Georgia Power reported back to its state Public Service Commission on Feb. 27 that there are no bargains out there for wind power that justify a request for proposals in the short term.
In May 2014, the Georgia Public Service Commission approved Georgia Power’s application for the certification of power purchase agreements related to the Blue Canyon II and Blue Canyon VI Wind Farms. The stipulation approved by the commission provided for the certification of the Blue Canyon II and VI Wind PPAs, and included an agreement by Georgia Power to further evaluate opportunities for future wind resource procurement. Georgia Power issued a Request for Information (RFI) and on Feb. 27 reported the results.
The commission articulated two primary considerations for this report. First, the commission was clear that furthering fuel diversity through additional wind procurements should only be considered if it can be accomplished in a reliable and responsible manner that will best benefit Georgia Power’s customers. Second, the PSC indicated its desire to understand the variables and risks in pursuing existing or potential wind resources, either under a firm or non-firm contractual arrangement.
During the RFI process, Georgia Power said it received many responses from both regional and national wind developers. The company structured the RFI to accept a variety of pricing structures and delivery options. As a result, the proposals received offered a wide spectrum of prices that ranged from $15.77 per megawatt hour (MWh) to $84.26 per MWh levelized over their respective terms. Many of the responses were for projects in the preliminary development stage and several were simply indicative scenarios based upon the respondent’s previous experience. A common trend was a dependency on the extension of federal production tax credits (PTC) to satisfy the proposed price and start dates.
There were no RFI responses that offered projects that would be immediately available with the same extraordinary characteristics as the Blue Canyon II and VI projects. Only one response was for a facility currently in operation. In fact, the results obtained through the RFI further support the company’s decision to act swiftly to capitalize on the limited and extraordinary opportunity presented by the Blue Canyon projects, which realized savings for customers while insulating them from the transmission and delivery risks of traditional wind products.
One of the most important aspects of the RFI evaluation was the consideration of the costs and risks inherent in the transmission of additional intermittent resources across neighboring transmission systems and across the Southern Company (SOCO) interfaces. As shown in the Transmission Evaluation Results, the cost to procure wind resources has grown significantly, and is not limited to a specific transmission system. The number of transmission constraints increases significantly as the number of off-system imports increases. As discussed in this report, the costs associated with the transmission and delivery of wind products has a significant impact on the economics and timing for future wind procurement.
“The RFI has provided a great deal of insight into the opportunities, risks and challenges associated with procuring additional wind resources in the current marketplace,” the filing said. “The Report concludes that there are varying costs and risks to procuring additional wind resources. To ensure the Commission’s goal of procuring additional resources in a reliable and responsible way that benefits Georgia Power’s customers, the RFI results will be further considered in the Company’s upcoming 2016 Integrated Resource Plan (‘IRP’), to be filed with the Commission in January 2016. The IRP is the proper forum for considering additional wind resource procurement decisions and provides the opportunity to consider such decisions in the broader context of serving customers’ needs in the most economic and reliable manner. As a result, Georgia Power does not support the issuance of an RFP for additional wind procurement at this time.”
A total of 21 different locations were proposed in the RFI with varying sizes and terms. Proposed projects were clustered primarily in the Midwest, Southwest, and Southeast regions. Oklahoma was the most popular project location, hosting eight proposed projects with nearly 2,000 MW offered. Projects located closest to Georgia Power’s service territory were in Alabama, North Carolina, and Tennessee.