AEP announced the big winner of its wind farm + transmission RFP yesterday.
Surprise, surprise, Invenergy gets the prize. But it's not the prize expected. It's not Invenergy's Wind Catcher wind farm in the Oklahoma panhandle, but three smaller Invenergy projects southeast of the panhandle. AEP's RFP was for 2100 MW, but it only awarded not quite 1500. Perhaps that was the limit it could find that fit into its regulatory shell game.
So what is Invenergy going to do with GBE now? Is it really going to continue to search for a customer and sell transmission capacity to its competitors, while going through a very expensive and doomed approval process for GBE in Illinois? Does Invenergy really want to assume the risk and expense of permitting a project that has no potential revenue? That's a Clean Line move, and I don't think Invenergy is that dumb.
So, what is AEP up to? As you may recall, the original Wind Catcher proposal was for a 2,000 MW wind farm in the OK panhandle, plus a generation tie line clear across the state. AEP proposed that the cost of the wind farm and transmission line would save ratepayers money. Regulators in Texas didn't buy that, and citizens in Oklahoma rose up to oppose the transmission line. After Wind Catcher was cancelled, AEP vowed to try again on a smaller scale. It has separated the wind farm purchase from the transmission build, at least for now. Although AEP's RFP called for possible transmission fixes for its wind farm purchases, it carefully chose ones it could pretend didn't need new transmission.
AEP says that it can use existing transmission to move the generation to load from the wind farms selected. Although existing transmission in Oklahoma is pretty congested with wind generation, AEP has a convoluted plan to make do and keep congestion costs to a minimum, at least for now. AEP posits that maybe in 5 years it will have to find another solution to rising congestion costs. AEP suggests that perhaps regional transmission planner Southwest Power Pool will plan and order a new transmission line to solve the congestion issues by that time, but it doesn't say AEP will take any action to make that happen. AEP's second solution would be to build a new generation tie line to connect the wind farms to existing transmission west of Tulsa. This is probably AEP's first goal... to own wind farms and transmission that will be paid for by ratepayers in four states.
Think about it... if AEP can convince regulators that wind farms save consumers money (and without the expense of building a new transmission line, it will be much cheaper and easier to pull off), then it can purchase the wind farms. Once it owns the wind farms, AEP can decide that existing transmission lines it relied on to make the case for the purchase of the wind farms are much too congested to deliver the wind energy to load. Therefore, in order to make the wind farms it purchased cheaper, AEP needs to build a new transmission line for its own use. How could regulators say no at that point, once AEP owns the wind farms? Saying no to new transmission makes the wind farms too expensive, so it's a fait accompli that new transmission must be built to lower congestion costs. It's a ridiculously simple-minded and obvious ploy... a transmission congestion shell game.
Will regulators buy it? Can AEP create enough smoke and mirrors about lack of congestion on existing transmission to convince regulators new transmission won't be needed in the future? The only thing certain here is that if regulators approve the purchase of the wind farms, the cost of a new generation tie line is certain at some point in the future. It will have to be built and there's pretty much no way to stop it at that point. Are state regulators really that short sighted? More importantly, are Okies that easily fooled that they will ignore the wind farm purchases in favor of waiting until transmission once again intrudes into their back yards? By that time, it will be too late to be effective opposing new transmission.
Most importantly, this time AEP isn't holding the risk. I read somewhere that the original Wind Catcher cost AEP around $45M in losses. This time they're not investing anything in a transmission line, and purchase of the wind farms is tied to state approvals. If it doesn't work out, AEP skates, and Invenergy gets left holding the bag on wind farms it built in a congested area, just like the original Wind Catcher.
Hmm... maybe Invenergy isn't too smart after all. Invenergy falls for the same gag every time.
Surprise, surprise, Invenergy gets the prize. But it's not the prize expected. It's not Invenergy's Wind Catcher wind farm in the Oklahoma panhandle, but three smaller Invenergy projects southeast of the panhandle. AEP's RFP was for 2100 MW, but it only awarded not quite 1500. Perhaps that was the limit it could find that fit into its regulatory shell game.
So what is Invenergy going to do with GBE now? Is it really going to continue to search for a customer and sell transmission capacity to its competitors, while going through a very expensive and doomed approval process for GBE in Illinois? Does Invenergy really want to assume the risk and expense of permitting a project that has no potential revenue? That's a Clean Line move, and I don't think Invenergy is that dumb.
So, what is AEP up to? As you may recall, the original Wind Catcher proposal was for a 2,000 MW wind farm in the OK panhandle, plus a generation tie line clear across the state. AEP proposed that the cost of the wind farm and transmission line would save ratepayers money. Regulators in Texas didn't buy that, and citizens in Oklahoma rose up to oppose the transmission line. After Wind Catcher was cancelled, AEP vowed to try again on a smaller scale. It has separated the wind farm purchase from the transmission build, at least for now. Although AEP's RFP called for possible transmission fixes for its wind farm purchases, it carefully chose ones it could pretend didn't need new transmission.
AEP says that it can use existing transmission to move the generation to load from the wind farms selected. Although existing transmission in Oklahoma is pretty congested with wind generation, AEP has a convoluted plan to make do and keep congestion costs to a minimum, at least for now. AEP posits that maybe in 5 years it will have to find another solution to rising congestion costs. AEP suggests that perhaps regional transmission planner Southwest Power Pool will plan and order a new transmission line to solve the congestion issues by that time, but it doesn't say AEP will take any action to make that happen. AEP's second solution would be to build a new generation tie line to connect the wind farms to existing transmission west of Tulsa. This is probably AEP's first goal... to own wind farms and transmission that will be paid for by ratepayers in four states.
Think about it... if AEP can convince regulators that wind farms save consumers money (and without the expense of building a new transmission line, it will be much cheaper and easier to pull off), then it can purchase the wind farms. Once it owns the wind farms, AEP can decide that existing transmission lines it relied on to make the case for the purchase of the wind farms are much too congested to deliver the wind energy to load. Therefore, in order to make the wind farms it purchased cheaper, AEP needs to build a new transmission line for its own use. How could regulators say no at that point, once AEP owns the wind farms? Saying no to new transmission makes the wind farms too expensive, so it's a fait accompli that new transmission must be built to lower congestion costs. It's a ridiculously simple-minded and obvious ploy... a transmission congestion shell game.
Will regulators buy it? Can AEP create enough smoke and mirrors about lack of congestion on existing transmission to convince regulators new transmission won't be needed in the future? The only thing certain here is that if regulators approve the purchase of the wind farms, the cost of a new generation tie line is certain at some point in the future. It will have to be built and there's pretty much no way to stop it at that point. Are state regulators really that short sighted? More importantly, are Okies that easily fooled that they will ignore the wind farm purchases in favor of waiting until transmission once again intrudes into their back yards? By that time, it will be too late to be effective opposing new transmission.
Most importantly, this time AEP isn't holding the risk. I read somewhere that the original Wind Catcher cost AEP around $45M in losses. This time they're not investing anything in a transmission line, and purchase of the wind farms is tied to state approvals. If it doesn't work out, AEP skates, and Invenergy gets left holding the bag on wind farms it built in a congested area, just like the original Wind Catcher.
Hmm... maybe Invenergy isn't too smart after all. Invenergy falls for the same gag every time.
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