Much of the country is currently experiencing a “wind rush” – 23,000 new jobs were created in the wind industry just last year. Wind power’s low price is driving utilities to snap up gigawatts of wind energy.
But for TVA, it seems like the winds may be a bit stagnant.
As our executive director Stephen Smith discussed recently, TVA’s Draft 2015 Integrated Resource Plan (IRP) “continues to view clean energy through a blurred lens.” The exercise depends on inputs (such as cost and performance data for various power plant types, including wind farms) to develop outputs and recommendations. Some of TVA’s most important assumptions for the cost and performance of wind power aren’t just blurred – they are fairly opaque.
So even though wind power is plentiful and arguably the cheapest energy supply resource available, TVA’s customers should be outraged that the utility’s Draft IRP suggests that the nation’s largest public utility is not only failing to take a clear look at wind power, in 9 of its 25 planning cases, TVA forecasts that it could even roll back its recent wind acquisitions and eliminate wind power in its energy portfolio by the year 2033.
TVA’s Draft IRP stands in stark contrast to current industry trends. Prices from different parts of the country now range in the $30-$40 per megawatt hour (MWh) range. Utility companies all across the south are snapping up wind power contracts left and right because wind power is so cost effective.
In 2012, the Southwestern Electric Power Company (SWEPCO) in Louisiana began purchasing 469 MW of wind energy. Also that year, Alabama Power began purchasing 404 MW of wind power from Oklahoma and Kansas. Last year, the Arkansas Electric Company Cooperative added 150 MW of wind power in addition to its already-existing 51 MW wind contracts. In February, Gulf Power announced a wind power purchase from the 178 MW Kingfisher wind farm in Oklahoma. This March, Southern Power announced another 299 MW power purchase agreement for wind power (this deal is a little different from others since Southern Power will own the wind farm, but is selling the power elsewhere). Starting next year, Georgia Power will receive 250 MW of wind power from Oklahoma. If you’re keeping score, the Southeast is on a wind buying binge: 1,801 MW of wind power purchases for utilities across the south have been announced in the past few years. Meanwhile, TVA is purchasing and importing 1,515 MW of wind power – more than three times as much as the next utility, and nearly as much as all the other utilities combined.
TVA has plenty of good wind opportunities available. In addition to importing wind energy, several new wind projects have been proposed right in TVA territory. Apex Clean Energy has proposed “Volunteer Wind”, a wind project in western Tennessee. And two high-voltage direct current (HVDC) transmission projects have been proposed that would connect high quality wind energy resources directly to TVA’s system. The Clean Line Plains and Eastern HVDC project would connect up to 3,500 megawatts of Oklahoma/Texas wind energy resources to Memphis; while Pattern Energy’s Southern Cross HVDC project would connect 1,500 MW of Texas wind to northern Mississippi. If only TVA was giving these resources as close a look as they deserve.
If wind energy resources are evaluated based on currently available market data, utility planners will naturally choose wind power. For example, SWEPCO (a utility in Louisiana) is already purchasing wind power; but, based on a Draft IRP that they recently completed using up-to-date wind energy information, SWEPCO now plans to nearly quadruple its already bullish wind energy purchases over the next 20 years.
What went wrong? Why is TVA’s Draft IRP out of line with the rest of the region?
Even though not all model inputs or data are publicly available from TVA, but it’s fair to say that cost assumptions and wind energy performance levels are probably misaligned with current wind industry information. TVA did a pretty good job at getting things like current capacity factors, net dependable capacity values and costs for the solar industry; but when it came to wind, TVA relied pretty heavily on its older wind power purchase agreements and essentially assumed that those are exactly the same as what’s available today – and 20 years into the future.
TVA made major strides in purchasing wind power over the years and is modeling different types of wind in its integrated resource planning process. But some Draft IRP models would completely undo TVA’s previous work on wind energy. Eliminating wind power from its generation portfolio would lead to a less diversified portfolio and negatively impact ratepayers. TVA needs to take a good look around the region and do a better job evaluating wind energy opportunities.
Note: TVA contacted SACE with some technical comments on this blog and we have adjusted the caption to the DOE Wind Vision graphic to more accurately represent the study findings. We also clarified that “in 9 of its 25 planning cases, TVA forecasts…” to avoid the misunderstanding that the elimination occurs in the base case and many of the other cases. We apologize to TVA and anyone else who was confused by these statements.