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Ratepayers Paying Wind Farmers Not to Produce Electricity — $2.7 Million So Far This Year

Red Flag for Region as I-937 Kicks In – Oversupply Payments, Half From BPA Customers, Expected to Grow as New Wind Farms Go Online

Wind turbines churn the breeze at a Puget Sound Energy wind farm near Vantage.

 OLYMPIA, Sept. 19.—When is too much green energy a bad thing? Well, how about July?

Rivers surged this summer at a time when the wind was blowing and wind-farm operators were pumping power into the region’s transmission grid. And for the second year in a row, it created a costly headache for the Bonneville Power Administration. BPA couldn’t spill all that extra water – it had to send it through the turbines at dams on the Columbia and Snake River system. So once again it curtailed production at the windmills that have been sprouting on seemingly every rural hillside in Eastern Washington. Under new protocols prompted by a federal ruling, BPA now must compensate wind operators for the power it can’t use – half of the $2.7 million worth of electricity it didn’t carry over its transmission lines during the 12 days of curtailment that have taken place so far this year.

Think of it as a red flag — a warning sign that the wind industry already is straining the capacity of the state’s electric utilities to put its power to good use. Members of the Washington House Energy, Technology and Communications Committee were told Tuesday that the oversupply problem is a big concern for BPA and the utilities it serves, an unintended consequence of the national push for green energy that has created particular problems for the Pacific Northwest. In this state, wind-farm developers have been throwing up windmills as fast as they can dig the foundations and pour the concrete, because of a policy established by a 2006 ballot measure. Initiative 937 forces most utilities to buy an increasing percentage of their power from “renewable” sources – mainly wind, some solar – even if slow-growing demand for power doesn’t require it, and even though there is plenty of non-polluting and almost-free power available from the region’s hydroelectric dams.

The oversupply problem of the last two summers is a little different, a temporary nightmare that occurs when snowfall is a bit too generous. It’s what happens during those peak periods when the rivers are brimming with runoff and there’s more power than anyone can use.

But you can connect the dots and see that there is big trouble coming as more and more wind-farms come online, says state Rep. Terry Nealey, R-Walla Walla. “We have already built things out to where we have an oversupply, and we are heading for some real problems – a huge overbuilding for production of energy,” he said. “I don’t see how the load is going to create the need for that, and so it is going to create an oversupply of energy and nobody to buy it and nobody to pay for it. That is my greatest fear.”

More Power Than Anyone Needs

Elizabeth Klumpp of the Bonneville Power Administration testifies before the House Energy, Technology and Communications Committee Tuesday.

What happened this summer showed that you can’t outplan Mother Nature. Precipitation in March was three or four times normal. May was another big month – records were broken in Northern Idaho, British Columbia and Western Montana. And as snow melted in June, the torrents hit the reservoirs along the Snake and Columbia, more water than the system could handle smoothly.

BPA couldn’t spill all the water without exceeding gas levels in the river – a danger for fish. So it had to run it through the turbines. But with all the new wind farms churning out electricity, there was more power than the region needed, and more power than existing transmission lines could carry to California and other markets in the West. So BPA told the wind farms to cut back production by a total 50 megawatts.

The same thing happened last year, too, to the tune of 90 megawatts, and all hell broke loose. Wind-farm operators complained that they couldn’t qualify for federal tax credits for energy production or sell renewable energy credits if they weren’t allowed to transmit electricity. They said they couldn’t honor contracts with utilities that need to comply with state renewable-energy purchasing requirements. And so they took their complaints to the highest power in the energy field, the Federal Energy Regulatory Commission, which ruled in December that BPA couldn’t discriminate among different types of power producers. This year BPA adopted a new scheme, which has yet to be approved by federal regulators. Unlike last year, wind-farm operators are being compensated for the power they are capable of producing but which the region doesn’t need. The wind industry as a whole is to absorb 50 percent of the foregone revenue at the farms that are curtailed. BPA customers pay the rest, meaning the tab goes to utilities and the high-power-consuming industries that are served directly. BPA hired a third-party firm to determine which operators can go offline at least cost to its customers; its share has already been paid.

The problem posed by abundant rain and snow is a little different than the problem utilities face as they comply with the rules imposed by I-937, but it is part of the same picture. Washington is among more than 30 states that have imposed green-energy purchasing requirements, using government policy to force the development of an industry. Right now Washington utilities are supposed to buy three percent of their energy from renewable sources, and that is supposed to rise to 9 percent in 2016 and 15 percent in 2020.  So these have been boom years for the wind business, and to a lesser degree solar. The Renewable Northwest Project, a green-energy advocacy group, estimates that $8 billion has been spent in this state alone as developers and utilities ramp up to meet the requirements. The problem is that the Pacific Northwest is unique – some 70 percent of its power already comes from non-polluting dams, which operate just as cleanly and more cheaply than any windmill. The green-energy production goals were set at a time when the economy was booming and it looked like the region might be able to use the power. But now it appears that it might be a decade or more before the additional production is actually required, meaning higher electric bills for consumers, for power the market doesn’t need, with no pollution advantage. So the smaller-scale issue for BPA might be taken as a sign of things to come – more windpower than the region can absorb.

Deliberately Running Dams Inefficiently

At Tuesday’s hearing, lawmakers were told of a problem that seems almost absurd – too much power during periods of peak runoff and nowhere to send it. At night, when usage is lowest, too much power actually imposes a dangerous strain on the grid. So utility officials and planners are wondering what to do with it all. Heavy users like irrigators, cold-storage facilities and server farms might be convinced to shift peak usage to night. Nighttime pumping operations might be used to replenish depleted aquifers in Eastern Washington. Perhaps less-efficient thermal plants might be phased out, and someday overnight charging of electric vehicles might absorb some of the production. In the meantime BPA is doing its best to modify management practices. It has struck an agreement with upstream operator B.C. Hydro to keep more water in storage. But some measures sound extreme and hint that the actual cost of oversupply this summer was considerably higher than $2.7 million. “We sold significant amounts of energy at zero cost,” said Elizabeth Klummp of BPA. “We operated Grand Coulee intentionally a little inefficiently to push more water through the turbines rather than over the spillway.”

What else can be done? Wind-energy advocates say new transmission lines ought to be built to carry their excess production to California and other Western points. “New transmission lines from the region would help to get the surplus clean energy to markets that really need it and are willing to pay for it,” said Cameron Yourkowski, senior policy manager for the Renewable Northwest Project.  “And of course, the Holy Grail, storage technologies – once that comes online, that would be something that would help as well.”

Trouble is, someone has to pay for that. High-cost solutions for the sake of the windpower industry really don’t make economic sense, said Tom Karrier of the Northwest Power and Conservation Council, the planning agency that was established in the wake of a similar overbuilding problem in the 1980s, when an overly ambitious nuclear-power development scheme caused the Washington Power Supply System debacle and triggered what was then the biggest bond default in the nation’s history. For now, Karrier said, compensation for wind developers during peak runoff times might cost $12 million a year at worst. Major upgrades to the system would cost many times that. The agency has convened a working group that includes utility officials and the BPA to consider solutions to the oversupply problem.

“When you start developing renewable energy sources you find that there will be potential conflicts and overlap because the dispatch of this generation is driven somewhat by Mother Nature, not by us,” he said. “So it is inevitable that there is going to be some overlap with hydro and wind; there will be with solar. It is how you address it that really is critical here.”

Does it Make Sense?

John Audley, deputy director of the Renewable Northwest Project, said you have to take the long view – for more than 100 years government has encouraged fossil fuel and hydroelectric production with its policies and subsidies. He said it’s not fair to single out one type of energy for cutbacks without compensation during periods of peak production, as BPA did last year. He noted that wind-farm operators have contracts with BPA to carry their power and contracts with utilities to provide it. Curtailment “is costing these companies a fair amount of money and their customers compliance with their own state statutes.”

But when you look at the big picture, and when you consider that windpower developers are expanding every year to take advantage of the opportunities I-937 has created, Nealey says BPA’s oversupply troubles are just the start. Last session he sponsored a bill, HB 2682, that would delay green-energy purchasing requirements until utilities need power to satisfy electricity demand. A companion bill, SB 6418, was sponsored in the Senate by Brian Hatfield, D-Raymond. “Some people say we are headed for a real train wreck on this thing, and one of my ideas is to slow down or dial back I-937,” Nealey said. “It’s not the complete answer, but we have to find a way to integrate [renewable energy]. In any other state of the U.S., [the rules] would be fine, but we don’t want to interfere with the cheap power that is being produced by our hydroelectric dams.”

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