CONCEPT DESCRIPTION: TRANS-PRAIRIE AND INTERIOR WEST WIND 'PIPELINES'

July 31, 2003

By Tom Gray, American Wind Energy Association

SUMMARY

As part of a national energy program aimed at

1. Moving quickly to deal with the natural gas shortage; and

2. Increasing overall reliability of the national electricity transmission system

The American Wind Energy Association (AWEA) proposes phased development of Trans-Prairie and Interior West Wind "Pipelines" to collect wind-generated electricity from the windy, lightly-populated, high Plains and interior West and deliver it to cities in the Midwest and West.

For important financial and technical reasons, each "pipeline" would consist of three phases:

Phase I: Transmission tariff reform and other refinements in rules governing the transmission system to more fully utilize existing power line capacity. Cost: $0. New wind capacity facilitated: ~4,000 MW (equivalent to ~0.4 Bcf/day of natural gas).

Phase II: Addition of several new local 345-kV transmission lines to remove existing system bottlenecks and bolster secondary-level reliability. Cost: ~$1 billion (for both regions). New wind capacity facilitated: ~26,000 MW (equivalent to ~2.4 Bcf/day of natural gas).

Phase III: Construction of two major high-voltage lines from the northern Plains to the East (Trans-Prairie Wind Pipeline) and West (Interior West Wind Pipeline). Cost: $10 billion to $20 billion. New capacity facilitated: 30,000 MW to 60,000 MW (equivalent to ~2.8-5.5 Bcf/day).

This proposal will not only address the two national priorities—natural gas price pressures and electric transmission reliability-- listed above, but will provide enormous economic development benefits to regions that have been hemorrhaging population and jobs for decades.

BACKGROUND

How does the wind pipeline plan address the natural gas shortage?

The U.S. is heavily dependent on natural gas for new electricity generation (more than 90% of new power plants on order are gas-fueled), and this "rush to gas" is adding to an overall shortage of gas supplies (for both heating and power). Since gas plants can be turned on and off quickly, they mesh well with wind, a variable power source, and most electricity generated from wind replaces gas generation on a one-for-one basis.

The current U.S. gas shortage amounts to approximately 3-4 Bcf (billion cubic feet) per day. By the end of 2003, wind plants will be generating about 15 billion kilowatt-hours (kWh) annually, equivalent to ~0.5 Bcf/day. AWEA estimates that today's wind capacity (6,000 MW) can be boosted to 36,000 MW (equivalent to ~3 Bcf/day) within four years through completion of Phase II of the pipeline plan (up to 26,000 MW) and of new wind plants in other parts of the country (e.g., New York, Pennsylvania, California, Texas, Oklahoma, Kansas, New Mexico).

How does the wind pipeline plan address U.S. electricity system reliability?

Currently, there are well-developed transmission networks east of the Mississippi and west of the Rockies, but very few lines across the Missouri River basin or in the interior West, where "brittleness" of the transmission system leads to significant restrictions on regional electricity exports. This proposal would massively strengthen secondary transmission, improve reliability of the electric system, and provide a strong and reliable link between the Midwest and West.

Where will the pipelines go?

The "pipelines" and their feeders would collect wind-generated electricity in Montana, North Dakota, South Dakota, and Wyoming and deliver it to Chicago, Milwaukee, and St. Louis (Trans-Prairie) and Denver, Salt Lake City, and the Pacific Northwest (Interior West). Phase II also strengthens transmission and allows wind development in neighboring states: Minnesota, Iowa, Colorado, Utah, Idaho, and eastern Washington.

Existing transmission lines in these regions were largely built to carry electricity from hydropower dams and mine mouth coal plants to cities. The "wind pipelines" would expand this concept to serve wind, a more abundant, non-depleting, and non-polluting resource.

Why develop the pipelines in phases?

While a single mega-construction project has the appeal of simplicity, there are three compelling reasons for a more thoughtful and comprehensive phased approach in this case:

1. There is a fundamental mismatch between the short lead time needed to build wind farms (12-18 months) and the time needed to site and build major electric transmission lines (several years). This results in chicken-and-egg problems: no one will invest to build transmission lines without generators to feed them, and no one will invest to build wind farms without transmission to deliver their power to market. The solution: take interim, lower-cost steps that permit installation of wind farms that can later be expanded as more transmission capacity is built.

2. Going directly to Phase III is risky and unsound technically—akin to building a major interstate highway without providing on and off ramps (secondary feeder and distribution lines) or improving neighboring secondary roads. Secondary lines are needed at both ends of a pipeline for collection and distribution, and also in neighboring regions so that if the pipeline goes out of service, the system can still function.

3. No one knows what will happen to natural gas prices or availability. Current trends seem to indicate cause for alarm, as Federal Reserve Chairman Alan Greenspan recently testified to Congress. Phasing in wind-powered electric "pipelines" allows for current natural gas trends to mature without heavy up-front investment. Phase I requires no funding outlays, while Phase II funding can be accommodated through the existing regional transmission planning process.

What can I do to support the wind pipeline proposal?

AWEA has developed a policy agenda aimed at ensuring the development of a robust wind energy industry and rolling out the three phases of the pipeline plan. That agenda includes:

• A five-year extension of the existing federal wind production tax credit (PTC), a proven tool for building the wind energy market which has been hampered by on-again, off-again application. It has been allowed to expire twice in the past four years, each time bringing investment and activity in the industry to a standstill.

• A national renewables portfolio standard (RPS) requiring electricity suppliers to obtain a minimum percentage of their energy from renewable sources (wind, solar, etc.) by a date certain (e.g., 10% by 2020). This provides long-range certainty that a market will develop and permits orderly industry growth.

• A national transmission policy that encourages the formation of large, efficient regional electricity markets instead of a balkanized, inefficient system of smaller markets, each trying to levy its own charges (tolls) on electricity that is passing through. Wind is a variable, geographically-dispersed resource: the larger a transmission "control area" is, the more easily large amounts of wind generation can be accommodated and moved to market.

• A national transmission policy that encourages transmission planning consistent with energy policy. In the electricity sector (one-third of national energy use), transmission policy is energy policy. A national goal of building more wind plants must not be subverted by a transmission fee system that discriminates against wind or by a lack of planning to get power lines built where needed.

How would the wind pipeline proposal benefit the economy?

Wind can take part of the pressure off the demand for gas to generate electricity:

• Every time a new wind turbine is put into production, it reduces demand for gas for electricity generation that competes with demand for gas for home heating and for industry. Less gas demand means more supply, and lower prices for consumers.

• At today’s gas prices, large new wind plants in favorable wind areas are more economic than new gas plants. But these favorable wind areas need additional electric transmission to bring wind to market.

• Wind development brings substantial positive economic development to rural areas.

AWEA estimates that it is reasonable to expect each dollar spent on the wind pipeline proposal to leverage $5 to $7 in other private investment, resulting in enormous economic benefits in the form of: property taxes to local jurisdictions; lease payments to landowners ($3,000 to $5,000 per turbine per year); and a modest but still significant number of long-term skilled operations and maintenance jobs in rural, remote regions where these jobs are very difficult to stimulate.

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