Z2, Combined Cycle Modeling also on To-Do List for 2017
By Tom Kleckner
SPP and its stakeholders enter 2017 seeking ways to integrate the massive amounts of renewables in the RTO’s interconnection queue, while also completing the painful Z2 project, improving the Order 1000 competitive transmission process and implementing more sophisticated combined cycle modeling.
Expiring tax credits and reduced costs for renewable energy has led to a rush of generation projects that threaten to overwhelm RTO transmission planners.
“We’re embarking on an era we’ve never seen before,” Mike Wise, chair of SPP’s Strategic Planning Committee, said during the RTO’s Board of Directors/Members Committee meeting in December. “We’re trying to figure out, one, how do we deal with the issue and, two, how do we take advantage of the issue at the same time?”
David Osburn, general manager of the Oklahoma Municipal Power Authority, agreed with Wise, saying, “It wasn’t very long ago we were arguing about how much wind might be on the system, and we’ve already blown through that.”
Whether or not the pun was intended, Osburn made his point. SPP has been able to add more wind to its system than many would have thought possible a few years ago, and now it looks to be facing the same issue with solar power.
SPP currently has 15,728 MW of installed wind energy with another 21,535 MW in the interconnection queue — adding up to more than half of the balancing authority’s coincident peak load (50,622 MW in July). The system set a new record for wind generation Friday with 12,141 MW, and for some hours in April, almost half of the generation came from wind sources. SPP expects to set new records in April 2017, with wind exceeding 60% penetration. (See SPP Coal Generation Continues Decline; Wind, Load Records Set and Wind Growth Causes SPP to Take 2nd Look at Tx Projects.)
3,000 MW of Solar Coming
The RTO currently only has 215 MW of solar energy on the system, but more than 3,000 MW of solar is planned. That has Board Chair Jim Eckelberger sounding the alarm.
“That’s what wind looked like 10 years ago, and solar is getting cheaper and cheaper and cheaper,” he said. “We’re going to have quite a need to refocus on the mechanics of the market to make this work, or negative pricing is really to going to have a long-term change in the way electricity is used in our footprint.”
SPP says all that wind generation has a high impact on system congestion. Wind energy also causes headaches for grid operators by not showing up during high demand — or by providing too much power during periods of low demand. Wind power on the margin resulted in 160 hours of negative clearing prices in 2016. SPP staff notes some wind farms are voluntarily curtailing their production because of low prices.
“We have to figure out a way to either use the wind, control for the wind or figure out a way to allow other folks in this country to get access to this wind,” Wise said. “This is really a dilemma … a growing dilemma.”
But SPP can point to studies that show UHVAC networks and HVDC links could deliver surplus wind power to markets in the east, helping them meet renewable portfolio standards.
The Strategic Planning Committee created the Export Pricing Task Force last summer to evaluate the business case for exports and create a rate structure “to address the recovery of the incremental transmission and the underlying facilities necessary” to support exports. The group met twice in 2016 but has scheduled monthly meetings for this year. Its charter calls for making recommendations by the end of July.
If all the pending wind projects are brought online, SPP Manager of Operations Analysis and Support Casey Cathey told the committee, the lack of an export strategy might force the SPP Reliability Coordinator to allow more wind energy to sink within the balancing authority, while at times increasing curtailments.
Cathey’s team is also responsible for the 2017 Variable Generation Integration Study, which stressed the SPP system to a point of instability in analyzing the effect of high-wind/low-load scenarios on reliability. A workshop has been scheduled for Feb. 14-15 in Little Rock to discuss the study’s results.
“It’s going to fall on SPP to really figure out what we’re doing in the future and how we’re going to resolve this issue,” Wise said to the board and members. “I encourage all the great thinkers at your companies to be attentive to the issue … and help us come up with solutions, because this is not an easy task.”
Z2 Project Lingers
Accommodating and planning for more wind generation is not the only difficult task facing SPP in 2017. Members and stakeholders continue to work on improving the troublesome Z2 crediting process for network upgrades, which was a bone of contention for much of this past year.
Under Attachment Z2 of the SPP Tariff, staff was to assign financial credits and obligations for sponsored upgrades. However, staff had not applied the credits for years dating back to 2008, complicating the task of trying to accurately compensate project sponsors and claw back money from members who owed debts for the upgrades.
Staff and members agreed on a process to compensate everyone properly, but it wasn’t until November that staff was able to compile the historical data from 2008 through August 2016. Members will be invoiced almost $95 million in lump sum payments, with another $15 million billed in 20 installments through August 2021.
SPP CEO Nick Brown said last January that Z2 would be “the focus of the organization this year.” That will still be the case this year, as the Z2 Task Force will meet before January’s Markets and Operations Policy Committee to evaluate staff and stakeholder proposals to improve the process. SPP has proposed using incremental long-term congestion rights as one replacement for Z2 credits.
At the same time, the legal and regulatory battles over Z2 have just begun. In November, the Kansas Electric Power Cooperative became the first SPP member to pursue legal action over the Z2 revenue-crediting process when it filed a complaint with FERC. KEPCo said in its Nov. 22 filing that SPP’s direct cost assignment of approximately $6.2 million to it violated the RTO’s Tariff, the filed rate doctrine and the Federal Power Act. The complaint seeks relief from directly assigned Z2 obligations and a refund for payments already made.
Staff and members are also working to improve the RTO’s competitive bidding process under FERC Order 1000. The first go-round last year resulted in one competitive project being bid out, only to have it pulled for re-evaluation shortly thereafter.
The Competitive Transmission Process Task Force hopes to change that by offering recommendations this year to improve the process. The group has already modified documents and templates while reviewing the entire competitive bidding process. Two Tariff revision requests have already begun to wind their way through the stakeholder-approval process, and more could be on the way if the MOPC and board approve changes to the scoring criteria in January.
Enhanced Combined Cycle Modeling
SPP will see one of its first major projects since the Integrated Marketplace come to a conclusion March 1 when software allowing multiple configurations of combined cycle units goes live. With the new functionality, market participants can register and submit separate offers for each configuration, leading to a more economic commitment and dispatch of the resources.
Participants completed structured testing of the software in December. The technology also played a role in SPP’s successful timeline changes for coordinated gas-electric scheduling practices in September as a result of FERC Order 809.