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Analysis: Southwest Power Pool wind fleet to grow to 22.7 GW by end of 2019, but experts not alarmed

Highlights

Plenty of reserves, but decreasing

Development concentrated geographically

Houston — Southwest Power Pool so far in 2019 has had 754 MW of wind capacity enter commercial operation, but no other type, according to a generation interconnection status report generated Monday. Another 1.5 GW, almost all wind, is on schedule to come online in 2019.

As of the end of 2018, SPP had about 20.6 GW of wind, in terms of nameplate capacity, which made up almost 23% of the independent system operator's 89,999 MW of resource capacity, coming in third place behind natural gas with 40.3% and coal with 28.6%.

In terms of SPP's 275.8 TWh of energy generated, wind generation came in second with 23.5%, following coal's 42.4% but barely beating natural gas' 23.4%.

The Electric Reliability Council of Texas declared Energy Emergency Alerts on August 13 and 15, partly because of low wind output, and the UK had a blackout on August 9, reportedly tied to a problem with an offshore wind farm.

Coincidentally, ERCOT set a record for power demand on August 12 at 74,531 MW, while SPP set its all-time record a week later, August 19, at 50,662 MW.

RESERVE MARGINS

Asked whether SPP's increasing reliance on wind power might pose a reliability risk, Joshua Rhodes, University of Texas Energy Institute research associate, said, "I don't think that these numbers are alarming," because SPP's planning reserve margin is significantly higher than ERCOT's.

SPP had a planning reserve margin of 24.4% for summer 2019, according to the 2019 SPP Resource Adequacy Report, which indicated that only 3,229 MW of SPP's wind capacity was considered likely to be available at peak. SPP has assessed its minimum reserve percentage needed to maintain reliability as 12%.

A planning reserve margin is calculated as total amount of resources in excess of expected maximum peakload, as a percentage of that peakload.

That 24.4% is down from 28.1% for the summer of 2018 and the 2018 SPP Resource Adequacy Report's estimate of 26.3% for the summer of 2019. One factor resulting in 2019's smaller reserve margin was 1,160 MW more in confirmed retirements.

Travis Whalen, a power market analyst at S&P Global Platts Analytics, noted that ERCOT's reserve margins are much lower -- 8.6% this summer, compared with ERCOT's target of 13.75%.

"Just as importantly, SPP is a massive importer and exporter across multiple different boundaries, even connecting to the Western Interconnect," Whalen said, while ERCOT is a virtual island, with much more limited connectivity and power trading with neighboring grid operators.

The North American Electric Reliability Corp.'s latest Summer Reliability Assessment raises the issue of wind's effects on SPP's reliability.

"SPP has experienced mid-range forecast error uncertainty in wind forecasts as the penetration of wind generation increases," the report states. "This is not an issue if the error is short lived, but if the error continues throughout the day it can lead to short-term supply scarcity. Within SPP, a team is developing mitigation to ensure appropriate ramp product is available on a daily basis."

PROJECT CONCENTRATION

SPP's footprint incorporates all or parts of 14 states, stretching from Minnesota and North Dakota in the north to Louisiana, New Mexico and Texas in the South, but all of the generation slated to come online in 2019 is concentrated in five states: Kansas, Nebraska, Oklahoma, South Dakota and Texas.

In assessing the market impact of greater concentrations of wind in SPP, Platts Analytics' Whalen noted the effects so far on SPP.

"Power prices have dropped, which has incented retirements from many coal and older steam gas plants, which has whittled away at reserve margins," Whalen said. "Eventually you could reach a point where you wouldn't want to rely on the level of imports needed, which could require some action to incentivize new gas builds, but the fact that SPP is primarily in regulated markets suggests that those new builds might not require major market changes."

SPP generation additions in 2019
Online now
State Type Capacity (MW)
Kansas Wind 276
Texas Wind 478
On schedule for 2019 commercial operation
State Type Capacity (MW)
Kansas Wind 400.1
Nebraska Wind 160
Oklahoma Battery 20
Oklahoma Steam turbine 29
Oklahoma Wind 300
South Dakota Wind 200
Texas Wind 358.8
Source: Southwest Power Pool


-- Mark Watson, markham.watson@spglobal.com

-- Edited by Rocco Canonica, newsdesk@spglobal.com