*[Enwl-eng] Wyoming Dreams of Selling Wind Power to CaliforniaEnergy Markets

[ENWLine]

*Wyo. dreams of marrying its wind to rich Calif. markets*

Nick Juliano, E&E reporter
Greenwire: Tuesday, February 19, 2013

JACKSON HOLE, Wyo. -- If all goes according to plan, a few years hence,
hundreds of thousands of homes in Southern California will be turning on
their lights with electricity generated by Wyoming's whipping winds.

That's the ambitious vision of billionaire-backed energy companies and
economic development officials aiming to construct thousands of turbines
and hundreds of miles of power lines connecting remote, windy Wyoming to
dense cities across the Desert Southwest.

California is the top target -- with its 33 percent by 2020 renewable
portfolio standard and its climate law requiring an 80 percent reduction
in greenhouse gas emissions by 2050. But serious hurdles remain before
the projects take flight.

Illustration Omitted:
TransWest map. Developers of the TransWest Express transmission
line hope to carry power from a Wyoming wind farm to feed demand for
renewable energy in California. Map courtesy of TransWest Express.

Most notably, California Gov. Jerry Brown (D) is decidedly skeptical of
proposals to import electricity to meet the state's renewable energy and
climate change goals. Furthermore, the Wyoming wind and transmission
projects continue to face delays in federal permitting -- even though
projects such as these are typically granted priority status. And its
developers have not yet lined up utility customers to purchase the power
and cover the transmission costs.

But here in Wyoming, optimism and excitement for the projects are only
growing. Proponents say it's only a matter of time until California
utilities and politicians fully grasp the economic and reliability
benefits of Wyoming's wind, which is among the best in the nation, and
they are confident the federal permitting hurdles will be cleared. In
the meantime, developers and their allies will keep courting utilities,
lobbying Brown and the California Legislature and working their way
through various regulatory reviews.

"The only reason that Wyoming wind won't flow into California is
strictly politics, because the price is there, all the benefits are
there," says Loyd Drain, executive director of the Wyoming
Infrastructure Authority (WIA), a quasi-government agency that is
championing the projects.

Of the projects on the horizon, perhaps the most notable is a massive
wind farm and transmission line being pursued by companies owned by
billionaire Philip Anschutz, whose vast holdings include a
well-established oil drilling company. The 725-mile TransWest Express
transmission line would send power from the companion Chokecherry and
Sierra Madre Wind Energy Project -- a thousand turbines spread across
500 square miles. The line would carry the 2,500 megawatts of power that
would be generated to a substation outside Las Vegas, from which it
could flow across the Southwest.

Also notable is the Energy Gateway project, a collection of transmission
lines from Wyoming to several surrounding states being pursued by
PacifiCorp, a subsidiary of MidAmerican Energy Holdings, which is
affiliated with billionaire Warren Buffett's Berkshire Hathaway holding
company.

A few years farther down the line is the planned Zephyr line from a
partnership of Duke Energy Corp. and American Transmission Co., which
aims to carry up to 3,000 MW of Wyoming wind to the Desert Southwest.

"When you've got Warren Buffett behind PacifiCorp's Energy Gateway
project; when you've got Phil Anschutz behind TransWest; when you've got
Duke Energy and American Transmission Co. behind Zephyr -- that's pretty
impressive, pal," Drain said in an interview during a conference his
organization sponsored here last week. "We have been blessed with great
developers."

Charm offensive

WIA officials are rolling out studies demonstrating the compatibility of
Wyoming's wind with California's demand, bragging about the potential
for hundreds of millions of dollars in savings to Golden State utility
customers and frequently traveling to meet with anyone in the state who
will hear them out.

The WIA last week released a study it commissioned from the University
of Wyoming measuring the load Wyoming could provide compared with that
from wind and solar projects in California. It showed that Wyoming's
winds are steady during the day, when demand is high, compared with
California wind that blows primarily at night.

"California is famous for a lot of things, but unfortunately wind is not
one of them," Drain said. "That'd be like us trying to build a bunch of
solar in Wyoming."

Indeed, California has put more emphasis on solar projects in recent
years, encouraging both the installation of rooftop photovoltaic panels
and massive solar thermal projects in the desert. It is solar that
Wyoming wind developers have more to be worried about, but Drain said
they can compete there as well. The University of Wyoming study, for
example, also suggested that Wyoming wind could avoid reliance on fossil
fuel generation to fill in morning and evening gaps from solar generation.

Proponents of Wyoming wind also are quick to cite a 2011 study from the
Western Electricity Coordinating Council and funded by the Department of
Energy that found Californians could save $600 million per year if just
20 percent of the state's renewable energy demand came from Wyoming
wind. WIA plans to issue more studies demonstrating the economic and
job-creation potential of marrying its state's wind with California's
demand.

Drain participated in about 40 meetings in California last year, with
everyone from senior aides in the governor's office to utility
regulators and executives to environmentalists.

The charm offensive is beginning to bear fruit. WIA and developers
secured support for the TransWest project from several unions, including
the International Brotherhood of Electrical Workers, International Union
of Operating Engineers and AFL-CIO. Courting unions is not necessarily a
concern in conservative Wyoming, but developers recognize the political
weight they carry in California.

"We've gone out and we've done partnering agreements with the IBEW and
the operating engineers, so we can build this line with union folks,
which is important in some areas on this line," Bill Boyd, executive
vice president and chief operating officer for TransWest Express, said
at last week's WIA meeting. "It's less important here in Wyoming but
something that we see that we need to do."

A spokesman for Brown declined to comment for this article but provided
an August 2011 letter from the governor's office to the Western
Electricity Coordinating Council outlining its position on renewable
energy imports.

"Looking back, until the first solar project was approved last year,
California had not permitted a large-solar project since 1989," wrote
Michael Picker, the governor's senior adviser for renewable energy.
"Thus, we fully understand that to-date there would be no reason to
assume that California would be able to pursue its renewable energy
needs in-state. However, things are progressing here in California at an
unprecedented pace."

Citing the costs and permitting risk inherent with the project, the
letter added, "We are also particularly concerned when we see proposals
for large renewable energy resource development outside of California
interconnecting across long distances directly into California balancing
authorities."

Bill Miller, who is spearheading development of the TransWest Express
line and Chokecherry and Sierra Madre wind farm, said he understands the
governor's desire to keep as many projects in the state as possible. But
he said the stronger winds in Wyoming would lead to more production --
and lower costs -- than comparable projects in California. That would
mean lower energy prices, which would have a broad economic impact.

"If you want to create and maintain jobs, building a wind farm in
California versus building it in Wyoming will create some jobs, yes it
will," Miller said in an interview here. "But in the long run, the thing
that creates and maintains jobs is going to be the cost of energy. We've
proven that time and time again."

At the WIA meeting, Tom Doughty, director of customer service and
stakeholder affairs for the California Independent System Operator
Corp., praised the innovative ideas coming out of Wyoming and the
persistence of its champions.

"It takes a while to bring an entirely new paradigm to a state the size
of California, so what I say to you and the board members is we welcome
you and we honor the ideas and the persistence that you've stayed in
California," Doughty said at a reception after the board meeting. "Keep
it up. California ISO welcomes the discussion on your projects."

In an interview, Doughty acknowledged that the grid operator is only one
level of review the Wyoming projects would have to clear before selling
power into California, alongside the Public Utility Commission and
California Energy Commission.

Projects would be evaluated on the basis of reliability, affordability
and ability to meet the RPS target compared with many other applicants.
And he said the ISO had to have a long horizon as part of its evaluation
to account for changes to the grid that will emerge as more consumers
put solar panels on their rooftops, homes and buildings become more
efficient, and batteries and demand-response technologies advance.

"Fifteen years from now ... if everything goes well, those things have
become real," Doughty said of efforts to create incentives for
technologies like storage, efficiency and demand response. "And at that
point, now we have to consider a slightly different grid construct -- or
maybe even a dramatically different grid construct. That's why this is
such an exciting moment because technology is evolving at the same time
as new ideas such as these are arriving. That creates a much more
difficult assessment."

The length of time it will take to build the wind farms and transmission
lines -- not to mention the hundreds of miles of public and private land
the lines will cross -- has generated some skepticism.

Matt Freedman, a staff attorney with the Utility Reform Network, a
ratepayer advocate in California, said the projects are based on some
"questionable" assumptions, namely that California utilities will agree
to purchase the power and that the various projects can navigate the
thicket of federal, state and local regulatory processes.

Freedman said his group does not have a formal position on any of the
projects but wondered whether Wyoming wind would be able to compete
against solar projects in California, and he said utilities had been
burned in the past chasing projects that looked great on paper but
ultimately proved infeasible to carry out.

"It's always seemed to me like this ... is a bit of a stretch," he said
in a phone interview last week. "I'm not saying it won't happen, but
there are a lot of things that have to go just right for these guys to
make it happen."

Another renewable advocate in California voiced support for trying to
maximize renewable resources across the region, rather than taking a
"parochial" view, but cautioned that it remained an open question how
quickly such partnerships could emerge.

"We're open to working with the folks in Wyoming. I'd just suggest a
little patience and caution is in order," said John White, executive
director of the Center for Energy Efficiency and Renewable Technologies,
a nonprofit collaboration of environmental groups and renewable energy
companies based in Sacramento, Calif. "I think it's good for us to be
engaged regionally and not just to be parochial about it."
Federal support

The federal government also has been generally supportive. The
Department of Energy's Western Area Power Administration is jointly
funding the TransWest Express line with the expectation of becoming a 50
percent co-owner when it is complete. And the Interior Department has
agreed to expedite reviews of some of the projects.

TransWest and PacifiCorp's Gateway West project from Wyoming to Idaho
are among seven projects given priority status from the Rapid Response
Team for Transmission, an interagency effort to speed transmission projects.

At a WIA meeting here last week, Bureau of Land Management acting Deputy
Director Neil Kornze noted "how much Wyoming likes to be No. 1," among
other milestones, claiming the first national park and first wilderness
area and leading the nation in coal production.

"There are great opportunities here in Wyoming to be first in major
transmission," said Kornze, who is often mentioned as a leading
candidate to become the new permanent head of BLM. "And you have some of
the best wind potential anywhere on the face of the Earth -- that's
something we've been very excited to be a part of."

Project supporters are encouraged by Interior's enthusiasm.

"Neil Kornze and [Counselor to the Interior Secretary] Steve Black have
played an extraordinary role in supporting the secretary's efforts to
accelerate these projects," said Tom Dennis, a veteran Washington-based
energy lobbyist whose clients include TransWest Express and the WIA.

Permitting delays

Excitement is one thing; actually approving projects is another. BLM
says it is doing its best to speed up the process -- including adding
more than a dozen employees dedicated to transmission reviews, despite
tight budgets (Greenwire, Feb. 12).

Lately, though, developers say they continue to face delays in the
National Environmental Policy Act reviews BLM is spearheading.
PacifiCorp just learned that a final environmental impact statement and
record of decision for its Gateway West line from BLM has been
indefinitely delayed, and TransWest Express was told by BLM that a draft
EIS for that line was being delayed another eight weeks, pushing its
release back to June.

"The obvious concern to us is each of these delays is incredibly
expensive," said Miller, the Wyoming power executive. "It's hundreds of
thousands of dollars each time this happens."

BLM last year did issue a record of decision for the Chokecherry and
Sierra Madre wind project, which is arrayed on a checkerboard of
federal, state and private land in southeast Wyoming. But construction
won't start until the developers know they will be able to transmit the
power, ideally via TransWest Express. The project also still needs the
Fish and Wildlife Service to sign off on plans to protect golden eagles
and other birds in the area, and site-specific environmental reviews are
ongoing to evaluate the precise location of each turbine.

Policy uncertainty

And as with any large-scale energy project, uncertainty abounds, even
beyond the standard delays associated with NEPA review. Among the
biggest questions looming for developers, utilities, regulators and grid
managers: Will wind still be able to rely on its lucrative tax credits
in a few years? Will continued reductions in solar costs undercut
Wyoming's wind on price?

It was not difficult to find wind proponents here griping about the
federal government's disparate approaches to supporting wind and solar
technology. Solar developers primarily rely on the investment tax
credit, which rebates 30 percent of a project's cost and is in place
through 2016. Wind, on the other hand, primarily derives benefits from
the 2.2-cent-per-kilowatt-hour production tax credit, which is less stable.

The industry succeeded in winning a last-minute reprieve when it was
facing the credit's expiration last year -- it is now in place for
projects that begin construction by the end of 2013. But that alone
would not be enough for the Chokecherry and Sierra Madre project because
construction on its 1,000 turbines is not expected to begin until at
least next year.

Developers are awaiting guidance from the Treasury Department and IRS
outlining how they will determine that construction has begun. But even
if the government allows developers to make a 5 percent "safe harbor"
investment, similar to its handling of a clean energy grant program
established in the stimulus law, the risk is too great at the outset of
a construction project expected to take five years.

While the begin-construction language will benefit smaller projects --
say, in the 100 to 300 MW range -- Miller said it was not practical for
the massive installation the Power Company of Wyoming is planning.

"One, I'm not sure that I could do it because of the phasing and because
of the supplemental plans I have to do for the permitting. But 5 percent
of $5 billion is still a lot of money and is still fully at risk," he
said in the interview. "So the decision is real simple on our part
because we can't, nor would we, spend 5 percent to put ourselves in a
position to be in safe harbor on the PTC as it stands today."

Miller said he is confident that his project could compete even without
the PTC, and he is among those in the industry backing proposals to
phase out the PTC over the next several years. Even the details of such
an approach are not as vital as allowing developers to plan over several
years.

"Give it certainty, and we'll live with it," he said. "Don't go through
all these gyrations and all these exercises trying to figure out
something that is complicated and inelegant. Give us a glide path. Tell
us what it is. And tell us, 'Don't come back.'"

A long road behind -- and ahead

Planning for the Anschutz wind farm and transmission line projects began
in 2007. Formal federal reviews started at the end of 2008, and it will
be at least several more years before turbines begin spinning to send
electrons down the transmission line. But Miller is willing to be patient.

"We have been developing large, integrated infrastructure projects
forever," from pipelines to massive real estate projects in downtown Los
Angeles, Miller said.

"We don't get scared off."



http://www.eenews.net/public/Greenwire/2013/02/19/1


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