Quietly, the Tennessee Valley Authority (TVA) has been signing contracts with several wind developers that will put the federal utility in a position to significantly grow its wind energy portfolio in 2012, if all goes to plan. 
Over the past 5 months, TVA has announced multiple contracts with Invenergy Wind, CPV Renewable Energy Co., Iberdrola Renewables, and most recently Horizon Wind, adding up to 1,380 MW of contracted wind energy purchases by the end of 2012. These contracts are in direct response to the December 2008 Request for Proposals released by TVA for up to 2,000 MW of renewable energy, a strategy the TVA says is important to reach their goal of producing 50% of their electricity from zero or near-zero carbon emissions by 2020. It is encouraging to see TVA once again growing its wind portfolio. It has been half a decade since the utility last purchased wind energy through the expansion of Buffalo Mountain.
The integration of wind resources outside of the Valley should not come as a surprise. Wind energy is an extremely cost effective resource. According to the 2008 Wind Technologies Market Report released by Lawrence Berkeley National Laboratory, wind energy projects placed in service between 2006-2008 sold electricity at an average price of $45/MWh in the Heartland, while electricity was sold for an average of $65/MWh in the East . 
This price difference is accredited to the challenges of locating wind energy projects on more challenging terrains. In 2008, TVA noted in its renewable energy assessment that wind energy in the Valley could be expected to cost between $70-$110/MWh.
Furthermore, until a guaranteed market for wind energy is located in the Valley, there is a strong likelihood that wind developers will look to sell into, rather than develop in, the Valley. SACE noted that TVA would not likely receive proposals for in Valley resources, due to the lack of an established market and short response time. Wind resource assessment can take between 1-3 years, and therefore the wind industry will not invest into a market unless they are confident a market will exist after they understand the wind resource at a specific site.
There are pros and cons to building both outside and inside the Valley. While it may be the case that wind energy projects from right outside of the Valley are more cost-effective, the job and economic development benefits associated with wind development are shared outside of the TVA region. In fact, a recent study funded by the Department of Energy entitled “The Eastern Wind Integration and Transmission Study,” analyzed the impact of wind energy projects along the the Eastern Interconnect of the United States, which includes large utilities such as MISO, SPP, TVA, PJM, NYISO, and other large balancing areas in the region.
The study looked at various scenarios of wind energy growth required in order to reach the Department of Energy’s 20% Wind Energy by 2030 vision. One of the key questions that seems to be of particular interest to TVA is, “How do local wind resources compare with higher capacity-factor wind power that requires more transmission?”
This study found that in all cases, there is approximately 1247 MW of wind energy located inside of the TVA service area that will be more cost effective to build locally instead of purchasing from outside of the Valley.
These sites were located largely along the Cumberland Plateau, with other sites located on privately owned lands in eastern Tennessee, southwest Virginia and eastern Kentucky mountains. This study provides a blueprint for TVA to begin to understand the potential role that wind energy markets, both within the Valley and outside of the Valley, can contribute to the future growth of the electric portfolio.
Gazing into the crystal ball looking at the potential future role of wind energy in the TVA generation supply, one could draw many similarities with another federally owned utility, Bonneville Power Administration (BPA). Located in the pacific Northwest, BPA also operates a significant amount of hydro generation, and beginning in 2004, BPA has rapidly grown their wind energy supply, expanding up to 1,000 MW in 2007 and over 2,500 MW in 2009 with a goal of over 6,000 MW in 2013. Bonneville is accomplishing large scale wind integration through strategic use of its hydro plants in combination with a system-wide wind forecasting tool to smooth out the variability that wind energy sometimes provides. Its this type of innovative planning, that if adopted by TVA, could help TVA lead the way for cost-effective, reliable, large scale renewable energy production in the Southeast.