Valuing Geographic Diversity of Wind in the Rocky Mountain West
AbstractIncreasing integration of wind generation in the United States provides several opportunities and challenges to policy-makers. With respect to benefits, even without subsidy wind is now the cheapest form of new generation in many areas of the country, and costs continue to decline. Costs are so competitive, that in some areas it is cost effective to retire existing coal and even natural gas fueled generation and replace it with new wind facilities. In addition to cost reduction, expansion of wind generation also reduces emissions from existing fossil-fueled generation infrastructure, improving regional health outcomes, particularly when it results in reduced fossil-fueled generation in urban areas, and reducing greenhouse gas emissions. Such expansion of wind also creates challenges. In the existing transmission system rising wind generation in the United States poses a challenge to system operators due to wind intermittence and a current lack of economic storage alternatives. Geographic diversification of wind generation facilities, however, can minimize the system impact of site-specific intermittence; however, the location of wind resources can exacerbate problems of congestion on a transmission-constrained grid, with often unanticipated impacts to generation, cost and emission outcomes. To optimize wind development, the potential benefits from greater expansion of wind generation, including utilization of spatial distribution of wind resources on market price outcomes and emission reductions should be considered, subject to the constraints posed by existing transmission capacity. This paper attempts to determine the impacts of wind expansion using a simulation of the Rocky Mountain Power Area in the western United States to quantify the potential benefit-cost tradeoffs from cost improvements and emissions reductions while considering potential congestion impacts to system costs and emissions outcomes.
Our paper models the impacts of varying degrees of geographic diversity of wind resources while accounting for potential transmission congestion and time-of-day price variation, using a dispatch model of the Rocky Mountain Power Area region in the Western United States to simulate generation outcomes. We analyze different generation portfolios of wind location for their impact on electricity prices, generation variability, and global and local pollutant outcomes. This is conducted over a five-year period across the system as a whole and, in each of the two sub-regions of the system. Preliminary results indicate that, in the absence of transmission constraints, greater geographic diversification of additional wind power results in a win-win situation with minimal renewable generation variance, low electricity market prices, and greater reduction of total emissions. On a transmission-constrained grid, demand and supply conditions within specific sub-regions of the grid dictate the optimality of alternative wind generation siting choices. In each hour that transmission congestion occurs, costs and benefits of wind site placement are asymmetric across the system. This paper defines the impact that the placement of wind turbines has on market and non-market outcomes.