Commodities 2021: SPP adds 4.86 GW of renewable capacity in 2020, expects 4.95 GW more in 2021

The winds of change continue to blow across the Southwest Power Pool footprint after setting multiple renewable records in 2020, with more renewable generation expected to come online in 2021 as wind has assumed the top spot in the fuel stack.

Wind accounts for nearly 27% of SPP's generation capacity so far in 2020, behind coal at nearly 30% and natural gas at 36.5%, SPP Spokeswoman Meghan Sever said. However, wind has averaged 31.36% of the generation mix year to date, an increase of 3.6 percentage point year on year, and outpaced coal annually for the first time in SPP's history, according to ISO data.

"SPP saw wind overtake coal as our primary fuel source in 2020," Sever said. "We anticipate this will continue going forward as we see more growth in renewables."

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Coal generation fell 4.2 percentage points to average 30.4% of the stack so far in 2020 and although gas leads SPP's capacity, it ranks third in the fuel mix at nearly 27%.

Wind penetration records were broken three times in 2020, the last reaching 73.2% at 1:24 pm April 27, when SPP also set a renewable penetration record of 78.2%, Sever said. The wind output record was broken five times, the last reaching 19.371 GW at 6:47 pm Dec. 22, while SPP reached its latest renewable production record of 20.163 MW at 9:25 pm Nov. 23, surpassing a record of 20.075 GW reached Jan. 8. The historical renewable total was 20.566 GW, according to SPP.

Generation queue

"There is plenty of new wind projects in queue for SPP and we expect wind generation in SPP to grow by over 20% year on year," said Manan Ahuja, North American power analytics manager at S&P Global Platts Analytics. "It would mean less fossil generation in 2021. However, it could also impact gas generation as coal will likely compete better with higher gas prices forecast."

SPP added 4.84 GW of wind and 20 MW of solar in 2020, with plans to add 4.84 GW of wind in 2021 along with 100 MW of solar, Sever said.

"Despite having a large percentage of wind in our footprint, having a diverse fuel mix remains necessary to accommodate a wide variety of operational circumstances," Sever said. "Our diverse mix allows us to reliably serve load, even when the wind isn't blowing."

The increase in renewables is pulling down power prices. SPP spot prices in 2020 have averaged about $22.25/MWh so far this year, $5 lower than 2019 levels, according to SPP data. Forward packages for 2021 are averaging about 1.5% lower than 2020 packages, according to S&P Global Platts data.

WEIS market launch

In addition to new generation being built, SPP expects to launch its Western Energy Imbalance Service market in February, which would add 7.53 GW of capacity from entities participating in the WEIS market.

FERC rejected the initial SPP tariff filing (ER20-1059, ER20-1060) without prejudice and identified five primary issues that needed to be addressed – two main issues that caused FERC 's rejection and three suggestions.

SPP made changes based on FERC's recommendations and is awaiting a response in the latest filing, SPP Spokesman Derek Wingfield said.

SPP operates as a regional transmission organization in the Eastern Interconnection, where it administered a separate energy imbalance service market before launching its integrated marketplace for that region in 2014. It is currently jockeying with the California Independent System Operator for position to offer energy imbalance services across the US West.

SPP's WEIS market, which is expected to launch in February pending approval from the US Federal Energy Regulatory Commission, will balance generation and load regionally and in real time for participants in the Western Interconnection without those participants having to be SPP RTO members. Like SPP 's previous markets, the WEIS will provide price transparency of wholesale energy, allow parties to trade bilaterally and hedge against costly transmission congestion. WEIS participation can be a pathway to full RTO membership for utilities in the western grid.

SPP footprint spans 14 states, including Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming.