Friday, March 28, 2008

Is Wind Energy Getting FERC'd On Powerlines?

Judged exclusively by reporting from UPI and elsewhere this February, it had seemed like the recent attempts by the Federal Energy Regulatory Commission (FERC) to ensure affordable electricity prices and resolve discrimination in regional power markets would be a good thing for the wind industry. But, as Jeff Beattie of The Energy Daily reports, the American Wind Energy Association is reversing their initially happy assessment of the new FERC rules:

[W]ind developers—whose projects are awaiting interconnection in large numbers—say the Federal Energy Regulatory Commission did not go far enough and that major cost allocation issues must be more forcefully addressed before the so-called “interconnection queuing” problems will be fixed.
The order, approved Thursday at a FERC monthly meeting, stops well short of ordering regional transmission organizations (RTO) or independent system operators (ISO) to take any specific steps to revise the interconnection queue processes.
[...] In a written statement, Rob Gramlich, policy director for the American Wind Energy Association, said FERC needs to encourage RTOs and ISOs to conduct cost allocation studies to spread new interconnection costs more broadly among market participants. The current system unfairly saddles the new generator with large and unpredictable costs, slowing development of wind and other renewable power projects, he said.
“The underlying cause [of interconnection backlog] remains unaddressed—the rules of the road still require the next car on the entrance ramp to pay for the whole highway,” Gramlich said.
Some of the problem seems to be that as little as a quarter of all power generation projects submitted to grid operators end up being built, and that the ISOs and RTOs lack the staff to perform the requisite "system impact studies" to determine how new plants could effect their grids. The FERC's main recommendation so far has been a “first-ready, first served” policy by which RTOs and ISOs could shuffle interconnection queues after evaluating which projects were likely to succeed. With only sketchy details on how grid managers might make these judgments, the FERC seems to be offering an open window for graft and corruption. The policy also sounds designed to preferentially treat firms with excess capital to throw into initial design phases, which I'm willing to bet are predominantly of the monied and well-entrenched coal and natty gas variety.

[Link to The The Energy Daily article. Subscription required.]

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