Seeking to capitalize on the repowering movement in California, a midscale turbine manufacturer has its eyes on several legacy wind sites in Tehachapi, Calif., the birthplace of U.S. wind.
Turbine supplier EWT Americas, which manufactures direct-drive wind turbines with rated capacities up to 1 MW, plans not only to install a handful of 900 kW wind turbines in sites that were originally built in the 1980s, but also to own and operate the machines.
But before the manufacturer-turned-developer can move forward with its plans, it needs the California Public Utilities Commission (CPUC) to modify eligibility requirements under California’s Renewable Market Adjusting Tariff (ReMAT) program – a key state incentive that would help improve the economics of the project.
The ReMAT program, which operates like a feed-in tariff, stipulates that renewable energy projects of less than 3 MW cannot share facilities, such as transformers. And that puts EWT’s three planned Tehachapi wind projects – each with nameplates smaller than the 3 MW threshold – in jeopardy.
ReMAT, which pays developers $89/MWh, is a standard fixed-price contract that allows the sale of electricity to California’s three large investor-owned utilities: Southern California Edison (SCE), Pacific Gas and Electric, and San Diego Gas and Electric. The program runs on a first-come, first-served basis until it is fully subscribed. To date, the program totals nearly 500 MW of capacity dedicated to renewable energy, with most of that amount awarded to solar energy. In fact, only one wind power purchase agreement was awarded to a wind developer in nearly three years.
As Jarod Bishop, EWT’s business development manager for the West Coast, explains, ReMAT projects are characterized as distribution-level projects, meaning they generate power onto the utility’s lower-voltage distribution grid. Connecting at the 12 kV level for a small project is doable. But in some areas of California, such as Tehachapi, the distribution lines are as high as 66 kV. At that level, a new transformer costs roughly $500,000 for the equipment and another $400,000 for related design, engineering and installation services.
“At that point,” Bishop notes, “the cost quickly approaches $1 million.”
Modifying ReMAT eligibility requirements, explains Bishop, would alleviate the “twisted nature” of the California grid.
“The twisted nature of interconnection capacity on the grid leaves some projects with a small amount of unfilled capacity,” Bishop explains.
He says the utilities try to claw back allocated interconnection capacity all the time; one point in time this occurs is during the qualifying facility conversion process, when legacy contracts are updated to conform to current regulatory standards, resulting in interconnection agreements that contain new terms under the appropriate regulatory jurisdiction, shifting from state to federal regulation, for example. This process often results in a loss of allocated capacity, or partitioned capacity that is difficult to develop in today’s energy market.[adright zone=’190′]
According to Bishop, EWT thought it had struck an agreement with SCE late last year. However, citing restrictions under ReMAT, the utility terminated the off-take agreement earlier this year.
Nancy Rader, executive director of the California Wind Energy Association, has lobbied the CPUC on behalf of wind developers such as EWT. She asserts that a favorable ruling would open the door not only for some of its projects, but also for wind development in the state as a whole. She says EWT’s 900 kW turbines are a good fit for repowering many of the small 1980s projects that, for a variety of reasons, cannot handle 2 MW to 3 MW wind turbines, citing wind shadow, military height restrictions and small parcel size.
According to Rader, repowering preserves California’s nearly 1,000 MW in legacy projects, increases their capacity factors and stabilizes the grid. The expected increase in annual energy output is 330 MW, all of which would be available to meet California’s renewable portfolio standard of 50% renewables by 2030. (For more on California wind, see the cover story, “California Defies Trump’s Anti-Environment Agenda,” on page 28.)
In a letter to the CPUC, Rader argues that a large majority of the 1980s vintage wind projects that have not been repowered are relatively small in size (under 20 MW), and all use wind turbines that are tiny in size by today’s standards.
“In many cases, particularly in Kern and Riverside counties, circumstances are such that these pioneer projects cannot be repowered with typical modern turbines that are 2 MW to 3 MW in size,” she says. “Conversely, wind turbines in the 500 kW to 1 MW range will be required to repower many of these aging facilities. These midsize turbines are also well suited to California’s distributed generation market.”
The industry is pushing for a ruling on the issue sometime this month. Proponents, such as Bishop and Rader, are hopeful that the CPUC will rule favorably, primarily because the CPUC has already lifted the restriction for renewable projects exceeding 3 MW.
“We won the same argument [before], and we simply need the CPUC to extend their ruling to the ReMAT program,” Rader says. “While the CPUC appears to be short-handed, with priority going to the integrated resource planning and other matters, we are trying hard to get their attention on this.”
Bishop agrees. “The CPUC is often bogged down with so much to do that it can’t respond quickly enough to reasonable attempts from the industry to make sensible fixes to the policy in time.”