Sunflower and Mid-Kansas board members continue to support diverse electric generation. This is the third article in a series that gives an overview of each electric generation fuel type and describes how it fits into the Sunflower and Mid-Kansas systems.
It seems as if they are popping up everywhere across the nation—giant “pinwheels” used to generate electricity from the kinetic nature of wind. Electric cooperatives are playing their part with more than 550 co-ops in 37 states incorporating wind into their energy resource mix.1
Most co-ops acquire their wind via Power Purchase Agreements (PPAs) with independent power producers that have capitalized on the production tax credit (PTC) available to wind developers. Government subsidies pay wind producers $23 per megawatt hour, and typical PPAs include a “must take” clause that requires the buyer to purchase all energy produced regardless of demand.2
Sunflower and Mid-Kansas have been invested in wind energy since 2007. At present, the two companies have PPAs totaling 178 MW. The reasons for the investments were to achieve fuel diversity, have a fixed-priced hedge against volatile energy prices, and meet the renewable energy requirements then mandated by the state of Kansas.
During the last decade, the region, including the territory served by Sunflower and Mid-Kansas, has experienced a surge of wind development, primarily due to the PTCs that are slated to begin phasing out in 2020. This escalation has resulted in the rise in wind energy from 556 MW interconnected to the Sunflower/Mid-Kansas system in 2008 to approximately 3,491 MW by the end of 2018. This equates to 297% more wind energy than peak energy demand on the Sunflower/Mid-Kansas system. This overabundance of wind energy has caused Sunflower and Mid-Kansas to adapt to new ways of doing business.
Changes in operations
Just a few years ago, Sunflower and Mid-Kansas supplied wholesale energy to their members from their own fleet of generating resources powered by natural gas, coal and wind. Operations changed when the Southwest Power Pool, the Regional Transmission Organization of which Sunflower and Mid-Kansas are members, launched the Integrated Marketplace (IM) in 2014. With the IM, Sunflower and Mid-Kansas no longer generate energy just for their members. Instead, Sunflower and Mid-Kansas sell generation from their resource fleet into an energy market that serves a 14-state region and take advantage of the market’s competitive pricing to purchase energy for their members.
The abundance of wind energy often creates market conditions in which demand for the Sunflower and Mid-
Kansas fossil-fuel generation is sporadic. Not only do the generating plants ramp up and down to follow the fluctuation of wind, but they are also often operated at reduced levels of production or even stand idle to make way for wind energy.
“Sunflower’s 360-MW coal-fired unit is now often cycled from minimum to maximum load, creating maintenance issues that weren’t as prevalent when the unit was operated more consistently,” said Corey Linville, vice president, power supply and delivery for Sunflower and Mid-Kansas. “Our gas-fired internal combustion engines and combustion turbines also get cycled when they run. They are started more frequently, typically with short run times, partly to follow wind and provide ramping support to the Southwest Power Pool.”
The availability of traditional dispatchable generation, such as coal and natural gas, remains necessary to ensure that reliable electricity is always available to Sunflower’s and Mid-Kansas’ members. However, operating units in a manner in which they were not intended causes mechanical issues that are usually costly to repair. In addition, no matter the level of operation, staff must remain on hand to maintain each generation unit or operate it when it receives SPP’s notification to run. This new way of doing business comes with other costs as well.
Focus on transmission
The energy produced by each wind farm requires adequate transmission infrastructure to carry it from its point of origin to where it is needed. When sufficient transmission capacity is not available to support the flow of power, the result is transmission congestion, which can cause energy price volatility in the IM, impair grid reliability and make an area more vulnerable to outages.
Some solutions to congestion include transmission construction and
upgrades, solutions that come at a cost to energy ratepayers. To keep electric rates as reliable and affordable as possible, staff representing Sunflower and Mid-Kansas consider all options to mitigate transmission problems, such as working with other utilities to share costs on transmission projects, analyzing the need for additional transmission and studying alternative solutions such as generator modifications and batteries that are less expensive than new transmission.
Rate pressures caused by wind
”With wind energy, it is challenging to balance energy supply and demand,” said Linville. “There is substantially more wind generation connected to our system than demand for energy, also known as ‘load.’ Because wind typically blows the most when we have the lowest energy demand, it’s not uncommon to have wind generation injected into our system almost triple the amount of load we are serving from the system.”
When this happens, the principles of supply and demand kick in. When there is more energy being supplied to the Sunflower/Mid-Kansas transmission system than there is demand to consume it, the excess energy has to be exported. This export energy flows on transmission lines that were designed to serve rural western Kansas load, not to export substantial amounts of wind energy to other parts of the country. When flows begin to approach the design limitations of the transmission facilities, the lines are said to be “congested.”
The IM uses a pricing method in an attempt to relieve congestion. Energy prices on the upstream side of the congestion are lowered to encourage generators to produce less, while energy prices on the downstream side of the congestion are raised to encourage generators to produce more. Because wind producers receive a production tax credit on all energy produced, energy prices often have to drop to negative values before wind generators respond and reduce output. For buyers, the drop in the price of energy is good. For those who have energy to sell, including Sunflower and Mid-Kansas, the depressed pricing hurts the bottom line.
“Like every other energy resource, wind energy has its pros and cons,” Linville said. “Sunflower and Mid-Kansas are not fuel biased; we are member biased. Each and every day our staff strategizes about the best way to utilize our assets while participating in the IM in order to provide our members with the best service possible.”
1America’s Electric Cooperatives. “Wind.” https://www.electric.coop/wp-content/Renewables/wind.html.
2Moorefield, Laura. “Growth of Wind Generation in the Electric Cooperative Community.” June 2017. Business & Technology Strategies.