Those of you who follow power industry developments in the Pacific Northwest could not have missed the collision between wind power generators and the Bonneville Power Administration (BPA). While the parties continue fighting in courts, I decided to find an answer to the question: could the conflict have been predicted and maybe even prevented in the first place? The simple answer I arrived at is “yes.”
The conflict itself has been in the works for over a half year now; however, the playing field for it has been in development for many years. In short, here is the premise of the story.
BPA is a federal agency and regional balancing entity with a somewhat contradictory mandate to control floods in the Columbia River Basin, protect fish and wildlife under the Endangered Species Act, produce and market affordable electricity for the region, and ensure timely repayment of the treasury debt.
As the majority of wind power resources located in the area under BPA authority have been developed with the purpose of their output being exported out of the region, the relationship between BPA and wind power generators fit the framework of the transmission contracts. The BPA generation base is dominated by large hydro dams; this factor has a strong influence over the BPA operations. For example, when demand for electricity drops, water that is not needed to produce power has to be spilled over hydro dam spillways. As the water thrusts into the pool at the base of the dam, the air bubbles dissolve in the water and cause serious trauma or even fatalities of salmonids. These fish are under protection of Federal law, and therefore have to be managed by BPA. During such events BPA reduces water runoff by maintaining a certain level of power generation in hydro dams. High water inflows occur frequently in the Pacific Northwest, and BPA has been managing these events by selling electricity generated at the hydro dams to other markets at low or even negative prices.
The spring of 2011 created such conditions of high water levels and low electricity demand in the region. To ensure that hydro dams were operating at a higher capacity, BPA had to curtail production of nuclear and thermal plants in exchange for replacing their delivery obligations with hydropower generated in Federal dams. On May 17, 2011, BPA resorted to a so-called environmental re-dispatch (ER) procedure, which means taking the wind mills off the grid, and in exchange, using hydropower to service the delivery obligations. By July 18, 2011, the last day of the ER, BPA had curtailed 97,557 MWh of produced power, which is 5.4% of the total scheduled wind generation.
Although BPA ensured that wind owners’ power obligations to their customers were met, renewable generators lost production tax and renewable energy credits paid to them by government when they actually generate and send power into the grid. In response, wind power producers pulled their forces together and filed a complaint with Federal Energy Regulatory Commission (FERC), as well as the Ninth U.S. Circuit Court of Appeals. FERC ruled against BPA. This decision was contested by BPA in the Ninth U.S. Circuit Court of Appeals. And the struggle continues.
To answer the question of whether wind generators could have anticipated the current situation before they made capital investment decisions for the region, I first looked at the historical trends of power demand and water supply in the Northwest. The historical data confirmed that water inflows increase dramatically during the spring snowmelt period and decline during the winter. Regional power demand is also seasonal. However, its pattern is the opposite of inflow; demand peaks in winter and drops to the lowest levels in summer. As a result, the highest water flows occur during the lowest demand levels thus offering few local opportunities for power sales.
At the same time, the lucrative California market, which is the ultimate target for wind generators, cannot serve as a panacea for them during these periods. The actual demand in California drops to the lowest levels during the snowmelt, and demand stayed at a low level when BPA was executing ER.
A simple analysis of demand, hydrology patterns and federal legislation would have prepared wind power developers in the Northwest for the current events. Given that there are large volumes of data reported by different markets that are publicly available, it is feasible.
To learn more on the subject, read an In-Depth article in our January 2011 issue of DataWatch at DataWatch January
To learn more about ZEMA, a software that could be your tool for historical data analysis, go to our website: The ZEMA Suite