Overview of Nebraska Power Association Wind Integration Study

1. Overview of Nebraska Power Association Wind Integration Study Nebraska WindPower 2009 November 9-10, 2009Kearney, NE Robert ZavadilVice President620 Mabry Hood Road, Suite 300Knoxville, Tennessee 37932Tel: (865) 218-4600 ex. 6149bobz@enernex.com www.enernex.com

2. Project Objectives • Evaluate the impact of significant (>10% energy) wind energy on Nebraska power system operations • Produce meaningful and supported results in coordination with a Technical Review Committee (TRC), which should include stakeholders and experts in wind integration analysis • To quantify, using valid evaluation techniques, the expected wind integration costs, both sub-hourly and hourly and longer for Nebraska wind generation development. • To involve outside experts and interested parties in order to advance team building for future Nebraska wind generation development and increase the level of understanding among state leaders concerning wind integration issues for Nebraska • Build data base and utility expertise for ongoing improved in-house modeling of wind generation impacts for future studies Nebraska Wind Power 2009

3. Wind Scenarios • Four Base Scenarios: • 10% NPA wind, 10% SPP wind, without overlay • 20% NPA wind, 20% SPP wind, without overlay • 20% NPA wind, 20% SPP wind, SPP EHV Overlay • 40% NPA wind, 40% SPP wind, SPP EHV Overlay • NPA amounts are 1.2 GW, 2.4 GW, and 4.8 GW • SPP amounts are 6.3 GW, 12.6 GW, 25.2 GW • “Rest of world” wind capacity • per MISO/JCSP reference case • Approximately 70 GW • 2018 Study Year Nebraska Wind Power 2009

4. NREL Meso-scale Data Overview - SPP Nebraska Wind Power 2009

5. Wind and Load data drive analysis • NREL data allows high-resolution scenarios to be created for study • Variations and correlation between wind and load are correctly represented Nebraska Wind Power 2009

6. Average Seasonal Load and Wind - NPA Nebraska Wind Power 2009

7. Analysis • Multi-year simulation of NPA system operation • Hourly resolution • Mimic future SPP market operations • Consider increased regulation requirements, forecast errors due to wind in unit commitment and dispatch simulations • Primary results are NPA and SPP production costs to compare throughout scenarios • Model • Most of Eastern Interconnection (excluding NY, New England, Florida) • 70 GW of installed wind capacity outside of SPP/NPA • Loads matching 2018 projections, but using historical 2004-2006 patterns Nebraska Wind Power 2009

8. SPP EHV Overlay Nebraska Wind Power 2009

9. Transmission Sensitivity – 345 kV Overlay at 40% Wind Nebraska Wind Power 2009

10. NPA Wind Study – Findings and Conclusions Wind Generation Curtailment No significant curtailment in Nebraska in any case with or without the overlay Dispatched price of -$40; so wind has priority over other resources 17 flow gates monitored in NE; may be local congestion that would lead to curtailment In the rest of SPP for the base cases, curtailment was found to be: 2% at the 10% penetration without the overlay 7% at the 20% penetration without the overlay 0% at the 20% penetration with the overlay 5% at the 40% penetration with the overlay Wind Energy Usage – consistently as wind penetration increased, the study results had SPP (including Nebraska) increasing exports by half of the amount of the wind generation increases. (Wind penetration in external systems was held constant as SPP penetrations increased). Nebraska Wind Power 2009 Ventyx Confidential 10

11. NPA Wind Study – Findings and Conclusions SPP Incremental Reserves (compared to system with no wind, vary by hour, following are hourly maximums): 852 MW at 10% penetration 1,540 MW at 20% penetration 3,034 MW at 40% penetration Wind Generation Characteristics (historical 2004-2006) Considering all the wind sites in Nebraska used for the 40% penetration, the composite annual capacity factor in the NREL data varied as: 39.5% in 2004 41.0% in 2005 42.9% in 2006 The Mean Absolute Error of the day ahead forecast for the NREL wind generation data used in the Nebraska portion was 10.83% Nebraska Wind Power 2009 Ventyx Confidential 11

12. NPA Wind Study – Findings and Conclusions CO2 Increased wind penetrations result in lower CO2 emissions. A pure price penalty on CO2 is not very effective at reducing CO2 emissions in Nebraska (given a constant expansion fleet) until the penalty gets very large. Increased penalties on CO2 result in decreasedwind integration costs as more gas resources are committed due to CO2 penalties in both the ideal and actual cases diminishing the cost difference between the two. Nebraska Wind Power 2009 Ventyx Confidential 12

13. NPA Wind Study – Findings and Conclusions Total Cost Estimations $25/short ton CO2 price for cap-and-trade adds approximately 9% to total cost Each 10% penetration (7,540 MW) adds approximately 2% to total cost when CO2 cap-and-trade price is at $25/short ton Only the CO2 reduction case has emissions that approach the cap The savings in CO2 emissions cost and production costs appear to be 97% of the cost for the initial wind additions and 80% of cost at the 20%-40% penetrations (assuming CO2 price is $25/short ton). At the 20% wind penetration the annual expense of the overlay does not appear to be totally recovered in year 2018; however, this study is not considered to be a complete transmission analysis from either the operating or economic perspectives. Scheduling WAPA firm power to Nebraska utilities proportional to load-net-wind vs. proportional to load may save Nebraska on the order of $1 million subject to Missouri River Basin management priorities. Compared to cap and trade, a CO2 tax is estimated to add $2.94 billion at $25/short ton price and $5.88 billion at $50/ton. Nebraska Wind Power 2009 Ventyx Confidential 13

14. Nebraska Wind Power 2009

15. NPA Wind Study – Findings and Conclusions Integration Costs - Study Results Integration Costs (as initially definedwith shaped proxy resource) are relatively small and in a narrow range of $1.65 - $2.18 for the multiple penetration levels and years modeled. (See base results slide that follows in a few slides.) The base penetration scenarios show a consistent increase in use of gas fired resources to deal with wind forecast error and increased (and variable) reserve requirementswhen comparing actual wind to ideal wind runs. The initial definition of integration costs is only capturing effects of incremental reserves for wind and wind forecast error. Nebraska Wind Power 2009 Ventyx Confidential 15

16. Summary • Important initial findings for NPA members • NPA/SPP leveraged EWITS, NREL database • Another example of large model, multiple operating area simulation • Some new knowledge gained regarding integration cost analysis • But, as always, there is more work to do… Nebraska Wind Power 2009