Page 8 of 48 ldaho Power Company Executive Summary Wind lntegration Costs The integration costs in Table 2 were calculated from the system simulations. Table 2 Wind integration costs ($/MWh) Nameplate Wind Water Condition 800 Mw 1,000 Mw 1,200 MW Average (2009) Low (2004) High (2006) Average $7.18 $7.26 $9.73 $8.06 $1 1.94 $12.44 $14.79 $13.06 $18.15 $18.15 $20.73 $r9.0r Simulations with the proposed Boardman to Hemingway transmission line were also performed, yielding the results in Table 3. Table 3 Wind integration costs with the Boardman to Hemingway transmission line ($/TlWtrl Nameplate Wind Water Condition 800 Mw 1,000 MW 1,200 MW Average (2009) Low (2004) High (2006) Average $6.51 $6.66 $9.72 $7.63 $11.03 $11.04 $13.78 $r 1.95 $16.38 $16.67 $19.53 sr7.53 Curtailment The study results indicate customer demand is a strong determinant of Idaho Power's ability to integrate wind. During low demand periods, the system of dispatchable resources often cannot provide the incremental balancing reserves paramount to successful wind integration without creating an imbalance between generation and demand. Under these circumstances, curtailment of wind generation is often necessary to maintain balance. Modeling demonstrates that the frequency of curtailment is expected to accelerate greatly beyond the 800 MW installed capacity level. While the maximum penetration level cannot be precisely identified, study results indicate wind development beyond 800 MW is subject to considerable curtailment risk. Importantly, curtailed wind generation was removed from the production cost analysis for the wind study modeling, and consequently had no effect on integration cost calculations. The curtailed wind generation simply could not be integrated, and the cost-causing modifications to system operations designed to allow its integration were assumed to not be made. The curtailment of wind generation observed in the wind study modeling is shown in Figure 2. Exhibit No. 1 Case No. IPC-E-I3-22 P. DeVol, IPC Page I of48 PageT Executive Summary 50,m 45,(m 4,0,(m 35,(m Pc E *,*o Ei zs,om(, .C3 2o,om =15,(m 10,(m 5,mo o Figure 2 Curtailment of wind generation (average annua! MWh) lncremental Cost of Wind lntegration The integration costs previously provided in Tables 2 and 3 represent the cost per MWh to integrate the full installed wind at the respective penetration levels studied. For example, the results of Table 2 indicate that the full fleet of wind generators making up the 800 MW penetration level bring about costs of $8.06 for each MWh integrated. However, wind generators comprising the 678 MW of current installed capacity on the Idaho Power system are assessed an integration cost of only $6.50ArIWh'. In order to fully cover the $8.0644Wh integration costs associated with 800 MW of installed wind capacity, wind generators in the increment between the current penetration level (678 MW) and the 800 MW penetration level will need greater assessed integration costs. Study analysis indicates that these generators will need to recognize integration costs of $16.704{Wh to allow full recovery of integration costs associated with 800 MW of installed wind capacity. Similarly, generators between the 800 MW and 1000 MW penetration levels introduce incremental system operating costs requiring the assessment of integration costs of $33.42lIvIWh, and generators between 1000 MW and 1,200 MW require incremental integration costs of $49.464,IWh. A graph showing both integration costs and incremental integration costs is provided in Figure 3 below. The incremental integration costs are summarized in Table 4. Exhibit No. 'l Case No. IPC-E-13-22 P. DeVol, IPC lntegration cost stipulated by ldaho Public Utilities Commission Case No. IPC-E-07-03, Order No. 30488. Page 8 '10 of 48 ldaho Power Company Executive Summary z S4o BE fi;{lg$o =o{Et,,E, $zo 6m &x) rAuEHArEW6aDlr$rirl Figure 3 lntegration costs with incremental integration costs ($/ttwh) Table 4 lncremental wind integration costs ($/MWh) -* TNCREMENTAL CO5T {s/Mwh} ..r-wr{D THTEGRATTON COSI ($lUWtrl Nameplate Wind 678 - 800 MW 800 - 1,000 Mw 1,000 - 1,200 Mw lncrcmental cost per MWh $16.70 $49.46 Exhibit No. 1 Case No. IPC-E-13-22 P. DCVOI, IPC Page 11 of48 Page 9 Executive Summary ldaho Power Company This page left blank intentionally. Exhibit No. 'l Case No. IPC-E;13-22 P. DeVol, IPC Page 10 12 ol 18 ldaho Power Company lntroduction lrurnooucnoN Electrical power generated from wind turbines is commonly known to exhibit greater variability and uncertainty than that from conventional generators. Because of the incremental variability and uncertainty, it is widely recognized that electric utilities incur increased costs when their systems are called on to integrate wind power. These costs occur because power systems are operated less optimally to successfully integrate wind generation without compromising the reliable delivery of electrical power to customers. Idaho Power has studied the unique modifications it must make to power system operations to integrate the rapidly expanding amount of wind generation connecting to its system. The purpose of this report is to describe the operational modifications taken to integrate wind and the associated costs. The study of these costs is viewed by Idaho Power as an important part of efforts to ensure prices paid for wind power are fair and equitable to customers and generators alike. Idaho Power first reported on wind integration in2007. While there was a sizable amount of wind generation under contract in2007, the amount of wind actually connected to the ldaho Power system at the time of the first study report was just under 20 MW nameplate. Over recent years, the amount of wind generation connected to the Idaho Power system has sharply risen. As of January 2013, Idaho Power has reached on-line wind generation totaling 678 MW nameplate. The rapid growth in wind generation is illustrated in Figure 4. ^nd *d ^nd *C "C "-*." ^nn*' "on*" ^nuo" "on*" ^nd' "od^nd ,-d "d "dFigure 4 Installed wind capacity connected to the Idaho Power system (MW) The steep upturn in wind generation has driven Idaho Power to expand its area of concern beyond the operational costs associated with wind integration to the consideration of the maximum wind penetratton .rr,,on,uo. ., Case No. IPC-E-13-22 P. Devol, IPC Page 13 of48 Page 1 1 lntroduction ldaho Power Company level its system can reliably integrate. Thus, the objective of the Idaho Power wind integration study is to answer the following two questions: o What are the costs of integrating wind generation on the Idaho Power system? o How much wind generation can the Idaho Power system accommodate without impacting reliability? A critical principle in the operation of a bulk power system is that a balance between generation and demand must generally be maintained. Power system operators have long studied the variability and uncertainty present on the demand side of this balance, and as a matter of standard practice carry operating reserves on dispatchable generators designed to accommodate potential changes in demand. The introduction of significant wind power causes the variability and uncertainty on the generation side of the balance to markedly increase, requiring power system operators to plan for carrying incremental amounts of operating reserves, in this case necessary to accommodate potential changes in wind generation. For the purposes ofthis study report, the term balancing reserves is used to denote the operating reserves necessary for integrating wind. A document review on wind integration indicates a variety of terms for this quantity. Regardless of term, the property being described is generally the flexibility a balancing authority must carry to reliably respond to variability and uncertainty in wind generation and demand. A key component in the study of wind integration, as well as the successful in-practice operation of a power system integrating wind, involves the estimation of the additional balancing reserves dispatchable generators must carry to allow the balance between generation and demand to be maintained. Thus, three essential objectives of this report are to describe the analysis performed by Idaho Power to estimate the incremental balancing reserves requirements attributable to wind generation, describe the power system simulations conducted to model the scheduling of the reserves, and estimate associated costs. The study also evaluates situations where the incremental wind-caused balancing reserves exceed the capabilities of Idaho Power's dispatchable generators, putting the system in a position where it cannot accept additional output from wind generators without compromising reliability. Technical Review Committee Idaho Power held a public workshop on April 6,2012, to discuss its work on wind integration. This workshop included a discussion of methodology and preliminary results, as well as a question and answer session. Following the workshop, the company began working with a technical review committee comprised of individuals selected by Idaho Power based on their knowledge of regional issues surrounding wind generation and the operation of electric power systems. The following members agreed to serve on the committee: o Ken Dragoon (EcofysA.iorthwest Power and Conservation Council) o Kurt Myers (Idaho National Laboratory [INL]) o Frank Puyleart (Bonneville Power Administration [BPA]) o Rick Sterling (Idaho Public Utilities Commission [IPUC]) The purpose of the work with the technical review committee was to describe in greater detail the study methodology, including an in-depth review of the model used for system simulations for the study. Given this information, the company asked the members of the committee for their specific comments Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 12 '14 of 18 ldaho Power Company lntroduction upon release of this wind integration study report. These comments will be specially noted as having been provided by the technical review committee on the basis of its in-depth review of study methods. Energy Exemplar Contribution . Idaho Power contracted with Energy Exemplar (formerly PLEXOS Solutions) for assistance with the wind integration study. Energy Exemplar's involvement was critical in the development of the wind generation data used for the study, particularly in the development of representative wind generation forecasts used in the analysis to estimate appropriate balancing reserves requirements. Energy Exemplar was also instrumental in the design of the study methodology, providing key counsel in the formulation of the two-scenario study design detailed later in this report. With respect to system simulations for the wind study, Idaho Power has developed considerable expertise modeling the power system over recent years. In parallel with the Energy Exemplar efforts, Idaho Power developed a model that optimizes the wind, hydro, and thermal generation production. This internally-developed model was used for system simulations included in the wind study. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 15 of48 Page 13 lntroduction ldaho Power Company This page left blank intentionally. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 14 16 of48 ldaho Power Company ldaho Power System Overview lolno Powen Svsrem OveRvrew Idaho Power serves approximately 500,000 customers in southern Idaho and eastem Oregon through the operation of a diversified power system composed of supply- and demand-side resources, as well as significant transmission and distribution infrastructure. From the supply-side perspective, ldaho Power relies heavily on generation from l7 hydroelectric plants on the Snake River and its tributaries. These resources provide the system with electrical power that is low-cost, dependable, and renewable. Idaho Power also shares joint ownership of three coal-fired generating plants and is the sole owner of three natural gas-fired generating plants, including the recently commissioned Langley Gulch Power Plant. With respect to demand-side resources, Idaho Power has received recognition for its demand response programs, particularly the part these dispatchable programs have played in meeting critical summertime capacity needs. Finally, Idaho Power maintains an extensive system of transmission and distribution resources, allowing it to connect to regional power markets, as well as distribute power reliably at the customer level. Hyd roelectric Generati ng Projects Idaho Power operates l7 hydroelectric projects located on the Snake River and its tributaries. Together, these hydroelectric facilities provide a total nameplate capacity of 1,709 MW and annual generation equal to approximately 970 average megawatts (aMW), or 8.5 million megawatt hours (MWh), under median water conditions. The backbone of Idaho Power's hydroelectric system is the Hells Canyon Complex (HCC) in the Hells Canyon reach of the Snake River. The HCC consists of Brownlee, Oxbow, and Hells Canyon dams and the associated generation facilities. [n a normal water year, the three plants provide approximately 68 percent of ldaho Power's annual hydroelectric generation. Water storage in Brownlee Reservoir also enables the HCC projects to provide the major portion of Idaho Power's peaking and load-following capability. The capability to respond to varying load is increasingly being called on to regulate the variable and uncertain delivery of wind generation. Hydro is Idaho Power's wind integration resource of choice because of its quick response capability as well as large response capacity. However, the capacity of the hydro system to respond to wind variability is recognized as finite; power-system operation, in practice and as simulated for this study, indicates the hydro system is not always able to sufficiently provide the balancing reserves needed for responding to wind. Using the hydro system for wind integration also limits its availability for other opportunities. The costs of these lost opportunities are a significant part of wind integration costs. For the wind integration study, the hydroelectric generators at the Brownlee and Oxbow dams were designated in the modeling as available for providing wind-caused balancing reserves. This is consistent with system operation in practice, where the generators at these projects are dispatched to provide the overwhelming majority of operating reserves. Under standard operating practice, the remaining hydroelectric generators of the Idaho Power system are not called on for providing operating reseryes. Generators at the Lower Salmon, Bliss, and C. J. Strike plants are capable of some ramping for responding to intra-day variation in load. However, under certain flow conditions, the flexibility of the smaller reservoirs to follow even load trends is greatly diminished, and the facilities are operated strictly as run-of-river (ROR) projects. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVoI, IPC Page '17 of 48 Page 15 ldaho Power System Overview ldaho Power Company Coal-Fired Generating Projects Idaho Power co-owns three coal-fired power plants having a total nameplate capacity of l,l 18 MW. With relatively low operating costs, these plants have historically been a reliable source of stable baseload energy for the system. The output from these plants over recent years is somewhat diminished because of a variety of conditions, including relatively high Snake River and Columbia River stream flows, lagging regional demand for electricity associated with slow economic growth, and an oversupply of energy in the region. Idaho Power is currently studying the economics of operating its coal-fired plants, specifically the cost effectiveness of plant upgrades needed for environmental compliance at the Jim Bridger and North Valmy coal plants. The Boardman coal plant in northeastem Oregon will not operate beyond 2020 and ldaho Power's 64 MW share of the plant will no longer be available to serve customer load. Coal is one of the thermal resources Idaho Power uses to integrate wind generation. Unlike hydro, the fuel for the coal plants comes at a cost. These fuel costs, as well as the lost opportunities created by using the coal capacity to integrate wind, make up another part of the wind integration costs. The coal generators do not have the large range and rapid response provided by the hydro units. Natural Gas-Fired Generating Projects Idaho Power owns and operates four simple-cycle combustion turbines totaling 416 MW of nameplate capacity, and recently commissioned a 300 MW combined-cycle combustion turbine. The simple-cycle combustion turbines (located at Danskin and Bennett Mountain project sites) have relatively low capital costs and high variable operating costs. As a consequence ofthe high operating costs, the simple-cycle turbines have been historically operated primarily in response to peak demand events and have seldom been dispatched to provide operating reserves. Expansion of their operation to provide balancing reserves for integrating wind is projected to lead to a substantial increase in power supply costs. Idaho Power commissioned in July 2012 the 300 MW Langley Gulch Power Plant. As a combined-cycle combustion turbine, this generating facility has markedly lower operating costs than the simple-cycle units and is consequently expected to be a critical part of the fleet of generators dispatched to provide balancing reseryes for responding to variable wind generation. Transmission and Wholesale Market Idaho Power has significant transmission connections to regional electric utilities and regional energy markets. The company uses these connections considerably as part of standard operating practice to import and export electrical power. Utilization of these paths on a day-to-day basis is typically driven by economic opportunities; energy is generally imported when prices are low and exported when prices are high. Transmission capacity across the connections does not reduce system balancing reserves requirements. Thus, balancing reserves necessary for reliable power system operation in practice are provided by dispatchable generators. The wholesale power market, as accessed through regional transmission connections, is not able to provide balancing reserves. Idaho Power's existing transmission system spans southern Idaho from eastern Oregon to westem Wyoming and is composed of transmission facilities having voltages ranging from I l5 kilovolts (kV) to 500 kV. The sets of lines transmitting power from one geographic area to another are known as Exhibit No. 1 transmission paths. There are defined transmission paths to other states and between southern Idah61ffidf;i1""i;li;t Page 16 18 of48 ldaho Power Company ldaho Power System Overview centers such as Boise, Twin Falls, and Pocatello. Idaho Power's transmission system and paths are shown in Figure 5. The critical paths from the perspective of providing access to the regional wholesale electricity market are the Idaho-Northwest, Idaho-Utah (Path C), and ldahe-Montana paths. The Boardman to Hemingway transmission line identified by ldaho Power in the preferred portfolio of its 201I IRP will be an upgrade to the tdaho-Northwest path. The combination of these paths provides Idaho Power effective access to the regional market for the economic exchange of energy. While ldaho Power does not consider the regional market part of its day-to-day solution for integrating wind generation, it may be necessary during extreme events to use the regionaltransmission connections and rely on the regional energy market to accommodate wind. The company expects that at times even the regional market will be insufficient to integrate wind. During these times when ldaho Power and the regional market have insufficient balancing reserves to successfully integrate wind generation, it may be necessary to curtail wind, or even curtail customer load, to maintain electrical system stability and integrity. Exhibit No. 'l Case No. IPC-E-13-22 P. DeVol, IPC Page 19 of48 \.. rsrncPtrR mrrescrr ,l\iii\^lirEal \t ttl P.rtC ... S(V o12525$x- ROCKiruualrptrR lo S &rtE , Figure 5 ldaho Power transmission paths Page 17 ldaho Power System Overview ldaho Power Company Power Purchase Ag reements In addition to power purchases in the wholesale market, Idaho Power purchases power pursuant to long-term power purchase agreements (PPA). The company has the following notable firm wholesale PPAs and energy exchange agreements: o Raft River Energy I, LLC-For up to l3 MW (nameplate generation) from its Raft River Geothermal Power Plant Unit #l located in southern Idaho. The contract term is through April 2033. o Telocaset Wind Power Partners, LLC-For l0l MW (nameplate generation) from the Elkhorn Valley wind project located in eastern Oregon. The contract term is through 2027. o USG Oregon LLC-For 22MW (estimated average annual output) from the Neal Hot Springs geothermal power plant located near Vale, Oregon. The contract term is through 2037 with an option to extend. r Clatskanie People's Utility District-For the exchange of up to l8 MW of energy from the Arrowrock project in southern Idaho for energy from Idaho Power's system or power purchased at the Mid-Columbia trading hub. The initial term of the agreement is January l, 2010 through December 3l,2015.Idaho Power has the right to renew the agreement for two additional five-year terms. System Demand Idaho Power's all-time system peak demand is 3,245 MW, set on July 12,2012, and the all-time winter peak demandis2,527 MW, set on December 10, 2009. An important characteristic of the ldaho Power system is the intra-day range from minimum to maximum customer demand, which during the summer commonly reaches 1,000 MW and occasionally exceeds 1,200 MW. Thus, generating resources that can follow this demand as it systematically grows during the day are criticalto maintaining reliable system operation. Hydro generators, particularly those of the HCC, provide much of the demand following capability. Recent natural gas-fired resource additions are also instrumental in allowing the system to reliably meet system demand. An additional resource available to the system is the targeted dispatch of demand response programs. These demand-side programs have proven to dependably reduce system demand during extreme summer load events. From the perspective of system reliability, the nature of Idaho Power's customer demand places a premium on the value associated with capacity-providing resources; energy resources, such as wind, contribute markedly less towards promoting system reliability. It is recognizedthat production from wind projects does not dependably occur in concert with peak customer demand. In fact, there is a tendency to experience periods during which production from wind and hydro facilities is high and customer demand is low. The coincidence of these circumstances leads to an excess generation condition, where the capability of system generators to reduce their output in response to wind is severely diminished. Such excess generation events have been observed in recent years by Idaho Power and other balancing authorities in the Pacific Northwest. System stability for the balancing authority is maintained during these events through the curtailment of generation, including that from wind-powered facilities. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 18 20 oI 48 ldaho Power Company ldaho Power System Overview System Scheduling Idaho Power schedules its system with the primary objective of ensuring the reliable delivery of electricity to customers at the lowest possible cost. System planning is conducted for multiple time frames ranging from years/months in advance for long-term planning to hour-ahead for real-time operations planning. A fundamental principle in system planning is that each time frame should be driven by the objective of readying the system for more granular time frames. Long-term resource planning (i.e., the tRP) should ensure the system has adequate resources for managing customer demand over the 18-month long-term operations planning window. Long-term operations planning should position the system such that customer demand can be managed over the balance-of-month perspective. Balance-of-month planning should result in a system that can manage demand when scheduling generation day-ahead. Day-ahead scheduling should enable operators to meet demand from a real-time perspective. Finally, real-time energy schedulers should ensure the system is positioned hour-ahead such that reliable service is maintained within the hour. With the possible exception of the IRP, the scheduling horizons considered by Idaho Power involve transacting with the regional wholesale market. Where the economic scheduling of system generation is insufficient to meet demand, Idaho Power enters into contracts to purchase power off-system through its transmission connections. Conversely, where economically scheduled generation exceeds customer demand, surplus power is sold into the market. Importantly, Federal Energy Regulatory Commission (FERC) rules (FERC order nos. 888/890) stipulate that surplus power sales are sourced by generating resources that have been undesignated from network load service. Undesignation of a variable generating resource, such as wind, for sourcing a third-party sales transaction results in the transacted energy being given a dynamic tag, where tag is the North American Electricity Reliability Corporation (NERC) term representing an energy transaction in the wholesale electricity market. Balancing authorities experience considerable difficulty attracting a purchaser of dynamically tagged energy. Therefore, as a standard operating practice, Idaho Power sources off-system power sale contracts from its fleet of hydro and thermal generators. With their recognized level of dependability, hydro and thermal generators can be undesignated for sourcing surplus power sales while allowing conventional tagging procedures to be followed. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page21 ol 48 Page'19 ldaho Power System Overview This page left blank intentionally. Exhibit No. 1 Case No. IPC-E-1}22 P. Devol, IPC Page 20 22 oI 48 ldaho Power Company Study Design Sruoy Desrctt Idaho Power designed its wind integration study with the objective of isolating in its operations modeling the effects directly related to integrating wind generation. A common study design used towards meeting this objective, and employed by Idaho Power for this study, is to simulate system operations of a future year with projected wind build-outs under the following two scenarios: o Base scenario for which the system is not burdened with the incremental balancing reserves necessary for integrating wind o Test scenario for which the system is burdened with the incremental balancing reserves necessary for integrating wind A critical feature of this design is to hold equivalent model parameters and inputs between these two scenarios except for balancing reserves. The incremental balancing reserves built into the test scenario simulation necessarily result in higher production costs for the system, a cost difference that can be attributed to wind integration. The test year selected by Idaho Power for its study is 2017. While in-service for the 500-kV Boardman to Hemingway transmission line is not anticipated before 2018, the study still considered scenarios to investigate the effects of the expanded transmission on wind integration costs. The study assumed customer demand and Mid-Columbia trading hub wholesale prices as projected for 2017 in the 20r1rRP. As noted previously, as of January 2013 Idaho Power has 678 MW of nameplate wind capacity. Future wind penetrations considered in the study are 800 MW, 1,000 MW, and 1,200 MW of nameplate capacity. The synthetic wind data at these penetration levels, as well as representative day-ahead forecasts, were provided by 3TIER and Energy Exemplar. The synthetic wind data were provided for 43 wind project locations requested by Idaho Power corresponding to project sites having a current purchase agreement with the company, as well as sites proposed to the company for future projects. Further discussion of the study wind data and assobiated day-ahead forecasts is provided in a May 9, 2012 explanation released by the company (Appendix A). To investigate the effect of water conditions on wind integration, the study considered Snake River Basin stream flows for three separate historic scenarios representing low (2004), average (2009), and high (2006) water years. Because of their importance in providing balancing reserves to integrate wind, the HCC projects were simulated using the study model to determine their hydroelectric generation under the selected water years. Generation for the remaining hydroelectric projects, which are not in practice called on to provide balancing reserves for integrating wind, was entered for the study as recorded in actual operations for the water years selected. Exhibit No. 'l Case No. IPC-E-13-22 P. DeVol, IPC Page 23 of 48 Page21 Study Design ldaho Power Company This page left blank intentionally. Extribit No. 1 Case No. IPC-E-1*22 P. Devol, IPC Page22 24 ol 48 ldaho Power Company Balancing Reserves Calculations and Operating Reserves BeIRUcING RESERVES CnIcuIATIoNS AND OpennnNc RESERVES Critical to the two-case study design is the calculation of the incremental balancing reserves necessary for successfully integrating the future wind penetration build-outs considered. The premise behind these calculations is that Idaho Power's dispatchable generators must have capacity in reserve, allowing them to respond at an acceptable confidence level to the variable and uncertain delivery of wind. Estimates of the appropriate amount of balancing reserves were based on an analysis of errors in day-ahead forecasts of system wind for the wind build-outs considered in the study. In addition to the synthetic time series of hourly wind-generation data, 3TIER provided a representative day-ahead forecast of hourly wind generation. To provide a larger sampling, Energy Exemplar created 100 additional day-ahead forecasts having similar accuracy as the 3TIER forecast. Summaries of the synthetic wind data and day-ahead forecasts are included in Appendix B. An illustration of this design is given in Figure 6. 1mt**'*'l_ ffi ffi ffi ffi WI'{I' GENTArIOX IfruAt ffi Figure 6 Wind-forecasting and generation data In recognition of the seasonality of wind, the data were grouped by month, yielding balancing reserves estimates specific to each month. The sample size for each month was extremely large. As an example, for July there were 74,400 deviations between the day-ahead forecast and actual wind generation (100 forecasts x 3l days x 24 hours). The balancing reserves requirements were calculated as the bi-directional capacity covering 90 percent ofthe deviations. The use ofthe 90 percent confidence level for the wind integration analysis is consistent with the criterion used for hydro conditions in assessing peak-hour resource adequacy in integrated resource planning. Figure 7 is an illustration of a full year of deviations for a single forecast iteration at the 1,200 MW penetration level. In this figure, the deviations on the positive side correspond to deviations where actual wind was lower than day-ahead forecast wind, while deviations on the negative side reflect instances where actual wind exceeded the forecast. Importantly, the balancing reserves requirements did not cover the full extent ofthe deviations, leaving extreme tail events in both directions uncovered. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 25 of 48 Balancing Reserves Calculations and Operating Reserves ldaho Power Company BE 1fi)O 800 600 400 200 o -200 -4{m -500 -800 -lfl)O s8 oo,z. cl Date Figure 7 Deviations between forecast and actua! wind generation with monthly balancing resen es requirements (MllU) The requirements are dynamic in that the forecast wind was taken into account in imposing the amount of balancing reserves. For example, the requirements suggest that for the 1,200 MW wind penetration level,295 MW of unloaded generating capacity should be held as balancing reserves in January to guard against a drop in wind relative to the forecast. However, ifthe forecast wind generation is only 250 MW, then the most wind can drop relative to forecast is 250 MW, which is then the amount of balancing reserves built into the generation schedule. As a second example, if the forecast wind generation is 350 MW, the analysis of wind data indicates that balancing reserves should be held to guard against wind dropping to 55 MW. The likelihood of wind dropping below 55 MW is small (5 percent), and balancing reserves are not scheduled on dispatchable generators for covering a drop in wind to less than 55 MW. The monthly requirements for balancing reserves are given in Table 5 for the wind penetration levels studied. The term ReS Up is used for generating capacity that can be brought online in response to a drop in wind relative to the forecast. Reg Down is used for online generating capacity that can be turned down in response to a wind up-ramp. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page24 26 ol 18 ldaho Power Company Balancing Reserves Calculations and Operating Reserves Table 5 Balancing reserve requirements (MW) Wind Gen 800 MW 1,000 MW 1,200 MW Reg Up Reg Down Reg Up Reg Down Reg Up Reg Down January 199 -262 246 -325 295 -390 February 252 -246 319 -297 379 -351 March 226 -295 281 -368 339 444 April 255 -353 331 450 395 -540 May 258 -290 328 -366 392 -439 June 266 -285 339 -363 409 -436 July 274 -256 355 -322 423 -384 August 172 -179 215 -224 257 -267 September 242 -219 309 -280 371 -337 October 217 -248 275 -308 329 -367 November 226 -336 277 421 333 -507 December 267 -338 326 424 394 -510 Balancing Reserves for Variability and Uncertainty in System Demand As described previously, power system operation has long needed to hold bidirectional capacity for responding to variability and uncertainty in system demand. For the wind study modeling, Idaho Power imposed a balancing reserves requirement equal to 3 percent of the system demand as capacity reserved to allow for variability and uncertainty in load. This capacity was carried in equal amounts in the two scenarios modeled: the base scenario where the system was not burdened with wind-caused balancing reseryes, and the test scenario where a wind-caused balancing reserves requirement was assumed necessary. For the test scenario modeling, the separate load- and wind-caused reserves components were added to yield the total bidirectional balancing reserves requirement. This approach for combining the reserves components is consistent with Idaho Power operations in practice for which system operators receive separate forecasts for wind and demand and combine the estimated uncertainty about these proj ections through straight addition. Contingency Reserve Obl igation The variability and uncertainty in demand and wind are routine factors in power system operation and require a system to carry the bidirectional balancing reserves described in this section for maintaining compliance with reliability standards. However, balancing authorities, such as [daho Power, are also required to carry unloaded capacity for responding to system contingency events, which have traditionally been viewed as large and relatively infrequent system disturbances affecting the production or transmission of power (e.g., loss of a major generating unit or major transmission line). System modeling for the wind study imposed a contingency reserve intended to reflect this obligation equal to 3 percent ofload and 3 percent ofgeneration, setting aside this capacity for both scenarios (i.e., base and test). The requirement to carry at least half of the contingency reserve obligation on generators that are spinning and grid-synchronized was also captured in the modeling. case No. HBI=ili:;l P. Devol, IPC Page27 of48 Page 25 Balancing Reserves Calculations and Operating Reserves ldaho Power Company This page left blank intentionally. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 26 28 ol 18 ldaho Power Company System Modeling Svsrem Mooeuruc Idaho Power used an internally developed system operations model for this study. The model determines optimal hourly scheduling of dispatchable hydro and thermal generators with the objective of minimizing production costs while honoring constraints imposed on the system. System constraints used in the model capture numerous restrictions goveming the operation of the power system, including the following: r Reservoir headwater constraints o Minimum reservoir outflow constraints o Reservoir outflow ramping rate constraints . Wholesale market activity constraints o Generator minimum/maximum output levels o Transfer capacity constraints over transmission paths o Generator ramping rates The model also stipulated that demand and resources were exactly in balance, and importantly that hourly balancing reserves requirements for variability and uncertainty in load and wind were satisfied. The incremental balancing reserves required for wind variability and uncertainty drove the production cost differences between the study's two cases. Day-Ahead Scheduling The hourly scheduling determined by the model was intended to represent the optimal day-ahead system dispatch. This dispatch schedule included generation scheduling for thermal and hydro generators, as well as market transactions. Key inputs to the generation scheduling were the forecasts for wind production and customer demand. These two elements of the generation/load balance commonly carry the greatest uncertainty for power system operation in practice. A fundamental premise of reliable operations for a balancing authority is the need to cary reasonable and prudent flexibility in the day-ahead generation schedule, allowing the system to respond to errors in demand and wind generation forecasts. This principle was built into the wind study modeling in the form of balancing reserves constraints the model must honor. In the two-case study design, the system modeling for the base case included constraints only for demand uncertainty, whereas constraints for the test case included the need to carry additional balancing reserves for wind uncertainty. The derivation of the balancing reserves constraints is described previously in this report. The critical decision day-ahead generation schedulers must make involves how to schedule dispatchable generation units taking into account the following factors: o Forecasts for demand and wind production o Production from other non-dispatchable resources (e.g., PPAs) o Production from ROR hydro resources o Operating costs ofthermal resources o water supply for dispatchable hydro resources .r* *". =,J8r=llrr;r P. DeVol, IPC Page 29 of 48 Page27 System Modeling ldaho Power Company o Operating reserves for contingency events o Flexibility in the schedule for dispatchable generation units allowing them to respond if necessary to deviations between forecast and actual conditions in load and wind The essence of wind integration and the associated costs is that the amount of balancing reserves that must be carried is greater because of the uncertainty and variability of wind generation. Demand and Wind Forecasts The demand forecast used for the modeling was based on the projected hourly load used in the 201t IRP for the calendar year 2017. The wind production forecast used for the modeling was based on the average of the 100 forecasts provided by 3TIER and Energy Exemplar. The forecasts for both elements were identical between the study scenarios; the test scenario simply imposed greater balancing reseryes constraints to allow for variability and uncertainty in the wind production forecast. Transmission System Modeling As noted in the Idaho Power System Overview section, the critical interconnections to the regional market are over the Idaho-Northwest, Idaho-Utah (Path C), and Idaho-Montana paths. For the wind-study modeling, the separate paths were combined to an aggregate path for off-system access. Every October, Idaho Power submits a request to secure firm transmission across its network based on its expected monthly import needs for the next l8 months. The maximum levels used in the modeling for firm import capacity were based on the October 2010 request. The modeling assumed additional import capacity using non-firm transmission. Non-firm imports were assessed a $50/NIWh penalty designed to represent the less favorable economics associated with non-firm transmission and typical hourly pricing. The export limits were based on typical levels of outbound capacity observed in practice. The transmission constraints in Table 6 were used in the wind study modeling. Table 6 Modeled transmission constraints (MW) Maximum Firm lmport (MW) Maximum Nonfirm lmport(MW)Maximum Export (MW) January February March April May June July August September October November December 179 35 0 0 320 262 149 230 217 0 113 325 500 500 500 500 500 500 500 s00 500 500 500 500 300 300 300 300 300 300 300 300 300 300 300 300 Exhibit No. 'l Case No. IPC-E-I3-22 P. Devol, IPC Page 28 30 of 48 ldaho Power Company System Modeling Idaho Power's transmission network is a fundamental part of the vertically integrated power system, and allows the company to participate in the regional wholesale market to serve load or for economic benefit. However, Idaho Power does not view its transmission network with associated regional interconnections as a resource for providing balancing reserves allowing it to respond to variability and uncertainty in wind generation and customer demand. In the region, each balancing authority provides its own balancing reserves. Idaho Power provides its balancing reserves from company-owned dispatchable generation units (thermal and hydro). Idaho Power also investigated scenarios with the 500-kV Boardman to Hemingway transmission line. For these scenarios, the maximum firm import constraint was increased by 500 MW during April through September and by 200 MW for the remainder of the year. The maximum export constraint was increased by 150 MW throughout the year. The following transmission constraints were used in the wind study modeling for the system with the proposed Boardman to Hemingway transmission line. Table 7 Modeled transmission constraints-simulations with 500-kV Boardman to Hemingway transmission Iine (MW) Marimum Firm lmport (MW)Maximum Non-firm lmport (MW) Maximum Export (MW) January February March April May June July August September Oclober November December 379 23s 200 500 820 762 649 730 717 200 313 525 300 300 300 300 300 300 300 300 300 300 300 300 650 650 650 650 650 650 650 6s0 650 650 6s0 6s0 Overgeneration in System Modeling At a fundamental level, the reliable scheduling of the power system is based on the following simple equation: Fo re c ast lo ad: Fo re cast gene rot ion An expanded form ofthis equation is as follows: Forecast retail sales * Forecast wholesale sales Forecast dispatchable generation * Forecast wind generation -l Forecast other generation Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 31 of 48 System Modeling ldaho Power Company In the expanded equation, dispatchable generation includes scheduled production from resources the balancing authority (i.e., Idaho Power) can vary at its discretion to achieve reliable and economic system operation. Built into this term of the equation is the bidirectional balancing reserves intended for use in case the forecasts for demand or wind generation are incorrect. The other generation in the expanded equation is the amount of energy that cannot be varied. This term includes minimum generation levels at baseload thermal plants, ROR hydro generation, and non-wind power purchased under contract. At times, the left side of the equation can become very low; Idaho Power customer use is low and wholesale exports are capped by transmission capacity. During these times, providing the balancing reserves necessary for responding to wind, specifically for responding to wind up-ramps, is not possible without upsetting the balance between the two sides of this equation. In effect, the terms of the right side of the equation cannot be reduced enough to match the left. For these times, the wind study modeling assumed the wind, or potential wind, was excessive and could not be accepted; curtailment of wind energy was necessary to maintain balance. Further discussion of overgeneration and curtailment is provided in the following section. Exhibit No. 1 Case No. IPC-E-13-22 P. Devol, IPC Page 30 32 of 48 ldaho Power Company Resulrs As noted previously, the objective of this study is to answer two fundamental questions: l. What are the costs of integrating wind generation for the Idaho Power system? 2. How much wind generation can the Idaho Power system accommodate without impacting reliability? Thus, the results produced by the study's system modeling were designed to address these two questions. Wind lntegration Costs From a cost perspective, a comparison of annual production costs between two scenarios having different balancing reserves requirements-where the difference in balancing reserves is related to wind's variability and uncertainty-was used to estimate the costs of integrating wind. The production cost difference between scenarios was divided by the annual MWh of wind generation to yield an estimated integration cost expressed on a per MWh basis. The integration cost calculation is summarized as follows: o Base scenario for which the system was not burdened with incremental balancing reserves necessary for integrating wind (wind integration is "not our problem", a theoretical case used as a benchmark for comparing costs) o Test scenario for which the system was burdened with incremental balancing reserves necessary for integrating wind The wind integration cost is the net-cost difference of the two scenarios divided by the MWh of wind generation (the amount of wind generation was the same in both scenarios): Wind integration cost = Iesf scenario nef cosf - Base scenario nef cosf Wind generation in MWh As noted earlier, the study included three water years and three wind penetration levels. These conditions are shown in Table 8. Table 8 Wind penetration levels and water conditions Wind Penetration Leve! (MW Gapacity)Water Year Low (2004) Average (2009) High (2006) A matrix of the wind integration costs on a per MWh basis is given in Table 9. These costs are based on a system without the proposed Boardman to Hemingway transmission line. 800 1,000 1,200 Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 33 of 48 Page 31 ldaho Power Company Table 9 lntegration costs ($/MWh) Nameplate Wind Water Condition 800 Mw 1,000 Mw 1,200 MW Average (2009) Low (2004) Hish (2006) Average $7.18 $7.26 $9.73 $8.06 $11.94 $12.44 $14.79 $13.06 $18.1s $18.15 $20.73 $19.01 The addition of the Boardman to Hemingway transmission line reduced integration costs slightly. Table l0 provides the wind integration costs for a system having the proposed Boardman to Hemingway transmission line. Table 10 lntegration costs with the Boardman to Hemingway transmission line ($/MWh) Nameplate Wind Water Condition 8OO MW 1,000 i'w 1,200 MW Average (2009) Low (2004) High (2006) Average $6.51 $6.66 $9.72 $7.63 $11.03 $11.04 $13.78 $1r.95 $16.38 $16.67 $19.53 $r7.53 lncremental Cost of Wind lntegration The integration costs previously provided in Tables 9 and l0 represent the cost per MWh to integrate the full installed wind at the respective penetration levels studied. For example, the results of Table 9 indicate that the full fleet of wind generators making up the 800 MW penetration level bring about costs of $8.06 for each MWh integrated. However, wind generators comprising the 678 MW of current installed capacity on the Idaho Power system are assessed an integration cost of only $6.5044Wh2. In order to fully cover the $8.064{Wh integration costs associated with 800 MW of installed wind capacity, wind generators in the increment between the current penetration level (678 MW) and the 800 MW penetration level will need greater assessed integration costs. Study analysis indicates that these generators will need to recognize integration costs of $16.7044Wh to allow full recovery of integration costs associated with 800 MW of installed wind capacity. Similarly, generators between the 800 MW and 1000 MW penetration levels introduce incremental system operating costs requiring the assessment of integration costs of $33.42lI\4Wh, and generators between 1000 MW and 1,200 MW require incremental integration costs of $49.4644Wh. A graph showing both integration costs and incremental integration costs is provided in Figure 8 below. The incremental integration costs are summarized in Table 11. Exhibit No. 1 Case No. IPC-E-13-22 P. Devol, IPC 2 Integration cost stipulated by Idaho Public Utilities Commission Case No. IPC-E-07-03, Order No. 30488. Page 32 34 of 48 ldaho Power Company Results S4o.E =Eo;iI ssozotrf,(,r2 s2o Figure 8 Table 11 ..D rNcR EM EiffAr COSr (s/MWh) +wlilD INTEGRAnON COST (s/tvtWhl Integration costs with incremental integration costs ($/MWh) lncrementa! wind integration costs ($/MWh) Nameplate Wind 578 - 800 MW 800 - 1,000 Mw 1,000 - 1,200 illw lncrcmental cost per MWh $16.70 $33.42 $49.46 Spilling Water The modeling suggests that providing balancing reserves to integrate wind leads to increased spill at the HCC hydroelectric projects. Spill is observed in actual operations during periods of high Brownlee Reservoir inflow coupled with minimal capacity to store water in the reservoir. Minimal storage capacity at Brownlee occurs when the reservoir is nearly full or when the reservoir level is dictated by some other constraint, such as a flood control restriction. Flow through the HCC cannot be significantly reduced during these periods; the three-dam complex is essentially operated as a ROR project during these high-flow periods. As a consequence, holding generating capacity in reserve for balancing case No. HllI]Yil P. DeVol, IPC Page 35 of 48 Page 33 Results ldaho Power Company purposes is frequently achieved only through increasing project spill, rather than reducing turbine flow. Table 12 provides the total incremental HCC spill in thousands of acre-feet (kaf) associated with integrating wind. Table 12 lncremental Hells Canyon Complex spill (thousands of acre-feet) Nameplate Wind Water Condition 800 Mw 1,000 tuw 1,200 MW Average (2009) Low (2004) High (2006) 534 kaf 33 kaf 2,101kat 949 kaf 93 kaf 2,698 kaf 1,446kat 255kaf 2,9't6 kaf Simulations for the high water condition (2006) with 800 MW of wind capacity provide a good illustration of the effect of wind integration on spill. Under the base scenario, the theoretical "not our problem" case, wind study system simulation shows spill totaling 3,590 kaf at Brownlee alone. For reference, this simulated spill is within 5 percent of the actual total Brownlee spill in 2006, which was about 3,800 kaf. By comparison, the total Brownlee spill under the test scenario, where integrating wind is ldaho Power's problem, is 4,475 kaf. The excess spill under the test scenario translates to about 185 gigawatt hours (GWh) of lost power production at Brownlee----energy that is no longer available for serving load or off-system sales. Maximum ldaho Power System Wind Penetration The capability ofthe Idaho Power system to integrate wind is finite. The rapid growth in wind capacity connecting to the system over recent years has heightened concern that the limits of this integration capability are being neared, and that development beyond these limits will severely jeopardize system reliability. The quantity of wind generation Idaho Power can integrate varies throughout the year as a function of customer load. During times of high load, Idaho Power can integrate more wind than during times of low load. Modeling performed for the wind study has demonstrated the occurrence during low load periods where the balancing reserves necessary for responding to a wind up-ramp (i.e., generation that can be dispatched down in response to an increase in wind) cannot be provided without pushing the system to an overgeneration condition. Customer load for these periods, where load consists of sales to retail customers and to wholesale customers by way of regional transmission connections, is too low to allow for the integration of a significant quantity of wind. This situation requires curtailment of wind generation to maintain system balance. For the wind study modeling, the curtailed wind generation was removed from the production cost analysis and consequently did not affect the calculated integration cost. Curtailed wind was not integrated in the modeling and had no influence on the calculated integration costs. Not surprisingly, curtailment was found in the wind study modeling to have a strong correlation with customer load, water condition, and wind penetration levels. A summary of the amount of curtailment in the study is provided in Table 13. Exhibit No. 1 Case No. IPC-E-13-22 P. Devol, IPC Page 34 36 of 48 ldaho Power Company Results Table 13 Curtailment of wind generation (annual MWh) Nameplate Wind Water Gondition 800 itlw {,000 Mw 1,200 iiw Average (2009) Low (2004) High (2006) Average 738l'n /h 204]rrwh 890 t'il\ rh 6fl MWh 8,755lr^ /h 3,494 t'A rh 12,519 MWh 8,256 MWh 48,942IrIWh 29,574 trA /h 61,557 IrA /h 46,691 MWh c E *,0-tt zs,m(, .E = 2o,mo E Figure 9 illustrates the projected exponential increase in curtailment as a function of the wind penetration level. 50,m 4t(m 40,(m 35,ff)o Figure 9 Gurtailment of wind generation (average annual MWh) A key feature of Figure 9 is the rapid acceleration of projected curtailment as installed wind capacity increases beyond the 800 MW level. The addition of 200 MW of installed wind capacity from 800 MW to 1,000 MW is projected to result in about 7,600 MWh of additional curtailment. Increasing the installed wind capacity 200 MW further to 1,200 MW is projected to result in another 38,000 MWh of curtailment. It is important to note the effect of a procedure for curtailment. Spreading the curtailed MWh over the full installed wind capacity of 1,200 MW results in a projected curtailment of about 1.5 percent of produced wind energy. However, if wind generators comprising the expansion from 1,000 MW to 1,200 MW are required under an established policy to shoulder the curtailment burden arising from their addition to the system, curtailment of their energy production is projected to reach Exhibit No. 1nearly 8.5 percent. case r.ro. -r6i'_Eii-l Page 37 of 48 Page 35 Results ldaho Power Company The study results suggest that the occurrence of low load periods for which curtailment is necessary is likely to remain relatively infrequent for wind penetration levels of 800 MW or less. However, the results indicate that operational challenges are likely to grow markedly more severe with expanding wind penetration beyond 800 MW of installed nameplate capacity. The occurrence of low load periods for which balancing reserves cannot be provided without causing overgeneration is expected to become more frequent and require deeper curtailment of wind production. This is particularly true in that it is often necessary to maintain the operation of thermal (i.e., gas- and coal-fired) generators during periods of low load and high wind, in order to have the dispatchable generation from these resources available should customer loads increase or winds decrease. Effect of Wind lntegration on Thermal Generation Idaho Power operates its coal resources to provide low-cost, dependable baseload energy. However, the study results suggest that the operation of the company's coal resources is likely to decrease on an annual basis with expanding wind penetration. The reduction in coal output is principally the result of displacement of coal generation by wind generation, as well as the displacement by flexible gas-fired plants required to help balance the variable and uncertain delivery of wind. The operation ofcoal-fired generators has been affected by energy oversupply conditions over recent years in the Pacific Northwest. Coal plants have historically been operated less during periods of high hydro production, and maintenance is typically scheduled to coincide with spring runoff when customer demand is relatively low. However, the expansion of wind capacity over recent years in the region has caused overgeneration conditions to become more severe and longer lasting, leading to extended periods during which prices in the wholesale market have been very low or negative. The effect on coal plants has been a decline in annual energy production. However, during periods when customer load is high, such as during summer 2012,ldaho Power's coal fleet is consistently relied upon for energy to meet the high customer demand. While the operation of baseload coal-fired power plants is expected to decline as a consequence of adding wind to a power system, this decline is offset by a marked increase in generation from gas-fired plants. The rapidly dispatched capacity from the gas-fired plants is widely recognized as critical to the successful integration of variable generation. Wind study modeling suggests that the need to dispatch gas-fired generators for balancing reserves is likely to displace the economic operation of coal-fired generators, particularly during times of acute transmission congestion. This situation where relatively low-cost baseload resources are displaced by flexible cycling plants (i.e., gas-fired) is described in a2010 NREL report (Denholm et al. 2010). Table l4 lists the annual generation from the wind study modeling for thermal resources for the case when Idaho Power is responsible for providing the balancing reserves and integrating the wind energy. Table 14 Annual generation for thermal generating resources for the test case (GWh) Nameplate Wind Thermal Resource 8OO MW 1,000 Mw 1,200 mw Coal-fired Gas-fired 7,568 GWh 963 GWh 7,291 GWh 1,238 GWh 6,851 GWh 1,918 GWh Exhibit No. 1 Case No. IPC-E]13-22 P. DeVol, IPC Page 36 38 of 48 ldaho Power Company Recommendations and Conclusions RecoUIMENDATIONS AN D COI.ICI-USIONS Idaho Power has 678 MW of nameplate wind generation on its system. This is a growth in wind capacity of about 290 MW over the last two years, and 490 MW over the last three. The explosive growth in wind generation has heightened concems that the finite capability of Idaho Power's system to integrate wind is being rapidly depleted. Because ofthese concerns, the objective of this investigation is to address not only the costs to modifr operations to integrate wind, but also the wind penetration level at which system reliability becomes jeopardized. The questions that drove the investigation are the following: l. What are the costs of integrating wind generation for the Idaho Power system? 2. How much wind generation can the Idaho Power system accommodate without impacting reliability? The study utilized a two-scenario design, with a base scenario simulation of operations for a system that was not burdened with incremental balancing reserves for integrating wind and a test scenario simulation for a system burdened with incremental wind-caused balancing reserves. Averaged over the three water conditions considered, the estimated integration costs are $8.06/MWh at 800 MW of installed wind, $l3.06A,lwh at 1,000 MW of installed wind, and $19.01/IrrIWh at 1,200 MW of installed wind. A summary of the estimated costs is given in Table 15. Table 15 lntegration costs ($/MWh) Nameplate Wind Water Gondition 800luw 1,000 Mw 1,200 MW Average (2009) Low (2004) Hish (2006) Average $7.18 $7.26 $9.73 $8.06 $11.94 $12.44 $14.79 $13.06 $18.15 $18.1s $20.73 $r9.01 Importantly, the system modeling conducted for the study indicates a major determinant of ability to integrate is customer demand. This finding is not to be confused with the pricing of wind contracts and the wide recognition that wind occurring during low load periods is of little value. Instead, the study indicates that during periods of low load, the system of dispatchable resources often cannot provide the incremental balancing reseryes paramount to successful wind integration without creating an imbalance between generation and demand. Modeling demonstrates that the frequency of these conditions is expected to accelerate greatly beyond the 800 MW installed capacity level, likely requiring a sharp increase in wind curtailment events. Even at current wind penetration levels, these conditions have been observed in actual system operations during periods of high stream flow and low customer demand. While the maximum penetration level cannot be precisely identified, study results indicate that wind development beyond 800 MW is subject to considerable curtailment risk. It is important to remember that curtailed wind generation was removed from the production cost analysis for the wind study modeling, and consequently had no effect on integration cost calculations. The curtailed wind generation simply could not be integrated, and the cost-causing modifications to system operations designed to allow its integration were not made. The curtailment of wind generation observed in the wind study modeling is shown in Figure 10. ",," *".''J8-E1lll;l P. DeVol, IPC Page 39 of 48 Page 37 Recommendations and Conclusions ldaho Power Company 50,mo - 1 45.000 , 40,ooo . 35,0O0 c9 Eo,omE=ots zs.mo =Ur = lo,ffi E 15,(nO 10.m0 5,000 O i- o 200 400 Wind Capacity (MW) Figure 10 Curtailment of wind generation (average annual MWh) Conversely, during periods of high customer demand, the dispatchable resources providing the balancing reserves for integrating wind are needed and thus are positioned at levels where they are ready to respond to changes in wind. While the costs to integrate wind still exist during these higher customer demand periods, the system can much more easily accommodate high levels of wind without impacting system reliability. lssues Not Addressed by the Study The focus of this study was the variability and uncertainty of wind generation. The study then established that these attributes of wind bring about the need to have balancing reserves at the ready on system dispatchable resources, and finally that having balancing reserves for integrating wind brings about greater costs of production for the system. A consideration not addressed by the study is the increased maintenance costs expected to occur for thermal generating units called on to frequently adjust their output level in response to changes in wind production or that are switched on and off on a more frequent basis. The effect of wind integration on these costs is likely to become evident and better understood with the expanded cycling of these thermal generators accompanying the growth in wind generation over recent years. The controlof system voltage and frequency is receiving considerable attention in the wind integration community. It is widely recognized that the addition of wind generation to a power system has an impact on grid stability. On some transmission systems, controlling system voltage and frequency during large ramps in generation within acceptable limits can be challenging. Idaho Power's system has not yet exhibited this problem at current wind penetration levels. However, growth in wind penetration beyond the current level will lead to greater challenges in maintaining system voltage and frequency within control specifications of the electric system, and likely increase the incidence of excursions where Exhibit No. 1 Case No. IPC-E-13-22 P. DeVoI, IPC Page 38 Page 40 of 48 ldaho Power Company Recommendations and Conclusions system frequency deviates from normal bands. The effects of frequency excursions may extend to customer equipment and operations. Measures Facilitating Wind !ntegration Idaho Power recognizes the importance of staying current as operating practices evolve and innovations enabling wind integration are introduced. Some changes in operating parameters include mechanisms such as Dynamic Scheduling System (DSS), ACE Diversity Interchange (ADI), and intra-hour markets. Further development of these measures will, to varying degrees, make it easier for balancing authorities to integrate the variable and uncertain delivery of wind generation. At this time, it is Idaho Power's judgment that the effect of these measures is not substantial enough to warrant their inclusion in the modeling performed for this study. An additional measure that has been studied over recent years as a Western Electricity Coordinating Council (WECC) field trial is reliability-based control (RBC).The essential effect of RBC on operations is that a balancing authority is permitted to carry an imbalance between generation and demand if the imbalance helps achieve wider system stability across the aggregated balancing area of the participating entities. In effect, the balancing authority area is expanded, and the diversity of the expanded area allows an aggregate balance to be more readily maintained. Idaho Power has participated in the RBC field trial since the program's inception, and has recognized a resulting decrease in the amount of cycling required of generating units for balancing purposes. However, the effect of RBC was not included in the modeling for this study. This omission is in part related to the status of the program as a field trial, and related uncertainty regarding the structure of RBC in the future, or whether RBC will exist at all. Moreover, while RBC may allow balancing reserves-carrying generators to not respond to changes in load or wind in real-time operations, the scheduling of these generators must still include appropriate amounts of balancing reserves because it is not known at the time of scheduling to what extent an imbalance between generation and load will be permitted. Future Study of Wind Integration Idaho Power continues to grapple with new challenges associated with wind integration. The expansion in installed wind capacity over recent years has made the establishment of a best management plan for integrating wind problematic; the amount of installed wind simply keeps growing. It is commonly understood that wind does not always blow, leading to the legitimate concern about having backup capacity in place for when wind generators are not producing. Somewhat ironically, integration experience over recent years throughout the Pacific Northwest has led to heightened concerns about what to do when wind generators are producing and that production is not needed and unable to be stored in regional reservoirs because of minimal storage capacity, and the balancing reserves carried on dispatchable generators only add to the amount of unneeded generation. While it has been recognized that balancing reserves need to be carried for responding to wind up-ramps (i.e., balancing reserves need to be bidirectional), it has only recently become apparent that the tdaho Power system, and even the larger regional system, at times cannot provide these balancing reserves. This experience has shown that it is diflicult to predict the integration challenges of tomorrow, but it is safe to say that there will be a need for continued analysis as additional tools, methods, and practices for integrating wind become available. Idaho Power has experienced success in wind-production forecasting. The company has developed an intemal forecast model which system operators are using with increasing confidence. It is likely that the future study of wind integration will make use of this forecast model, specifically in that its relative accuracy will ultimately lead to a reduction in the balancing reserves requirement for wind integration. t ",* *" ''J3-Ellllil P. Devol, IPC Page 41 of 48 Page 39 Recommendations and Conclusions ldaho Power Company However, even accurate wind forecasting cannot eliminate the need for curtailment when wind generation creates a significant imbalance between load and generation. Finally, the wider region beyond Idaho has added considerable wind capacity over recent years, much of the growth driven by requirements associated with state-legislated renewable portfolio standards. Most of the wind generation has been added outside of local or regional integrated resource planning efforts. The addition ofthis generating capacity has resulted in recurring energy oversupply issues for the region, a situation that has led the BPA to propose a protocol for managing oversupply (BPA 2013). Regional market prices during these oversupply periods have experienced pronounced declines to very low or even negative levels. Sometimes even the larger regional system and larger regional market cannot successfully integrate all of the wind energy that is produced. It is critical that future modeling for studying wind integration continues to capture the regional expansion of wind generation and its effect on the wholesale market. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 40 42 ol 48 ldaho Power Company Literature Cited LrreRlruRE Grreo Bonneville Power Administration (BPA). February 2013. Oversupply management protocol, version 2. http://transmission.bpa.eov/ts_businessJractices/Content/9_Redispatch_and_Curtailment/Oversuop ly met protocol.htm. Accessed on: February 2,2013. Denholm, P., E. El4 B. Kirby, and M. Milligan 2010. The role of energy storage with renewable electricity generation. U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, National Renewable Energy Laboratory. Technical Report NREL/TP-6A2-47187, January 2010. GE Energy 2010. Western wind and solar integration study. Prepared for: U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, National Renewable Energy Laboratory. Subcontract Report NREL/S R-5 5 0 - 47 43 4, May 20 I 0. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 43 of 48 Page 41 Literature Cited ldaho Power Company This page left blank intentionally. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page42 14 ot 48 ldaho Power Company Appendix A Appendix A. May 9,2012, Explanation on wind data Wrno IrurecmnoN WoRKSHoP SruoY Wrtrto DnrR ExplaNlnoru May 9,2012 Idaho Power received questions during the April 6 wind integration workshop related to the synthetic wind data used for its study of wind integration. The company recognizes the importance of using high-quality wind data, and consequently indicated at the workshop that it would thoughtfully review the wind data in an effort to address the questions raised. As stated at the workshop, the wind data used for the study were provided by 3TIER. 3TIER provided these data for 43 wind project locations requested by ldaho Power corresponding to project sites having a current purchase agreement with the company, as well as sites proposed to the company for purchase agreement. The 43 wind project locations are given as Attachment No. 3 to comments filed by Idaho Power with the IPUC on December 22,20103. It is important to note that 3TIER did not select from the more than 32,000 existing or hypothetical wind project sites used for the Western Wind and Solar Integration Study (WWSIS), but instead pulled new time series directly from the WWSIS gridded model data set precisely at the 43 locations requested by Idaho Power. Thus, the geographic diversity of the synthetic wind data provided by 3TIER is representative of the geographic diversity for projects proposed to Idaho Power. 3TIER also provided a synthetic day-ahead forecast for the wind generation time series. In providing this forecast, 3TIER notes that a bias found in the forecast during completion of the WWSIS was corrected on a site-by-site basis for the ldaho Power wind study, as opposed to the regional bias correction used for the WWSIS. The site specific correction is preferable to the regional correction because it mimics real forecasting practice, where project data at each site would be used to eliminate long-term bias from the forecast. With respect to accuracy of the synthetic day-ahead forecast, 3TIER reports that hourly wind speed forecast errors for ten operational sites in Idaho or neighboring states were compared to similarly calculated errors for the synthetic day-ahead forecast. 3TIER reports that this comparison yielded values for mean absolute error and root mean squared error for the synthetic day-ahead forecast only about l5% higher than equivalent statistics for the real errors at the ten operational sites in the Idaho vicinity. This result suggests that the error characteristics of the synthetic forecasts are very similar to those of actual wind forecasts. To validate the synthetic actual wind time series, 3TIER has completed validation reports describing the results of comparisons between the synthetic wind data and public tower data. The complete set of validation reports for the WWSIS can be found through the NREL website4. Five of the validation towers are located in ldaho. Review of these reports indicates that the synthetic actual wind time series capture the seasonal and diumal wind cycles fairly well; however, the synthetic time series are consistently low biased, at a 3TlER-reported average level of about -1.2 m/s at the five validation sites. There is basis in suggesting that the low bias, while reducing the total production of modeled wind projects, would have minimal impact on the overall variability of the synthetic actual wind time series, and would consequently have little effect on the estimated integration cost. 3 Iduho Power Comments, Idaho Public Utilities Commission Case GNR-E-10-04, Attachment No. 3. a http://wind.nrel.gov/public/WWIS/ValidationReports/wwis-vrpts.html#vmap Exhibit No. 1 Case No. IPC-E-13-22 P. DeVoI, IPC Page 45 of 48 Page 43 Appendix A However, Idaho Power recognizes the critical nature of the synthetic wind data used for the study, and will discuss this low bias further with the technical review committee it has formed. Finally, the synthetic actual wind time series created for the WWSIS have been found to exhibit excessive ramping as described in the WWSIS final report and as reported by NRELS. The excessive ramping in the WWSIS wind data occurs because the mesoscale model used to generate the synthetic wind data was run in 3-day sections. Smoothing techniques were used to reduce the ramping across the seam at the end of each third day; however, 3TIER reports that excessive variability remains in the WWSIS wind data. 3TIER also reports that review of the synthetic actual wind time series data pulled for the ldaho Power study indicates similar excessive ramping, with ramps tending to be 1.5 to 2.0 times larger from two hours before to eight hours after the start of every third day. While Idaho Power intends to discuss this condition with its technical review committee, the company believes that only a small fraction of hours are affected, and that consequently the impacts on integration cost are likely small. Idaho Power hopes that this follow-up helps to address questions on the wind data raised at the April 6 workshop. We value the questions and feedback received from workshop participants, and welcome remaining questions related to the wind data or other features of the wind study. We are planning a meeting with our technical review committee in early May, and are looking forward to the added value this group will bring to our effort. Idaho Power,l22l W Idaho Street, Boise, Idaho 83702 email: I P C _Wind _$tudy@Idaho P ow e r. com Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC s http://www.nrel.gov/wind/integrationdatasets/pdfs/westem/2009/westem-dataset-irregularity.pdf Page 44 46 of 48 ldaho Power Company Appendix B Appendix B. Wind data summaries Table Bl Monthly and annual capacity factors (percent of installed nameplate capacity) Nameplate Wind Month 800 Mw 1,000 Mw 1,200 MW January February March April May June July August September October November December Annual 30Yo 20Yo 31Yo 38Yo 24Yo 29Yo 20Yo 17o/o 18o/o 23o/o 360/0 38% 27% 30% 20Yo 32% 38% 24Yo 29o/o 19Yo 17o/o 18o/o 23o/o 35o/o 38o/o 27o/o 30% 19o/o 32% 37o/o 24o/o 29o/o 19o/o 17o/o 18% 23% 35% 38o/o 27% Note: Wind generation data for study provided by 3T|ER. Exhibit No. 1 Case No. IPC-E:13-22 P. Devol, IPC Page 47 of 48 Page 45 Appendix B ldaho Power Company This page left blank intentionally. Exhibit No. 1 Case No. IPC-E-13-22 P. DeVol, IPC Page 46 48 of48