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Southwest Power Pool board to mull $336 million portfolio of wires upgrades, mostly for wind

Highlights

Likely to cut congestion costs

8 GW of wind with interconnection deals

Houston — State regulators for the Southwest Power Pool learned Monday that the grid operator plans to ask the SPP board of directors on Tuesday to approve $336 million worth of transmission projects to help accommodate continued strong growth in wind generation in the sprawling footprint.

"On average, we would expect congestion costs lower by 63 cents/MWh, or 21%, which is a fairly significant reduction," said Lanny Nickel, SPP vice president for engineering, during Monday's SPP Regional State Committee meeting, as he presented the proposed 2019 Integrated Transmission Plan.

The RSC includes representatives from the various jurisdictions where SPP operates, including Arkansas, Iowa, Kansas, Louisiana, Missouri, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota and Texas.

SPP develops the ITP with stakeholders in order to plan wires upgrades that deliver energy reliably and economically while facilitating public policy objectives, if necessary, and while optimizing benefits to end-use customers, Nickell said.

The wires upgrade package includes 44 projects, 166 miles of new 345-kV lines and 28 miles of rebuilt transmission facilities.

Public policy was not a major driver for this portfolio of projects, Nickell said. Rather, wind generation growth, fossil fuel retirements, solar additions and moderate load growth drove the decisions.

"We believe we will see benefits almost the very day we put the first project into service ... by 2024," Nickel said. "It really does reduce prices and shift congestion further east."

The largest five projects, in terms of estimated engineering and construction costs, are as follows:

  • The Wolf Creek to Blackberry 345-kV line in southeastern Kansas and southwestern Missouri, $155.5 million
  • The Wekiwa-Sooner 345-kV line in northeastern Oklahoma, at $85.9 million
  • The Marshall-Smittyville-Bailey-Seneca rebuild in northeastern Kansas, at $17.6 million
  • The replacement of 21 breakers at the 138-kV Riverside Station in Oklahoma, $16.3 million
  • The installation of the Pryor Junction transformer in Oklahoma, at $9.2 million

WIND GROWTH SCENARIOS

Taking issues besides congestion into account, the portfolio of projects would reduce rates on average, among SPP's 14 states, by 4 cents/MWh in a scenario with slow wind growth, adding just 2.6 GW of capacity over the next 10 years, to 23 cents in a scenario with faster wind growth, adding 8 GW over the next 10 years.

The benefit-to-cost ratio would range from 3.5:1 to 5.8:1, he said, depending on the scenario, "one of the larger benefit-cost-ratio portfolios we have seen over the last three or four years," Nickell said.

The faster-wind-growth scenario is more realistic, Nickell said, as SPP already has 8 GW of wind projects with signed interconnection agreements who "have the right to construct now."

"We are also aware of about 5 GW of projects that have been announced to be in service by 2021," Nickell said.

For the various load zones in SPP, the fast-wind-growth scenario's portfolio's net rate changes would range from negative $3.25/MWh (a rate reduction) to positive $1.48/MWh (a rate increase), according to Nickell's presentation.

For the slow-wind-growth scenario, the net rate changes would range from negative $1.63/MWh to positive $1.36/MWh.

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

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