The Plains and Eastern Clean Line project could inject large quantities of high-value, low-cost wind power directly into the Tennessee Valley region from western Oklahoma. Recently Senator Lamar Alexander (R-TN) spoke on the senate floor in opposition to the project, and wind energy. We are disappointed that Sen. Alexander continues to use outdated information regarding wind energy. He has a responsibility to support the best interests of his constituents; however, his personal opposition to wind power is clouding the interests of Tennesseans.
Sen. Alexander says that wind power is unreliable. However, Oklahoma’s regional grid operator (the Southwest Power Pool, or SPP) recently reached a record wind power penetration level: at one point, the entire region generated 52% of its electricity from wind power. SPP is eyeing perhaps 75% wind energy penetration levels in the long-term. As shown by Oklahoma’s example, wind power can provide low-cost, reliable energy.
Sen. Alexander says that wind power is expensive. However, his information is outdated. With its considerable wind energy resources, Oklahoma had the lowest electricity prices in the country last year. Tennessee ranked #28.
- In November 2016, Lazard Associates published their annual Levelized Cost of Energy analysis showing that the lowest cost wind power resources reach $14/MWh (1.4 cents per kilowatt hour, kWh), and a new report from Moody’s Investor Services reports wind power prices for $15/MWh (1.5 cents per kWh).
- In 2015, Georgia Power received wind power proposals with pricing of $15.77/MWh (1.577 cents per kWh).
- As an already-operating wind project, the Balko Wind project in western Oklahoma sold wind power to the Public Service Company of Oklahoma for $15.80/MWh (1.58 cents per kWh).
- A Lawrence Berkeley National Lab study found that low-cost wind power purchase agreements are low enough to compete directly against the cost of burning natural gas fuel.
Sen. Alexander would have Tennessee turn its back on the single energy resource that is arguably doing the most to drive energy prices down all across the country.
Sen. Alexander says that a long-term contract would put TVA’s low cost power at risk. In the US Department of Energy’s Environmental Impact Statement for the Clean Line project, Leidos Electrical estimated that the Plains and Eastern Clean Line project is likely to drive down electric prices in Tennessee, Arkansas, and beyond. Our team has studied the impacts on the actual rates TVA charges its customers, and concluded that the project would drive down TVA’s costs and electric rates. This benefit increases when the revenue TVA would earn from its fees for use of the existing TVA transmission system to “wheel” low-cost wind power to power-hungry neighbors.
Sen. Alexander criticizes wind energy, based on historical information from the Buffalo Mountain wind farm in Tennessee. That project became operational 13 years ago (in 2004), and wind turbine technology has advanced significantly since then. While the Buffalo Mountain project achieves capacity factors of approximately 20% per year, as expected, the LBNL study also shows new turbine capacity factors already exceeding 50%+ in high wind speed areas. Western Oklahoma wind farms could achieve 55%+ capacity factors. With oversubscription on an HVDC transmission line, capacity factors could go even higher.
Sen. Alexander says that the Tennessee Valley Authority’s integrated resource plan shows it does not need new baseload power plant capacity. On this point, we agree. We participated heavily in TVA’s most recent integrated resource planning process. TVA found that new baseload power plants, such as new coal and nuclear units, are not needed.
Raising this point is a red herring because wind power is not a baseload capacity resource. The Clean Line project delivers most of its potential value as an energy resource. Low-cost wind energy, when available, reduces costs by helping TVA further minimize its highest cost power plants. This is exactly how the high levels of wind power in Oklahoma have pushed its electric rates to the lowest levels in the country.
What Sen. Alexander did not mention in his floor speech is that he advocates for massive subsidies for untested, unproven and costly small-modular nuclear reactors – a baseload power resource, which Sen. Alexander says (with respect to wind) that TVA doesn’t need.
Sen. Alexander claims that the federal production tax credit for wind energy is a “wasteful” incentive. However, the PTC is phasing out, despite the fact that fossil fuel and nuclear industries still receive massive federal subsidies. The PTC has broad bipartisan support; even Sen. Alexander has voted for legislative packages that contained PTC extensions. Wind farm development companies need to sign contracts soon to qualify for the highest level of this important tax credit. Wind energy projects may up to four years to finish construction, after qualifying for the PTC. Projects that qualified in 2016 would have until December 31, 2020 to deliver power and retain their qualifying status. Project development firms need some level of assurance that projects have buyers. As the PTC begins to phase out, TVA – and its customers – will lose the opportunity to save tens of millions of dollars in savings if nothing is done.
Senator Lamar Alexander’s bluster against wind energy relies on outdated misinformation, that ignores current realities. TVA, and other electric companies throughout the region, should contract for wind energy on the Plains and Eastern Clean Line project, soon.