Despite significant progress in building transmission to incorporate renewable energy, more is still needed in almost all areas of the country to effectively integrate the burgeoning amount of wind generation, the head of the American Wind Energy Association (AWEA), said at the 125th Annual Meeting of the National Association of Regulatory Utility Commissioners (NARUC) meeting in Orlando, Fla., Nov. 18.
“We’ve got a long way to go on transmission,” Tom Kiernan, AWEA CEO told TransmissionHub following a discussion about the diversity of energy resources. “As an electric generating industry, we need to keep our shoulder to that wheel for many, many years to come, creating and developing significant additional transmission in the United States so that we’re able to, for renewables and for other reasons, transmit the energy into the high-load areas.”
Acknowledging the approval of some important transmission projects aimed specifically at incorporating renewables, Kiernan said the country is making progress but still has a long way to go.
“Transmission is still a very limiting factor for the [wind] industry,” he said.
Specifically, other said, many areas’ efforts to import wind energy are being stymied by congestion on the transmission system.
“There are economic congestion issues in all of the markets, so that’s certainly something where the right transmission, appropriate transmission, would make a huge difference,” Bruce Burcat, executive director of the Mid-Atlantic Renewable Energy Coalition, said.
Another expert noted that interregional transmission planning mandates of FERC Order 1000 could benefit the wind industry.
“Hopefully, when we’re looking at transmission today, we’re moving, not just from the regional enhancement of transmission but across those regional boundaries with the interregional piece,” Steve Gaw, energy industry consultant and former commissioner with the Missouri Public Service Commission, added.
In addition to the challenges of inadequate transmission, uncertainty about extending the production tax credit (PTC) has had a significant impact, as developers stopped putting projects into their production pipeline, Kiernan said, citing the 13,000 MW of wind generation installed in 2012 compared to 1.3 MW installed during the first six months of 2013.
While acknowledging that the PTC remains very important and that the industry would prefer to see it extended, he said the industry has studied whether it could get along without the subsidy.
“We are looking for an extension of the PTC for a certain number of years,” he said.
However, an AWEA analysis showed the industry would be viable without the PTC in six years, “if they were phasing down [the tax credits for] all other energy sources,” he added.
He also said that the prospect for a stand-alone PTC extension in 2014 is “reasonably strong.”
Despite the challenges of transmission that is less than adequate in many areas and the ongoing uncertainty over the PTC, wind energy is becoming a more popular and more economic part of the country’s energy mix.
“I think the extraordinary reduction of cost of wind production over the past several years shows that we’re on a path to have an extraordinarily affordable and clean and home-grown energy source,” Kiernan said, citing a decline in the cost of wind energy as a contributing factor.
“As the [turbine] blades have gotten significantly longer, that has led to significant additional power generation,” he said. “Also, a lot of software improvements in the managing of different wind farms has led to much greater capacity factors, so we’re up … to a 42% to 45% capacity factor, which is a great amount of energy produced.”
Kiernan cited decisions by utilities including Xcel Energy (NYSE:XEL) and Southern Company’s (NYSE:SO) largest subsidiary, Georgia Power, to buy more wind energy because it benefits their customers by virtue of being the lowest cost form of energy. Though he allowed it was not the lowest cost form of generation everywhere, Kiernan noted that it is, at the very least, cost-competitive in virtually all areas of the country.