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The Wind Blows Across the Coal Fields

Issue 8 and Volume 107.

By Steve Blankinship,
Associate Editor

Wind power developers bemoan the fact that abundant wind usually exists in regions remote from load centers, where there is rarely adequate transmission to connect wind-generated electricity to population centers. Developers of new coal-fired projects experience similar frustration because, in many instances, inadequate transmission hampers delivery of low-cost, coal-fired power to customers who could benefit most.

Although most people probably think of coal plants and wind farms as being at opposite ends of the power resource spectrum, both coal and wind share the need for expanded and improved transmission infrastructure if customers are going to derive maximum benefit from the electricity they generate. Coal offers reliable, low-cost base-load power. And wind brings emission-free renewable energy at an increasingly competitive cost. These realities are not lost on some generation-neutral entities.

The Midwest Independent Transmission System Operator (MISO), the nation’s first FERC-approved regional transmission organization, is one such asset-neutral entity. MISO’s footprint spans 15 states and 1.2 million square miles from Canada to Kentucky. “Some have noted that the wind blows across the coal fields,” says Jeff Webb, MISO’s director of planning. “It’s not enough to simply assure reliability. We need to identify transmission that must be built so the consumer can reap the benefits of existing low-cost generation and new developments. And among those low-cost resources are coal and renewables.”

Several transmission scenarios are under consideration by MISO, and some are based upon the location of substantial amounts of coal and wind where enhanced transmission could enable both. MISO’s coverage area is rich in both coal and wind resources. It includes the northern lignite basin in the Dakotas, and the Illinois basin in Illinois, Indiana and Kentucky. It also includes some of the highest wind potential areas in the world, also in the Dakotas as well as in Kansas and other upper-Midwest states. A MISO study shows that between $304 million and $1.6 billion in reduced annual marginal cost of wholesale energy could result from transmission additions together with higher amounts of wind and coal capacity, depending on natural gas price projections.

In the June issue of Power Engineering, Jacob Williams of Peabody Energy, a company pursuing low fuel-cost mine-mouth coal generation projects in western Kentucky and southern Illinois, noted that many coal facilities are underutilized because the lack of transmission prevents the flow of low-cost coal-generation to high-demand areas in the Northeast, Florida, Texas and the West.

As a result, many electricity markets will be left to float with the volatile natural gas market, which over the last three years has wildly fluctuated. “It is not surprising that the low-cost areas have the coal plants with the lowest capacity factors and the high-cost areas have coal units with the highest capacity factors,” he says. Webb says transmission outlets added to mine-mouth coal plants in the Illinois basin would produce wholesale cost reductions in TVA and to the south as well as in MISO.

Many of the potential sites for new coal and wind development in MISO are in congested areas of the system, and transmission expansion in these areas can result in improved delivery of the most efficient existing and new resources. “Certainly some of the scenarios we looked at, particularly up in the Northwest where most of our wind potential is, is also the area that includes some additional coal development,” says Webb. “We had one scenario that was mostly wind and also had some new coal. I think it is reasonable to expect that there’s both wind and coal resources up in the constrained transmission areas of the northwest. Transmission that enables one is going to enable both. That’s something that’s not lost even on the wind folks.”

Great Northern Power Development and Keiwit Mining Company announced in May that they will proceed with a 500 MW lignite/wind project in eastern Montana. The circulating fluidized bed design selected is a good example of today’s clean coal technologies that make the nation’s most abundant fuel dramatically cleaner than was once possible. The companies believe that linking coal and wind provides unique advantages to the project because coal can support the necessary upgrades to the transmission grid that would otherwise be difficult for wind to justify, while wind can improve the environmental performance of the project.

Elected officials in neighboring North Dakota — viewed as a “Saudi Arabia” of wind in the U.S., and with hundreds of years of coal reserves — have recognized the need for new transmission for both. North Dakota has organized a unique coalition of wind proponents, coal developers and transmission providers to address transmission to markets in need of new, reliable power.

“Our governor and elected officials have embraced energy development in the state, and recognized North Dakota’s opportunity to contribute to our nation’s energy supply and its security,” says Robert Harms, counsel to North Dakota Governor John Hoeven. Harms chairs the coalition formed to help resolve transmission constraints to neighboring markets. Governor Hoeven has been heavily involved in formulating national energy policy among governors, in an effort to help diversify the energy supply.

“Most people who have looked at the issue recognize the need for different fuel sources and risk of relying too heavily upon a single fuel,” says Harms. “We need it all. Energy developers in the region recognized the need to build alliances and coal and wind found those alliances that will help both deliver energy in coming years. Both energy groups recognized a need for one another, and a greater likelihood of success if they worked together, rather than going it alone. We know that transmission is the key and the members are committed to finding solutions to transmission constraints in the upper Great Plains in the coming years.”