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Earth and wind: Firing fuel demand

June 3, 2012 12:10 am

ARLINGTON

The United States is a leader in wind energy generation, which is a result of many policies and incentives that have been put in place to support renewable energy penetration at both federal and state levels. Local jurisdictions and electric utilities also provide additional incentives that have helped to put the U.S. in this position. But operating challenges exist for the targeted 40 percent wind energy penetration on its electric power systems. Grid-scale storage can help mitigate the impact of large-scale renewable energy penetration.

Additional support has come from renewable portfolio standards, which are state policies that require electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date. At present, 33 states, including the District of Columbia, have renewable portfolio standards in place.

However, the single most important policy that has helped the large-scale penetration of wind energy in the U.S. is the production tax credit, which comes from the federal government. It is a per-kilowatt-hour tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. Qualified energy resources include wind, biomass, geothermal, landfill gas, municipal solid waste, qualified hydroelectric, and marine hydrokinetic. The duration of the credit is generally 10 years, and currently the credit amount for wind is 2.2 cents/kWh.

FINANCIAL INCENTIVES

In the U.S., there are other financial incentives to support wind farm developments. These include, for example--at the state level--property tax incentives for wind farms, sales tax incentives for wind electricity sales, green power purchasing, as well as grant and loan programs for wind energy development. Performance-based incentives for wind farms offered by state public utility commissions are available, as well as grant programs, loan programs, and rebate programs offered by local utilities.

For example, Texas offers a wind energy device franchise tax deduction, wind energy business franchise tax exemption, and renewable energy systems property tax exemption. Iowa offers property tax incentives for wind energy devices, as well as a sales tax exemption for wind energy equipment. As a result, these two states have the highest wind electricity penetration in the country at present. Visit the Database for State Incentives for Renewables & Efficiency for additional information about policies and incentives for wind energy in the U.S.

While the amount of electricity from onshore wind power plants in Virginia does not match what is being generated in the midwestern states or Texas, the commonwealth has a rich and relatively easily accessible offshore wind energy resource.

According to a study published by the Virginia Coastal Energy Research Consortium, there is a potential for 2,400 MW of offshore wind installed capacity in the state. This could meet approximately 10 percent of the state's electricity demand with next-generation turbines (rated at 5 to 6 MW each with 126- to 150-meter-diameter rotor blades). Maryland, Delaware, and New Jersey have similar offshore wind potential, and thus can help with the development of a sustainable wind power industry in this part of the country.

Under currently forecasted fuel market conditions, VCERC estimates that a new offshore wind project owned by Dominion Virginia Power would have the same energy cost as a new coal-fired power plant of similar capacity (e.g., 600 MW). Future utility electric rate increases due to likely coal price increases make offshore wind attractive as a stably priced energy resource in Virginia. This new wind energy technology, if pursued, will not only diversify Virginia's source of electricity, it will help create a large number of high-paying jobs in manufacturing and offshore installations of wind turbine generators.

However, due to the inherent intermittent nature of electricity production from wind, there is concern about the dependability of wind power, especially when the penetration level exceeds 10 percent of the electric power grid capacity. There is now talk about wind penetration reaching up to 40 percent of grid capacity. Thus there is an obvious concern about the system level impacts of high wind penetration.

These impacts can come in various forms. It has been observed that wind variability becomes more apparent at a longer time scale; i.e., 10 minutes to one hour, as compared to a shorter time scale; i.e., minute-by-minute variations. However, this can be managed in part by diversifying the location of wind turbines. It has been observed that wind power output becomes less variable when a number of wind turbine generators are aggregated over a large geographical region.

Another mitigating factor could be the characteristic of the electrical load. Rather than looking at the variability of the wind generator's output, we look at the net load (load minus wind generation), which affects the utilization rates of conventional power plants in the network. At higher wind penetration levels, base-load power plants will need to operate at lower utilization factors because a significant amount of electricity will then be met from wind power.

MANAGING VARIABILITY

This may pose some challenges to the operation of the power system, especially in a system with a high proportion of nuclear or coal-fired power plants that are not designed for variable operation. The current practice to manage wind variability in the U.S. comprises wind curtailment and export to neighboring control areas. But export to neighboring areas is subject to transmission congestion, which is an issue in parts of the U.S.

Our research indicates that using storage can help increase base load power plants' utilization factor by storing electricity when not needed, and discharging from storage when the wind output is low. The grid-scale storage units will respond to the variability in the wind power output, thus freeing base load power plants from following the output changes too closely.

The level of improvement will depend on the storage size, the load variation, and the amount of wind power output in a given period. Optimal storage size, location, and operation schedule can be designed depending on the characteristics and requirements of a particular system, as well as wind and load variabilities.