Wind and Solar (Variable Energy Resources) Firm or Non-Firm. WSPP OC Meeting Park City, Utah Spring 2010

Transcription

1 Wind and Solar (Variable Energy Resources) Firm or Non-Firm WSPP OC Meeting Park City, Utah Spring 2010

2 The Issue Chain of firm transactions: Source is Variable Energy Resource ( V ) V sells to B, B to C, C to Sink ( S ) Upon scheduling, S learns that source is V, and assuming that C lacks firm energy to deliver, cancels. Is S non-performing (refusal to receive)? Or Are V and B non-performing (they have no firm power to deliver)? 2

3 Analysis Examine WSPP Agreement including Service Schedule C, FERC precedent and other authorities Schedule C and Agreement do not define firm or firm energy Characteristics under WSPP include: Limits on interruption as stated in C-3.7 Damages for non-performance But do not include dispatchability or other parameters to measure firm 3

4 Analysis FERC seems to advance a factual analysis to determine the capacity of resources; many believe that capacity is an element of firmness. In Order No. 69, FERC addressed firm sales from QFs. purchases of power from [QFs] will fall somewhere on the continuum between [firm and non-firm]. For example, wind machines... may be so uncertain in availability of output that they would only permit a utility to avoid generating an equivalent amount of energy and require the utility [to] continue to provide capacity... to meet the needs of its customers. On the other hand, effective amounts of firm capacity exist for dispersed wind systems, even though each machine, considered separately, could not provide capacity value. (emphasis added.) 4

5 RTOs / CPUC RTO treatment of wind capacity for reliability assurance (which may involve different considerations than in scheduling): MISO: in its Planning Reserve Margin gives wind a capacity credit of 20%. PJM: in base case modeling assumptions for its Reserve Requirement Study, applies a capacity factor of 13% for wind resources. SPP: assigns wind resources a net dependable capacity of 10 percent of their nameplate capacity to calculate the safe harbor limit for network upgrade costs associated with wind resources. 5

6 RTOs / CPUC CAISO in calculating net short energy for its mustoffer obligation, ascribes 0 capacity to wind. CPUC applies an exceedance methodology when including wind and solar into its resource adequacy program: estimating generation availability during peak hours Some would contend that determinations of capacity for reliability assurance are irrelevant to firmness of a particular energy sale or schedule. 6

7 DNRs While the Commission did not address wind as a DNR in Order No. 890, it has indicated that wind facilities can be DNRs. Southwest Power Pool, Inc., 127 FERC 61,283, at P 1 (2009) (discussing cost allocation methodology for network upgrades associated with the designation of wind resources as network resources ) Puget Sound Energy, Inc., 128 FERC 61,213, at P 16 (2009) (discussing Puget Sound Energy s Wild Horse wind farm designated as a network resource) Southwest Power Pool, Inc., 118 FERC 61,148, at PP 5-6 (2007) (discussing an SPP network integration transmission service agreement with AEP where AEP designated several wind facilities as network resources). 7

8 Wind Integration Services and other Firming Arrangements Wind owners may have entered into wind integration arrangements with BAs into which they sink, thereby firming their product. Under these arrangements the BA calls upon reserves to compensate for reduced flows from wind. Wind owners may have entered into backup arrangements with thermal or hydro resource owners to follow their delivery and compensate for reduced flows. Wind owners may have rights to purchase certain generation balancing services from BAs. See NorthWestern Corporation, 129 FERC P61,116 (2009). 8

9 Summing it Up WSPP Agreement does not define firm A court would look for industry standards, including FERC and other guidance FERC indicates a factual inquiry In reliability assurance setting, past decisions indicate 0, 10, 20% max; today s systems, including pseudo-tie and other dispersion arrangements, might justify materially more The issue is not how firm is the entire resource, but the capacity factor for the transaction. (Capacity factor could justify 100 firm of 500 mw, but transaction might be for that 100, or 100%). Such firmness could arise from the wind resource itself or from an integration or other firming arrangement. 9

10 Potential Ramifications in the Example Sink s (S) refusal to take delivery from C assumed that C s power source (V) was not firm. S may have lacked a factual basis to assume that V was not firm. 10

11 Potential Ramifications in Our Example If V had a factual basis to sell firm (e.g., data, dispersion, or integration or other firming arrangement): S s repudiation of the transaction was nonperformance If V lacked a factual basis to sell firm, it non-performed by failing to have firm power for delivery to B and potentially violated just and reasonable standard of Federal Power Act 11

12 Stated Differently Unless FERC tells us differently after the NOI and any follow-on NOPR, facts, including integration arrangements, data, appear to determine the firmness (or lack of firmness) of a VER same analysis might apply to a one-source IPP with thermal/hydro: if the resource is sufficiently reliable against other firm benchmarks, then firm sales seem justified 12

13 Okay, Have at It! Agree, disagree, discuss? 13