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San Antonio Express-News: Texas tackling wind-power transmission

Web Posted: 09/01/2007 09:00 AM CDT
Vicki Vaughan
Express-News Business Writer

Texas, once famed for its outrageously ample supply of black gold, stunned the energy world last year when it surpassed California as the nation’s biggest generator of wind power for electricity.

This year, the state’s excitement over wind power hasn’t blown cold. Texas now has almost 3,000 megawatts of wind power in production with another 1,700 megawatts planned by 2008.

Although wind power now supplies just a fraction of the electricity going to the Texas electric grid, the industry is attracting big investors, with units of Royal Dutch Shell and TXU Corp. pairing up to build a giant wind farm, only to be outdone by billionaire oilman T. Boone Pickens, who’s planning the world’s largest collection of wind turbines in the Panhandle.

In all, various investors have shown interest in building 24,511 megawatts of wind generation in Texas, enough to power 6 million homes. PUC Chairman Paul Hudson in July called that level of interest “extraordinary,” and “an astonishing testament to the wind resources available in our state.”

While Texas’ leaders are enthused about booming growth in wind generation, they’re grappling with a big problem. The wind-rich lands of West Texas and the Panhandle are far from the state’s biggest cities. And Texas’ grid and its transmission lines are designed to push electricity out to rural areas, not the other way around.

Soon, there will be lots more electricity produced from wind — but the state’s transmission lines aren’t yet ready to handle it.

“We have great wind out in West Texas, but we simply don’t have enough infrastructure to use it,” said Mike Sloan, managing consultant to the nonprofit Wind Coalition, which encourages the development of wind power.

The practice in the past has been to build transmission lines once power plants are well under way. That’s a bad idea with wind power. A wind farm can be completed in a year’s time or even less, Sloan said. Plants fired by coal or natural gas can take years to build, so planning and building transmission lines for them isn’t urgent.

The Texas Legislature, aware that more transmission from windy parts of the state is needed, passed Senate Bill 20 in 2005. The measure gives the Public Utility Commission the authority to build transmission lines to parts of the state that look most favorable for renewable energy.

SB 20 also called for a boost in the state’s use of renewable energy, saying utilities must get 5,000 megawatts of electricity from renewable resources by 2015. (Most of Texas’ renewable energy now is produced by wind.)

Wind developers believe utilities will be ready buyers for their electricity.

Although San Antonio’s CPS Energy already has commitments to buy wind-generated electricity, “I think it’s safe to say that we’re definitely interested in new wind in the coming years,” said Les Barrow, CPS senior director of Electric Reliability Council of Texas relations.

Lawmakers don’t want a repeat of what happened from 2001-2004. In those years, transmission lines out of windy areas were so overloaded that ERCOT, the operator of the Texas grid, had to call the wind farms — sometimes every hot afternoon — to tell them to shut down.

Transmission systems have maximum loads, and “if you push too much through the wires, you’ll overheat the wire. It’s like tripping breakers in a house,” Sloan said.

The Senate measure also calls for the PUC to identify specific wind-rich zones that will be best for linking to the Texas grid, which serves about 80 percent of Texas.

On July 20, the PUC took the first big step toward enhancing wind power when it identified eight key zones, mostly in West Texas and the Panhandle. PUC Chairman Hudson, in a July 20 memo, called the designation of the eight zones “a significant step” in a multiyear process to ensure that wind-generated electricity gets the needed infrastructure.

During the next six months, ERCOT will study the best areas for transmission. When the PUC begins to plan transmission lines, wind developers must show they’re committed by posting a letter of credit amounting to at least 10 percent of the value of their wind farm, PUC spokesman Terry Hadley said. In the past, wind-farm developers didn’t have guarantees that they’d ultimately have enough transmission to get their power to the grid. The new process assures wind development and transmission will be in balance.

“It’s a chicken and egg situation,” Hadley said. “You don’t want to build the wind turbines until you have transmission. And you don’t want transmission without a generating source.”

After ERCOT identifies the best areas for transmission, transmission companies will seek PUC approval to build the transmission lines. CPS’s Barrow and others expect the transmission will deliver power to the grid along Interstate 35 to serve the power-hungry regions of Austin-San Antonio and Dallas-Fort Worth.

One major party, though, isn’t going to wait for the PUC-sanctioned transmission plan. Pickens’ Mesa Power LP will build its own transmission for its $10.5 billion wind farm at a cost of $1.5 billion, Vice President Mike Boswell said. “If we’re going to spend that kind of time and effort — not to mention money — we’ll do it without having the (PUC-approved) line available to us,” Boswell said.

As has always been the case in Texas, ratepayers will pay the tab for the construction of transmission, which costs $1 million a mile on average.

CPS has taken a look at how much new transmission from wind-rich areas will cost its ratepayers, although it’s strictly a back-of-the-envelope calculation, Barrow said. While new lines won’t be cheap, Barrow expects the cost to a small part of a CPS customer’s bill.

And wind-power proponents see little resistance to plans to hook up more wind farms to the Texas grid.

“I can’t see anything that says this isn’t likely to proceed,” said Russel Smith, executive director of the Texas Renewable Energy Industries Association. There is extensive interest in building wind farms, ample agreements with landowners to build wind turbines on their land and “plenty of folks lined up to finance the projects,” he said.

Shell Renewables’ Mark Wilby, senior business development manager, said there’s been no outcry by residents to the company’s plan to build a 3,000-megawatt wind farm in rural Briscoe County in partnership with Luminant, a unit of utility giant TXU Corp.

“We have agreements with many, many landowners there,” Wilby said, “and they’ll receive compensation for having turbines on their property.”

The explosion of wind farms and the cost of building the transmission will be worth it to Texas ratepayers, Smith said, because wind power will provide millions of megawatts for at a set price. Although coal is less expensive, like natural gas, “you’ll have volatility and increases in the costs of those fuels,” he said.

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