Platte River Power Authority

Document Sample
Platte River Power Authority Powered By Docstoc
					Working with public power utilities and their customers
Nebraska Public Power District

Highlights                                       renewable energy must come directly from
                                                 utility management and policymakers.
Nebraska Public Power District (NPPD)
serves 52 publicly owned municipalities and      The decision-making process also reflected
24 public power districts and electric           informed customer viewpoints. NPPD used
cooperatives. Altogether, it provides            a unique survey process called deliberative
wholesale and retail electricity to nearly one   polling, involving more than 100 randomly
million Nebraskans. The 60-megawatt wind         selected customers. This process, which
project at Ainsworth serves this broad           required a review of background materials
customer base. It also benefits other project    and participation in an all-day workshop,
partners, including the Nebraska-based           showed that customer support for wind
Grand Island Utilities, Omaha Public Power       development was very strong. Customers
District, and Municipal Energy Agency of         who participated in the process favored wind
Nebraska, and one out-of-state municipal         development, even if it might result in a
utility, JEA, in Jacksonville, Florida.          slight increase in electric rates. The
                                                 participants expressed a preference for
As facility owner, NPPD spearheaded this         spreading the cost of wind development
project, secured financing, and retains more     across the entire rate base, instead of asking
than half of the output. NPPD also provided      individual customers to pay a voluntary
construction oversight and currently             green power premium.
operates and maintains the project.
Ainsworth-based KBR Rural Public Power           Ultimately, NPPD developed the Ainsworth
District has provided local technical support.   Wind Energy Facility with only negligible
Yet all partners played a role in the success    rate impact. Especially valuable aspects of
of this large-scale effort—the largest wind      the development plan included pinpointing a
project in the state of Nebraska.                site that had both a strong wind resource and
                                                 excellent transmission access. In addition,
The Ainsworth Wind Energy Facility               the project benefits from partnership
includes 36 1.65-MW Vestas wind turbines.        strategies to market excess wind power and
The overall site is expansive, spreading         to sell the environmental attributes of the
across approximately 11,000 acres of land        project through renewable energy
south of Ainsworth in north-central              certificates (RECs).
Nebraska. Yet only about 50 acres were
taken out of agricultural production for wind    History
towers, roads, and related infrastructure.
                                                 In cooperation with the National Renewable
One unique aspect of this project is the         Energy Laboratory, NPPD began to monitor
planning process that led to NPPD’s              wind resources in the mid-1990s. In 1998,
decision to build. Unlike many states,           the utility worked with the NREL Turbine
Nebraska does not have a state renewable         Verification Program to install two 750-kW
portfolio standard. Decisions to invest in       turbines at Springview. This project gave

American Public Power Association DEED Program                                          Page 1
Nebraska Public Power District

NPPD direct experience with turbine              wind power by 2010 (5 percent of NPPD’s
technology and system integration. It also       yearly electricity needs) and 5 MW of
provided experience in wind project              methane generation produced from animal
partnership. NPPD owns 61 percent of the         manure.
Springview project; Lincoln Electric System
owns 29 percent, and four other public
power utilities hold 5 percent or less. KBR                NPPD Ainsworth
Rural Public Power District owns a small                  Wind Energy Facility
share and operates the Springview turbines
at the local level. With headquarters in            The Ainsworth Wind Energy Facility
Ainsworth, KBR proved early on that a               demonstrates successful partnership
distribution utility can provide the technical      among public power utilities.
and community support that a wind project
needs in order to succeed.                          Project Partners: Nebraska Public
                                                    Power District, Omaha Public Power
                                                    District, Municipal Energy Agency of
NPPD’s decision to expand its wind
                                                    Nebraska, Jacksonville Electric
program came gradually, as an outgrowth of          Authority (JEA), and Grand Island
its Springview experience and as a result of        Utilities. KBR Rural Public Power
board decisions in support of portfolio             District is also a participant.
diversification. Nebraska does not have a
Renewable Portfolio Standard; the drive to          Total Size of Project: 60 MW
add renewables came from within the utility
and at the strategic direction of the board.        Turbine Manufacturer/Size: NEG
Customer sentiment and economical impact            Micon 1.65 MW (36)
were also among their considerations.
                                                    Project commissioned: Fall 2005
A unique survey process called deliberative         Capacity Factor: 40 – 44%,
polling helped the NPPD to understand how           based on engineering data
customers would prefer the utility meet
future energy needs. In 2003, with funding          Keys to project success:
assistance from the Nebraska State Energy            Excellent wind resource
Office and Western Area Power                        Partners boost economy of scale
Administration, NPPD engaged James                   Access to NPPD transmission
Fishkin of the University of Texas at Austin         Local (KBR) utility support
(now of Stanford University) to lead this            Economics based on use or
process. It involved more than 100                     marketability of wind energy
randomly selected NPPD customers in                  Innovative REC strategy
preparing for and participating in an
intensive one-day meeting. Since more than
half of the participants had to travel more
                                                 Participants received detailed information to
than 100 miles to take part, NPPD offered to
                                                 compare these options with a combined
pay expenses. NPPD planners viewed the
enthusiastic and open-minded participation       cycle gas alternative and a new coal plant
                                                 that would use advanced pollution control
of so many customers as a benefit worth the
investment.                                      technology. The relatively in-depth
                                                 education that participants received was the
                                                 biggest difference between this approach
The process addressed the question of
whether NPPD should continue, decrease, or       and typical customer surveys.
expand its commitment to renewable
resources. Specific renewable energy             Participants came to understand that any
options included the addition of 200 MW of       choice about their energy future represents

American Public Power Association DEED Program                                          Page 2
Nebraska Public Power District

trade-offs, and that there is no silver-bullet   NPPD’s generation facilities, including the
solution to today’s energy problems.             Ainsworth Wind Energy Facility.

Strategic Drivers                                Economic development. As noted above,
                                                 NPPD’s board of directors has expressed a
Resource diversification. NPPD relies on         specific interest in considering the economic
coal for approximately 60 percent of its         development impacts of new energy options.
energy needs. In addition, nuclear energy        In this light, wind development is very
comprises 24 percent of the NPPD resource        attractive. Wind is an abundant, indigenous
portfolio. Ten percent is purchased power,       resource for Nebraskans. Development
while hydropower, oil, gas, and renewable        provides jobs during construction and for
resources each contribute five percent or        ongoing operations. Land-lease payments
less. Since the completion of the Ainsworth      and increased revenues to local businesses
project, wind power supplies about 1.7           help the rural economy, directly and by
percent of the NPPD portfolio. Wind              raising tax revenues. The community of
resource variability is not a major concern,     Ainsworth has welcomed this development,
because the Ainsworth project is aimed at        based largely on an understanding of its
generating low-cost energy for use in the        economic benefits.
off-peak season or for sale on the wholesale
electricity market.                              Technical details

NPPD’s board of directors has outlined           The Ainsworth wind project taps
considerations that guide the utility’s wind     exceptional natural and technical resources.
acquisitions. For example, new energy            The site, in north-central Nebraska, offers a
resources should benefit Nebraska                Class 5 (on a scale of 1 to 7) wind resource,
economically and environmentally. Also,          with an average wind speed of nearly 20
new resources should not degrade the             miles per hour. This supports wind farm
utility’s outstanding service, and they must     operations with a projected annual capacity
be generally cost-competitive with other,        factor of 40 percent or more.
readily available resource options. So far,
wind energy has met these requirements.          The 60-MW project consists of 36 towers,
Wind energy is a promising resource, which       each supporting a 1.65-MW turbine. Each
can benefit Nebraska and its rural               tower is 230 feet tall. NEG Micon, a
communities, if it is carefully developed.       company that subsequently merged with
                                                 Vestas Wind Systems, supplied the turbines.
Environmental concerns. The deliberative         NPPD secured engineering, procurement,
poll of NPPD customers, completed in 2003,       and construction support from Austin-based
showed that environmental protection is          Renewable Energy Systems, Inc., which
important to NPPD customers. Among five          was, at that time, one of the nation’s leading
choices, top-ranked customer concerns were       wind-development firms.
(1) adequately meeting future electricity
needs, (2) keeping electricity costs             The project’s proximity to transmission is
affordable, and (3) protecting public health     key to its value. NPPD owns the 115,000-
and the environment. Concerns for                kilovolt transmission line with which the
economic development and service                 project interconnects, and it operates the
reliability ranked lower in this poll. NPPD      project through its own dispatch center.
is highly committed to environmental             NPPD continues to improve its wind
protection. Studies and ongoing programs         forecasting capabilities, while reports from
that protect soil, air and endangered species    staff indicate that project performance has
are included in projects associated with         been practically trouble-free.

American Public Power Association DEED Program                                          Page 3
Nebraska Public Power District

Financing and contractual details                 RECs are modest today, but NPPD expects
                                                  the REC market to grow.
The total cost of the Ainsworth wind project
was about $81.3 million. NPPD financed            The utility currently does not use voluntary
the entire project, using fixed-rate municipal    subscriptions or green power premiums to
bonds over a 20-year term. The utility            support its wind development program.
received a favorable interest rate of 4.25        NPPD customers prefer to see wind project
percent.                                          costs shared among all customers, making
                                                  support for renewable energy a universal
The Omaha Public Power District (OPPD),           cause in Nebraska.
Municipal Energy Agency of Nebraska
(MEAN), and the City of Grand Island
signed participation agreements for various
portions of the facility’s output. OPPD will
take the output of 10 MW of the facility,
MEAN will take the output from 7 MW, and
Grand Island will take the output from 1
MW. JEA, the Jacksonville, Florida,
municipal utility, has contracted for the
output of a 10 MW share, but through an
unusual 20-year purchase agreement. JEA
never physically receives the wind power.
It sells the power back to NPPD, but retains
the RECs, which represent the
environmental attributes of the wind
generation. This arrangement helps JEA to
meet its renewable energy goals, without
requiring JEA to actually wheel the energy
over such a great distance. In turn, NPPD
uses the energy to displace higher cost
generation or to sell into the market. The
partnership with JEA came in part from both
utilities’ participation in The Energy
Authority (TEA), a power marketing service
based in Jacksonville. TEA facilitates off-       Schoolchildren visit the wind site at Ainsworth.
system sales of wind energy for the project.
                                                  Conclusion and outlook
NPPD customers have expressed a
willingness to pay more for wind power, but       The 60-MW wind project at Ainsworth is a
this project has a negligible rate impact.        significant step toward NPPD’s long-term
Smart project planning and favorable              renewable energy portfolio goal. It builds
financing have kept costs affordable. In          directly upon the utility’s earlier experience
addition, NPPD has benefited by selling           in wind development at Springview. In fact,
some wind-related RECs. It has worked             both projects involve the same local host
with several green power brokers to sell          utility, KBR Rural Public Power District.
RECs to buyers in at least three states so far.   Other partners for the Ainsworth project,
By working with a broker, the utility can be      including Omaha Public Power District,
a part of the emerging national market for        Municipal Energy Agency of Nebraska,
RECs without having to build internal staff       Grand Island Utilities, and Florida-based
expertise. Revenues from wind-related             JEA, bring their own experience in
                                                  developing renewable energy for public
American Public Power Association DEED Program                                                Page 4
Nebraska Public Power District

power utilities. Financed with municipal          Finally, community relations are key. In
bonds and without access to the federal           partnership with NPPD, KBR Rural Public
production tax credit, this project relies on a   Power District helped to build and nourish
strong wind resource, solid engineering,          community support for the Ainsworth
good transmission access, and economies of        project. It serves as a local contact for tours
scale to achieve cost-effectiveness. While        and general questions about both earlier
the results of a deliberative poll indicated      Springview wind project and the new,
customer willingness to pay more for wind         expansive wind facilities. In an era when
power, this project did not have to test that     local opposition could stop a wind project,
willingness; its rate impact is negligible.       the community of Ainsworth has embraced
                                                  the wind farm as a local landmark and as
Project sponsors say their experience             part of its culture. As just one example, the
verified the importance of access to              local high school recently heralded a new
transmission in increasing project cost-          slogan for its homecoming football game:
effectiveness and ease of operation.              “Let’s Blow ’Em Away.”
Economy of scale is also important. This
was achieved by gathering partners from the
public power community. Each partner
benefits not only from participation in a
larger, more cost-effective project, but also
from collaboration on technical and
marketing aspects.

American Public Power Association DEED Program                                             Page 5