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The Cost of Transmission for Wind Energy: A Review of Transmission Planning Studies Andrew Mills, Ryan Wiser, and Kevin Porter Lawrence Berkeley National Laboratory February 2009 Electricity Markets and Policy Group Energy Analysis

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Electricity Markets and Policy Group • Energy Analysis Department

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The Cost of Transmission for Wind Energy: A Review of Transmission Planning Studies

Andrew Mills, Ryan Wiser, and Kevin Porter

Lawrence Berkeley National Laboratory February 2009

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Electricity Markets and Policy Group • Energy Analysis Department

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Presentation Outline

  • 1. Motivation and Scope
  • 2. Approach and Transmission Study Sample
  • 3. Results: Unit Cost of Transmission for Wind
  • 4. Factors Potentially Affecting Unit Cost Estimates

a) Inherent Assumptions in Methodology on Unit Costs b) Amount of Incremental Generation Studied and Line Voltage c) Length of Transmission Lines d) Equipment Cost Assumptions e) Transmission Planning Study Methodologies and Objectives

  • 5. Comparison of Bottom-Up to Higher-Level Top-Down Studies
  • 6. Policy Implications and Future Work
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Electricity Markets and Policy Group • Energy Analysis Department

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Motivation and Scope

  • Motivations: Rapid wind power development has been coupled with

concerns about the need for substantial new transmission infrastructure. Institutional issues pose major obstacles to transmission construction, but also of concern is the potential cost of this infrastructure build out.

  • Objectives:

– Develop a better understanding of the transmission costs needed to access growing quantities of wind generation – Highlight differences in transmission planning approaches – Inform higher-level assessment models used to estimate the cost of wind deployment (e.g., WinDS, NEMS)

  • Intended Audiences: Regulators and policymakers who need to

assess potential transmission costs for accessing large quantities of wind energy; analysts and transmission planners who want to be more aware of the variety of wind transmission studies and study approaches

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Electricity Markets and Policy Group • Energy Analysis Department

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Approach

  • Review 40 transmission planning studies from across the

U.S. that involve wind; study dates range from 2001 to 2008

  • Attribute transmission costs to wind by share of nameplate

capacity of incremental wind additions (capacity-weighted)

  • Estimate the implied unit cost of transmission for wind: total

transmission cost attributed to wind divided by incremental wind generation capacity

  • Analyze differences in amount of incremental generation,

length of transmission, study objectives and methodologies, and transmission equipment cost assumptions that may contribute to wide range in implied unit costs of transmission

  • Compare results to two scenarios of 20% wind electricity in

the U.S., and the treatment of wind transmission in NEMS

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Electricity Markets and Policy Group • Energy Analysis Department

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Geographic Location of Studies in Sample

Examples of: Detailed Studies: Xcel, Tehachapi Exploratory Studies: ERCOT, SPP, CapX Highly Conceptual Studies: Frontier, HPX, MISO Author and Location of Studies: Studies authored by ISO/RTOs, voluntary utility organizations, State-led

  • rganizations, and individual utilities
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Electricity Markets and Policy Group • Energy Analysis Department

6 $0 $500 $1,000 $1,500 $2,000

NTAC - 1 C/PNW-NorCal HPX CAISO - A4 Frontier - A Frontier - B NTAC - 2B NTAC - 2A TWE and GS MPC ERCOT - TOS - 1B NorthWestern EPTP - 2 SPP - OK - 2010N ISO-NE - High ERCOT - TOS - SPP - OK - 2010H CAISO - A6 SunZia CAISO - A2 NTAC - 2A' MSTI SPP - OK - 2020N EPTP - 1 ERCOT - TOS - 2 Tehachapi SPP - OK - 2020H CLRTPG - N1 SCE - ISM - EDM RMATS - 2 ERCOT - TOS - 3 SPP - EHV SCE- LA/Kern ERCOT - P4 ERCOT - TOS - 4 SCE - IR SCE - ISM - I ERCOT - Cb2 CAISO - A1 Xcel - BR - Actual ERCOT - Cb1 ERCOT - CW3 SPP - 2 IAP - 2020 CPUC - 2010 CapX - 2 SCE - ISM - P ERCOT - M2 CPUC - 2017 CapX - 1 SWAT SCE - ISM - V SSG - WI JCSP Xcel - BR - Proj MATL SPP-CRA ERCOT - Cb3 SCE - ISM - K CDEAC RMATS - 1 SPP - X SPP - 1 IAP - 2010T CapX - CBED ERCOT - C3 SCE - ISM - MP ISO-NE - Low Xcel - BRIGO MISO '03 - 2 MISO '03 - 1 NYISO PSCo

Unit Cost of Transmission ($/kW-wind)

5 10 15 20 25

Incremental Wind or Total Capacity Analyzed (GW)

Unit Cost (Capacity-weighted) Total Analyzed (GW) Wind Analyzed (GW) 236 GW wind analyzed

Range in Transmission Cost for Wind Is Vast, but Most Are Less than $500/kW

Unit cost of median study-scenario is $300/kW; 15 - 23% of the installed cost of a wind plant

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Electricity Markets and Policy Group • Energy Analysis Department

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Presentation Outline

  • 1. Motivation and Scope
  • 2. Approach and Transmission Study Sample
  • 3. Results: Unit Cost of Transmission for Wind
  • 4. Factors Potentially Affecting Unit Cost Estimates

a) Inherent Assumptions in Methodology on Unit Costs b) Amount of Incremental Generation Studied and Line Voltage c) Length of Transmission Lines d) Equipment Cost Assumptions e) Transmission Planning Study Methodologies and Objectives

  • 5. Comparison of Bottom-up to Higher-Level Top-Down Studies
  • 6. Policy Implications and Future Work
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Inherent Assumptions Tend to Overstate Cost Attributable to Wind

  • Assumption 1. Any non-wind generation shares responsibility for

new transmission investments

– Tends to understate cost of transmission for wind, but analysis indicates this limitation has little effect

  • Assumption 2. Transmission in high-wind future only benefits new

generators, and does not relieve pre-existing congestion or defer reliability investments

– Tends to overstate cost

  • Assumption 3. Transmission is sized to handle new generators

studied in scenario (rather than over-sizing in anticipation of future generator development not considered in scenario)

– Tends to overstate cost

  • Assumption 4. Business-as-usual reference case requires no new

transmission

– Tends to overstate cost

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Electricity Markets and Policy Group • Energy Analysis Department

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Unit Transmission Costs of Wind Do Not Appear to Increase with Higher Levels of Wind Additions

500 1,000 1,500 2,000 10 20 30 40 50 60 Total Incremental Generation (GW) Unit Cost of Transmission ($/kW, capacity-weighted)

MISO '03-1 MISO '03-2 CDEAC SSG-WI IAP 2020 RMATS-2 NTAC-2B TWE & GS Frontier A/B HPX ERCOT-TOS-2 C/PNW-NorCal NTAC-1 NTAC-2A SPP-EHV ERCOT-TOS-4 ERCOT-TOS-3 CAISO A4 JCSP: 403 GW, $195/kW SPP-CRA

Studies that add more than 10 GW of new generation are among the lower cost studies in our sample

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$0 $500 $1,000 $1,500 $2,000 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Miles of New Transmission Lines (mi) Unit Cost of Transmission ($/kW, capacity-weighted)

NTAC-1 NTAC-2A NTAC-2B C/PNW-NorCal HPX Frontier A/B TWE and GS RMATS-2 CDEAC SSG-WI SPP - EHV ERCOT-TOS-3 ERCOT-TOS-1B MCP NorthWestern ERCOT-TOS-1A JCSP: 14,937 mi, $195/kW

Unit Transmission Costs Do Not Unambiguously Increase with Increasing Transmission Length

Several studies with large quantities of new transmission investments have mid-range unit transmission costs

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Electricity Markets and Policy Group • Energy Analysis Department

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Unit Transmission Costs Increase when Long Lines Are Added with Relatively Little New Generation

$0 $500 $1,000 $1,500 $2,000 100 200 300 400 500 600 700 800 Miles of New Transmission Lines per Unit of Incremental Generation (mi/GW) Unit Cost of Transmission ($/kW, capacity-weighted)

Transmission Planning Studies $4 Million/mi $3 Million/mi $2 Million/mi $1 Million/mi NTAC-1 NTAC-2A NTAC-2B C/PNW-NorCal HPX Frontier A/B TWE and GS EPTP-2 Xcel-BR-Prj SPP - EHV ERCOT-TOS-1B MCP CAISO A2 ERCOT-TOS-1A EPTP-1 CDEAC RMATS-2 SSG-WI ERCOT-TOS-3 JCSP

Studies with long transmission lines and relatively little new generation (to the right) tend to have higher unit costs for a given average equipment cost

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Electricity Markets and Policy Group • Energy Analysis Department

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Equipment Cost Assumptions Vary Widely Across Studies

Variations influenced by regional factors, when the study was conducted, and the level of detail used in the equipment cost estimates. Differences likely contribute to a portion of the variation in unit costs of transmission.

Equipment Minimum Cost Maximum Cost Unit Number of samples Transmission Lines 765 kV (no description) 2.0 3.2 ($million/mi) 5 500 kV (single circuit) 1.5 2.2 ($million/mi) 6 500 kV (double circuit) 2.0 3.5 ($million/mi) 5 500 kV (no description) 0.8 2.6 ($million/mi) 10 HVDC Line (800kV) ($million/mi) 1 HVDC Line (345 - 500kV) 1.1 3.0 ($million/mi) 8 HVDC Undersea Cable ($million/mi) 1 345 kV (single circuit) 0.6 1.5 ($million/mi) 4 345 kV (double circuit) 1.0 2.3 ($million/mi) 5 345 kV (no description) 0.5 2.2 ($million/mi) 10 3.7 4.0

*Additional 230

kV, 115 kV, and associated equipment cost estimates are available in the report.

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Variations in Methodology, and the Characteristics

  • f the Grid, May Affect Unit Transmission Costs

Sparsely interconnected transmission lines Integrated network of highly connected transmission Transmission system characteristics: Treats all new generation the same based on the nameplate capacity of the resource Accounts for the expected generation characteristics of wind energy Treatment of wind energy: Accommodate the full nameplate capacity of any new generation during a peak snapshot in time Economically reduce congestion costs created by the addition of new generation Objective of building new transmission: Deliverability focused Congestion focused General framework:

Tends to decrease cost || Tends to increase cost

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Presentation Outline

  • 1. Motivation and Scope
  • 2. Approach and Transmission Study Sample
  • 3. Results: Unit Cost of Transmission for Wind
  • 4. Factors Potentially Affecting Unit Cost Estimates

a) Inherent Assumptions in Methodology on Unit Costs b) Amount of Incremental Generation Studied and Line Voltage c) Length of Transmission Lines d) Equipment Cost Assumptions e) Transmission Planning Study Methodologies and Objectives

  • 5. Comparison of Bottom-up to Higher-Level Top Down Studies
  • 6. Policy Implications and Future Work
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Higher-Level Studies of Wind Transmission Broadly Agree with Mid-Range of Unit Costs from Our Sample

$450/kW*

*Estimate includes base

transmission cost ($316/kW) and long-term multipliers ($133/kW)

40 GW Annual Energy Outlook 2008 projections for 2030: National Energy Modeling System (NEMS) $207/kW 290 GW 20% Wind Energy by 2030: Wind Deployment System (WinDS) $150 – 300/kW 200 – 400 GW 20% Wind Energy by 2030: AEP 765 kV Overlay Implied unit cost of transmission for wind: Wind capacity: Higher-level study:

Unit cost of median study-scenario in our sample is $300/kW

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Electricity Markets and Policy Group • Energy Analysis Department

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Policy Implications and Future Work

  • Range of transmission costs for wind implied by studies in our

sample is vast: Total range in unit costs across sample is from $0 to $1,500/kW. More comparative work is needed to understand how differences in study objectives, methodologies, and assumptions can impact the resulting cost estimates.

  • Mid-range implied unit transmission costs for wind, though not

insignificant, are also not overwhelming: The median cost of transmission for wind among all scenarios in our sample is $300/kW; roughly 15% of the current cost of building a wind project or 23% of the cost of building a wind project in the early 2000s.

  • Little evidence that higher levels of wind penetration require

dramatically increased unit transmission costs: Confirmed by two top down scenarios of 20% wind energy in the U.S., the JCSP study of 20% wind energy in the Eastern Interconnection, and by a number of bottom-up studies that add greater than 10 GW of new generation.

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For more information…

Download the report:

http://eetd.lbl.gov/ea/ems/re-pubs.html

Contact the authors:

Andrew Mills, 510-486-4059, ADMills@lbl.gov Ryan Wiser, 510-486-5474, RHWiser@lbl.gov Kevin Porter, 410-992-7500, porter@exeterassociates.com