Despite flaws, DOE collaborative report shows more wind and transmission saves ratepayers money

A planning collaborative funded by the U.S. Department of Energy has released a final report on its analysis of several electricity generation and transmission options in the Eastern U.S.

In spite of some serious shortcomings, the report clearly indicates that building more wind generation and transmission is the most cost-effective way to meet the region’s energy needs.
Following up on the Phase I report released at the end of 2011, the Eastern Interconnection Planning Collaborative (EIPC), which included utilities, regulators, and other stakeholders, has released the final report for Phase II, the final phase of the analysis.

Phase II developed more detailed transmission plans to accommodate generation build-outs for the following three of eight scenarios developed in Phase I:
1) National carbon policy with significant Midwest wind build-out,

2) Regional Renewable Portfolio Standard case, in which renewable requirements were met with more local (i.e., Eastern) resources, and

3) a business as usual case.
Because Phase II builds on the results of Phase I, previous complaints about flaws in the modeling inputs and methodology in Phase I apply to these results as well. These concerns included:
– Use of wind capital costs that were 50% too high,

– Failure to work from a “copper-sheet analysis” to determine the optimal level of transmission investment,

– Failure to conduct iterative transmission and generation development to reach a more optimized solution,

– Artificial limits on wind penetrations, and more.
These concerns were vindicated when the transmission build-outs proved to be too small to accommodate a significant share of the wind generation build-out in the wind-heavy case in Phase II, resulting in wind curtailment levels of 15%.

Modeling shortcomings in Phase II also affected the results, such as an inability to model the natural gas pipeline system resulting in the assumption that new gas generation would be sited at the site of retiring coal generation and likely greatly understating the actual transmission need in the gas-heavy “business as usual” case.

Even with these flawed assumptions working against wind and transmission deployment, the Phase II results provide a clear indication that wind and transmission development is the most cost-effective solution to the energy needs of the Eastern U.S.
Specifically, the national carbon policy and wind build-out case resulted in annual power system operating costs of $108 billion, significantly lower than the $151 billion annual cost in the regional RPS case and $161 billion in the business as usual case (excluding carbon costs).
These annual savings of $43 billion and $53 billion, respectively, would offset the higher upfront capital costs of the national wind case, which had capital costs of $206 billion more than the regional RPS case and $694 billion more than the business as usual case. The large annual operating cost savings produced by these very long-lived transmission and generation capital investments would repay the initial investments well before the ends of their useful lives.
If slightly larger transmission investments had been included that reduced the amount of wind curtailment from the unrealistically high 15% shown in these results, the benefit-cost proposition for wind and transmission would have appeared even more favorable, with a simple linear extrapolation indicating that an additional $17 billion worth of transmission up-front would have reduced wind curtailment to near zero and yielded additional annual operating cost reductions of $7.35 billion. Moreover, even with the high level of wind curtailment, the national carbon and wind build-out case reduced SO2 (sulfur dioxide) emissions by around 90% relative to the other cases, NOx (nitrogen oxides) by more than 98% relative to the other cases, and CO2 (carbon dioxide) by 75% and 80% relative to the RPS and business as usual cases, respectively. Assigning even a very low societal cost for this pollution would make the national wind build-out case an even clearer winner.

Phase II produced other important results as well. Many transmission lines, such as those needed for connecting wind energy along the East Coast and those needed for connecting wind development in the Midwest and transporting that energy eastward, appeared in multiple cases, indicating that those transmission lines should likely be included in any “no regrets” transmission plan.