# [Summary Report]{.underline}

# [Energy Analysis Forum]{.underline}

# Golden, Colorado

# August 13 & 14, 2001

# [Preface]{.underline}

The purpose of the first Energy Analysis Forum was to identify and
summarize analytic needs and approaches related to the expansion of
renewable power generation in regional electricity markets. The forum
included five sessions as follows:

-   Introduction and Context

-   Markets for Renewable Power Technologies

-   Regional Electricity Markets

-   Panels on Intermittency, Transmission, and Policy Issues

-   Analytic Needs Assessment and Conclusions

This forum was designed to be forward-looking, to identify analytic
issues deserving attention. As such, it did not attempt to present
methodologies or results of past efforts, nor a summary of current
analytic efforts.

This Summary Report provides a brief overview of the forum, including
outlines of the information presented, a summary of Analytic Needs
developed in the forum, and other key conclusions.

This forum was the first in an ongoing series of energy analysis forums
that NREL will plan and lead in the future. This series will
periodically convene analysts and stakeholders to address key analytic
issues relevant to the renewable energy and energy efficiency
communities. Future forum topics will be chosen based on the evolving
information needs of energy program managers, energy policymakers, and
energy marketplace decision-makers. The frequency is planned to be about
two forums per year.

# 

**[Forum Context and Introduction]{.underline}**

[Analysis and R&D Programs]{.underline}

Dr. Robert Dixon, Deputy Assistant Secretary of the Office of Power
Technologies at the Department of Energy, helped set the stage for this
and subsequent forums by outlining the needs and value of energy
analysis for energy program planning and management purposes, for
supporting energy policy formulation, and for understanding the
potential roles of new energy technologies in evolving energy markets.
Dr. Dixon pointed out that the aging infrastructure in the nation's
electricity sector, including the power generation and the transmission
and distribution systems, is getting much-needed attention based on
concerns about meeting increasing electricity service demands. In
addition, an expanding portion of the electricity demand sector is
seeking higher quality and reliability to meet specialized
manufacturing, information systems, and other high-profile service
needs. Planning and managing the most effective energy programs in this
context leads to a variety of analysis needs. Examples include:

-   Energy program performance analysis as ordered in the National
    Energy Policy

-   Energy program portfolio analysis

-   Analysis of the successes and failures in different states'
    approaches to electricity sector restructuring

-   Understanding the reliability dimension of the nation's energy
    system

-   Better understanding, forecasting, and mitigation of volatile fuel
    prices

-   Understanding U.S. options in the context of evolving international
    agreements on climate change

With this emphasis on national energy issues, Dr. Dixon is calling on
the energy analysis community for a review and renewal of energy
analysis activities, including

-   An emphasis on complete, reliable, and readily accessible databases,

-   Representation of distributed energy resources in models,

-   Development of credible renewable energy supply curves, and

-   A focus on credibility and objectivity to overcome the negative
    stereotypes of renewables-related analysis.

# [Forum Topic \-- The Role of Renewables in Regional Power Markets]{.underline}

As mentioned in the Preface, the purpose of this initial energy analysis
forum was

To identify and summarize analytic needs and approaches related to the
expansion of renewable power generation in regional electricity markets.

This topic was selected because of its current importance given the
following considerations:

-   Renewables are beginning to enter domestic markets in significant
    ways.

-   We are facing a period of increasing requirements for new generating
    capacity.

-   In order for renewables to make larger contributions to our energy
    economy, it is important that they succeed in this period of
    capacity expansion

-   At the same time, there are many factors besides technology
    readiness that can limit market success.

Thus, the forum was designed to share information on current market
conditions for renewable power technologies, to highlight issues
affecting these technologies, and to identify and prioritize analytic
needs to address these issues.

# 

# [Overview of U.S. Electricity Markets]{.underline}

# Dr. Arnold Leitner of RDI Consulting set the broad context for the forum by providing an overall summary of the current status and near-term outlook for the U.S. electricity sector. In contrast to the current concerns about adequate electricity supplies, he indicated that 400,000 megawatts of new generation currently are being proposed. While not all of this will come to fruition, RDI projects that 180,000 MW will be added within the next five years, and these additions will put the electricity sector into a state of excess capacity.

Dr. Leitner identified several market factors deserving attention in the
immediate future, as follows:

-   The current economic slowdown is not expected to cause a drop in
    electricity demand. However, an extended economic slowdown could
    blunt demand.

-   Retail prices heavily influence electricity demand.

-   The idea that expanding Internet use will greatly increase
    electricity demand is a myth.

-   However, high-density loads, such as "internet hotels" and data
    centers, requiring continuous service at 99.9999% reliability are on
    the increase.

-   Dynamic demand has the potential to reduce peak demand through load
    shifting.

Dr. Leitner also discussed market issues of particular relevance to
renewable power technologies. Most important is the ability to negotiate
viable power purchase agreements where the emphasis is on profitability
more than on lowering costs. Factors that need to be addressed include

-   Communicating in terms the industry understands

-   Intermittency can be accommodated if it is understood.
    Unpredictability of power output is more of a problem than
    intermittency.

-   Building capacity using traditional fuels is also a challenge.
    Different technologies will be chosen depending on their strengths
    and weaknesses.

-   Renewable power systems must be developed through independent power
    producers since they are developing the vast majority of power
    plants today.

**[Markets for Renewable Power Technologies]{.underline}**

The Forum included presentations on five renewable power technologies --
geothermal, wind, PV, concentrating solar power, and biopower. We have
summarized market information, issues, and related analytic needs for
these technologies in two tables below. The first table lists current
generating capacities and recent market experiences for these
technologies, as reported in REPIS. The second table summarizes the
presenters' views on near-term market outlooks, market issues and
barriers, and analytic needs related to market success of these
technologies.

These tables indicate that there are a number of analytic issues facing
expansion of renewable power technologies in the US. The most common
theme is financial issues, including costs of generation and delivery,
and the value of renewable power. Resource issues are also important,
including availability, costs, and forecasting.

**Table 1: Generation Capacities and Market Experiences of Renewable
Power Technologies in the U.S.**

+---------+---------+-------------------------------------------------+
| **Techn | **US    | **Recent Market Experiences**[^2]               |
| ology** | Capacit |                                                 |
|         | y**[^1] |                                                 |
|         |         |                                                 |
|         | **      |                                                 |
|         | through |                                                 |
|         | 1999**  |                                                 |
+---------+---------+-------------------------------------------------+
| Geo     | 2715 MW | 1990-1996: 229 MW, 1997-1999: none, 2000: 49    |
| thermal |         | MW.                                             |
| Power   |         |                                                 |
+---------+---------+-------------------------------------------------+
| Wind    | 2631 MW | 1990-1997: 372 MW, 1998-1999: 844 MW[^3].\      |
| Power   |         | Largest installation: 112.5 MW, Storm Lake, IA  |
|         |         | 1999.                                           |
+---------+---------+-------------------------------------------------+
| Pho     | 19 MW   | On-grid: Cumulative 1995: 8.2 MW, 1996-1999:    |
| tovolta |         | 10.8 MW[^5], 23.4% average annual growth.       |
| ics[^4] |         | Off-grid: Cumulative 1999: about 85 MW[^6].     |
+---------+---------+-------------------------------------------------+
| Concen  | 354 MW  | All installations are dated before 1990, except |
| trating |         | 0.125 MW in 1998.                               |
| Solar   |         |                                                 |
| Power   |         |                                                 |
+---------+---------+-------------------------------------------------+
| Biopo   | 11,755  | 1990-1999: 2688 MW, 2.6% average annual growth. |
| wer[^7] | MW      |                                                 |
+---------+---------+-------------------------------------------------+

#  Table 2: Key Market Issues and Analytic Needs for Expanding the Use of Renewables in U.S. Power Markets

+---------+-------------------+-------------------+-------------------+
| **Techn | **U.S. Market     | **Market Trends   | **Analytic        |
| ology** | Outlook**         | and Issues**      | Needs**           |
+---------+-------------------+-------------------+-------------------+
| Geo     | -   Declining     | -   Long-term     | -   Forecast of   |
| thermal |     plant and     |     contracts     |     marginal      |
| Power   |     production    |                   |     (natural gas) |
|         |     costs         | -   Transparent   |     prices        |
|         |                   |     Process       |                   |
|         | -   Limited U.S.  |                   | -   Value of      |
|         |     resource,     | -   Transmission  |     natural gas   |
|         |     mostly in the |                   |     hedge         |
|         |     west; strong  |                   |                   |
|         |     potential     |                   | -   Customer      |
|         |     overseas      |                   |     preference    |
|         |                   |                   |     and pricing   |
+---------+-------------------+-------------------+-------------------+
| Wind    | -   4,800 MW in   | -   Flexible      | -   Land use --   |
| Power   |     development   |     near-real     |     availability, |
|         |                   |     time          |     location,     |
|         | -   Fastest       |     scheduling    |     impact        |
|         |     growth in     |                   |                   |
|         |     west and      | -   Penalty-free  | -   Revisiting    |
|         |     mid-west      |     imbalance     |     models        |
|         |                   |     settlement    |     including     |
|         |                   |     system        |     capital cost  |
|         |                   |                   |     and project   |
|         |                   | -   Long-term     |     finance       |
|         |                   |     non-firm      |                   |
|         |                   |     transmission  | -   Adapting NOAA |
|         |                   |     at            |     wind          |
|         |                   |     v             |     forecasting   |
|         |                   | olumetric-pricing |     in generation |
|         |                   |                   |     models        |
|         |                   | -   Market        |                   |
|         |                   |     features      |                   |
|         |                   |     common to     |                   |
|         |                   |     other         |                   |
|         |                   |     resources     |                   |
|         |                   |                   |                   |
|         |                   | -   Robust        |                   |
|         |                   |     regional      |                   |
|         |                   |     least-cost    |                   |
|         |                   |     planning      |                   |
|         |                   |     process       |                   |
+---------+-------------------+-------------------+-------------------+
| Photov  | -                 | -   High public   | -   Understanding |
| oltaics |  More-than-double |     acceptance    |     of California |
|         |     total market  |                   |     crisis --     |
|         |     growth by     | -   Off-grid      |     aberration or |
|         |     2005          |     market strong |     preview?      |
|         |                   |                   |                   |
|         | -   Building      | -   On-grid       | -   Analysis of   |
|         |     products will |     markets       |     thin-film     |
|         |     account for   |     policy driven |     applications  |
|         |     over 60% of   |                   |                   |
|         |     the market by | -   Lacks global  | -   Value and     |
|         |     2005          |     sales         |     pricing       |
|         |                   |                   |     models        |
|         |                   |    infrastructure |                   |
|         |                   |     and trained   | -   Incentives to |
|         |                   |     installers    |     enhance       |
|         |                   |                   |     current       |
|         |                   | -   Telecom and   |     market        |
|         |                   |     information   |                   |
|         |                   |     systems lead  |                   |
|         |                   |     demand        |                   |
+---------+-------------------+-------------------+-------------------+
| Concen  | -   18 companies  | -   Competitively | -   None          |
| trating |     (suppliers,   |     priced at     |     specified     |
| Solar   |     designers,    |     \$.10/kWh     |                   |
| Power   |     operators,    |                   |                   |
|         |     retailers)    | -   Aggressive    |                   |
|         |     and growing   |                   |                   |
|         |                   | commercialization |                   |
|         | -   4 of 18 are   |                   |                   |
|         |     Fortune 500   | -   Market        |                   |
|         |     companies     |     acceptance    |                   |
|         |                   |     near          |                   |
+---------+-------------------+-------------------+-------------------+
| B       | -   Most          | -   Long-term     | -   Predictive    |
| iopower |     favorable in  |     contracts     |     models        |
|         |     Midwest and   |                   |                   |
|         |     Southeast     | -   Feedstock     | -   Life cycle    |
|         |     regions of    |     supplies      |     analysis      |
|         |     the U.S.      |                   |                   |
|         |                   | -   Intersection  | -                 |
|         |                   |     of energy,    | Regulatory/policy |
|         |                   |     agriculture,  |     analysis      |
|         |                   |                   |                   |
|         |                   |    environmental, | -   Economic      |
|         |                   |     forestry, and |     including     |
|         |                   |     waste         |     pricing, spot |
|         |                   |     management    |     markets and   |
|         |                   |     issues        |     futures       |
+---------+-------------------+-------------------+-------------------+

**[Regional Perspectives, Outlook, and Issues]{.underline}**

To provide and share an understanding of overall electricity market
conditions and outlooks, the forum also included presentations on the
electricity markets for seven specific regions -- the Northeast,
Mid-Atlantic, Southeast, Midwest, Northwest, California, and Texas.

This regional market information has been summarized in two tables
below. The first table includes the region's current fuel mix, demand
trends, and generation trends. The second table summarizes the region's
market drivers, renewables outlook, and analytic needs.

**Table 3: Regional Electricity Markets: Status and Trends**

+-------+--------------------+-------------------+--------------------+
| **Reg | **Current          | **Demand Trends** | **Generation       |
| ion** | Capacity/Mix**     |                   | Trends**           |
+-------+--------------------+-------------------+--------------------+
| Nort  | 5104 MW (New       | New England       | New England        |
| heast | England)           |                   |                    |
|       |                    | -   110,000       | -   Aging supply   |
|       | 6116 MW (New York) |     GWh/year      |     moving to      |
|       |                    |                   |     reliance on    |
|       | New England Mix:   | New York          |     natural gas    |
|       |                    |                   |                    |
|       | -   Oil 24.3%      | -   130,000       | New York           |
|       |                    |     GWh/year      |                    |
|       | -   Nuclear 17.8%  |                   | -   Natural gas    |
|       |                    |                   |     plants under   |
|       | -   Gas 15.5%      |                   |     construction;  |
|       |                    |                   |     many more      |
|       | -   Coal 15.3%     |                   |     planned        |
|       |                    |                   |                    |
|       | -   Hydro 5.6%     |                   | -   Transmission   |
|       |                    |                   |     constraints    |
|       | -   Imports 16.4%  |                   |     between        |
|       |                    |                   |     upstate        |
|       | -   Other 5.1%     |                   |     (supply) and   |
|       |     (includes      |                   |     NYC/Long       |
|       |     biomass,       |                   |     Island         |
|       |     hydro, PV,     |                   |     (demand)       |
|       |     wind)          |                   |                    |
+-------+--------------------+-------------------+--------------------+
| Mi    | 373 TWh            | -   Data not      | Average annual     |
| d-Atl | Generated[^8]:     |     presented     | percent            |
| antic |                    |                   | growth[^10],       |
|       | -   Coal 51.9%     |                   | 1988-1998:         |
|       |                    |                   |                    |
|       | -   Nuclear 40.6%  |                   | Total Utility      |
|       |                    |                   | (1.4%):            |
|       | -   Oil 3.5%       |                   |                    |
|       |                    |                   | -   Coal 0.6%      |
|       | -   Gas 2.6%       |                   |                    |
|       |                    |                   | -   Nuclear 3.4%   |
|       | -   Hydro 1.0%     |                   |                    |
|       |                    |                   | -   Oil --6.7%     |
|       | Renewables[^9]:    |                   |                    |
|       | wind 10.6 MW, PV   |                   | -   Gas 13.4%      |
|       | 1.1 MW, biomass    |                   |                    |
|       | 1238 MW.           |                   | Non-Utility 2.8%   |
+-------+--------------------+-------------------+--------------------+
| Mi    | -   700 TWh        | -   Electricity   | -   Large          |
| dwest |     Generated      |     demand        |     additions of   |
|       |                    |     steadily      |     new gas plants |
|       | -   Dominated by   |     growing       |     to be          |
|       |     coal and       |                   |     completed by   |
|       |     nuclear        | -   Total demand  |     2020           |
|       |                    |     to reach      |                    |
|       |                    |     nearly 1000   |                    |
|       |                    |     TWh by 2020   |                    |
+-------+--------------------+-------------------+--------------------+
| Sout  | -   750 TWh        | -   Electricity   | -   Increased      |
| heast |     generated      |     demand        |     demand to be   |
|       |                    |     increasing    |     met with 400   |
|       | -   Dominated by   |     rapidly       |     TWh of new gas |
|       |     coal and       |                   |     development    |
|       |     nuclear        | -   Total demand  |                    |
|       |                    |     to reach      |                    |
|       | -   Includes 3,182 |     nearly 1,100  |                    |
|       |     MW of biomass, |     TWh by 2020   |                    |
|       |     2 MW of wind,  |                   |                    |
|       |     0.95 MW of PV  |                   |                    |
+-------+--------------------+-------------------+--------------------+
| Nort  | -   Hydro 60.5%    | -   20,000 aMW    | -   Dangerous      |
| hwest |                    |     annually      |     reliance on    |
|       | -   Coal 21%       |                   |     hydro with     |
|       |                    | -   Demand growth |     2001 worst     |
|       | -   Gas 12.4%      |     steadily      |     water year on  |
|       |                    |     decreasing    |     record         |
|       | -   Nuclear 3.2%   |     from 3.6%     |                    |
|       |                    |     annual        | -   By mid-2003,   |
|       | -   Other 3.0%     |     (1970s) to    |     new capacity   |
|       |     including      |     1.2% annual   |     (mostly gas)   |
|       |     black liquor,  |     (1990s)       |     to restore     |
|       |     solar, wind,   |                   |     acceptable     |
|       |     pet coke, wood | ```{=html}        |     levels of      |
|       |     residue,       | <!-- -->          |     reliability    |
|       |     wastewater     | ```               |                    |
|       |     gas, LFG, MSW, | -   Complementary |                    |
|       |     and refinery   |     loads with    |                    |
|       |     gas            |     southwest     |                    |
|       |                    |     peak loads in |                    |
|       |                    |     summer;       |                    |
|       |                    |     northwest     |                    |
|       |                    |     peak loads in |                    |
|       |                    |     winter        |                    |
+-------+--------------------+-------------------+--------------------+
| Calif | -   Gas 31%        | -   5,000 MW peak | -   700 MW new     |
| ornia |                    |     demand growth |     generation     |
|       | -   Hydro 21%      |     from          |     from 1995-1999 |
|       |                    |     1995-1999     |                    |
|       | -   Imports from   |                   | -   11,267 MW in   |
|       |     Northwest,     | -   Sharp growth  |     new capacity   |
|       |     Arizona, and   |     since 1996    |     in 2001-2002   |
|       |     Nevada         |     driven by     |                    |
|       |                    |     economic      | ```{=html}         |
|       |                    |     growth        | <!-- -->           |
|       |                    |                   | ```                |
|       |                    | -   High annual   | -   New power      |
|       |                    |     growth in     |     plant          |
|       |                    |     Arizona and   |     investments    |
|       |                    |     Nevada        |     avoided before |
|       |                    |                   |     restructuring  |
+-------+--------------------+-------------------+--------------------+
| Texas | -   Gas 59%        | -   Peak demand   | -   29,830 MW in   |
|       |                    |     of 56,800 MW  |     new generation |
|       | -   Coal 32.5%     |     projected by  |     planned; 61%   |
|       |                    |     2002          |     under          |
|       | -   Nuclear 7.6%   |                   |     construction   |
|       |                    |                   |                    |
|       | -   Hydro 1.0%     |                   | -   80,000 GWh     |
|       |                    |                   |     consumer       |
|       |                    |                   |     sales; 70,000  |
|       |                    |                   |     GWh industrial |
|       |                    |                   |     sales; nearly  |
|       |                    |                   |     65,000 GWh     |
|       |                    |                   |     commercial     |
|       |                    |                   |     sales          |
+-------+--------------------+-------------------+--------------------+

Table 4: Market Drivers, Outlook, and Analytic Needs for Renewables in
Regional Power Markets

+------+--------------------+-------------------+---------------------+
| **   | **Market Drivers   | **Outlook for     | **Analytic Needs**  |
| Regi | for Renewables**   | Renewables**      |                     |
| on** |                    |                   |                     |
+------+--------------------+-------------------+---------------------+
| N    | -   Purchase       | New England       | -   Resource and    |
| orth |     mandates       |                   |     policy          |
| east |                    | -   Near-term     |     assessments     |
|      | -   State          |     development   |                     |
|      |     incentives     |     of wind, PV,  | -   Wind and site   |
|      |                    |     biomass,      |     assessment      |
|      | -                  |     landfill gas, |                     |
|      |    Consumer-driven |     and hydro     | -   Biomass         |
|      |     green power    |                   |     assessments     |
|      |     demand         | New York          |                     |
|      |                    |                   | -   Natural gas     |
|      | -   Generation     | -   Technical     |     reliability     |
|      |     attribute      |     potential for |                     |
|      |     requirements   |     wind and      | -   RPS cost and    |
|      |                    |     untapped      |     impact analysis |
|      | -   Supply mix,    |     hydro         |                     |
|      |     emissions      |     resources     | -   Policy analysis |
|      |     markets,       |                   |     of market rules |
|      |     wholesale      |                   |                     |
|      |     market         |                   |                     |
|      |     structures     |                   |                     |
+------+--------------------+-------------------+---------------------+
| Mid- | -   Mandated       | -   Declining     | -   Analysis of     |
| Atla |     purchase       |     wind          |     competitive     |
| ntic |     programs       |     generation    |     market rules    |
|      |                    |     costs:        |                     |
|      | -   Customer       |                   | -   Studies of      |
|      |     choice         |  \$.49/kWh (1979) |     Green-E and     |
|      |     programs       |     to 2.5-4.5    |     energy labeling |
|      |                    |     cents/kWh     |     programs        |
|      | -   Wind           |     (2003)        |                     |
|      |     increasingly   |                   | -   Performance and |
|      |     price          | -   Target        |     environmental   |
|      |     competitive    |     wholesale     |     disclosure      |
|      |     due to wind    |     wind price    |     requirements    |
|      |     speeds,        |     premium is    |                     |
|      |     innovation,    |     1.5 cents/kWh |                     |
|      |     long-term      |     by 2003.      |                     |
|      |     agreements,    |                   |                     |
|      |     and public     | -   Excellent     |                     |
|      |     funding        |     wind          |                     |
|      |                    |     resources,    |                     |
|      | -   Strong         |     especially in |                     |
|      |     customer       |     mountain      |                     |
|      |     demand for PV  |     regions       |                     |
|      |     and wind       |                   |                     |
+------+--------------------+-------------------+---------------------+
| Mid  | -   Data not       | -   Estimated     | -   Transmission of |
| west |     presented      |     1,000 MW of   |     wind from       |
|      |                    |     Wind; 500 MW  |     western to      |
|      |                    |     of Biomass    |     eastern states  |
|      |                    |     proposed      |                     |
|      |                    |                   | ```{=html}          |
|      |                    | -   Some PV       | <!-- -->            |
|      |                    |     proposed      | ```                 |
|      |                    |                   | -   Update          |
|      |                    |                   |     transmission    |
|      |                    |                   |     rules to give   |
|      |                    |                   |     wind fair       |
|      |                    |                   |     access          |
+------+--------------------+-------------------+---------------------+
| S    | -   Data not       | -   11 MW of new  | -   Wind: on- and   |
| outh |     presented      |     biomass       |     off-shore       |
| east |                    |     proposed,     |     siting;         |
|      |                    |     some PV       |     potential of    |
|      |                    |                   |     small wind      |
|      |                    | -   Large         |     turbines        |
|      |                    |     opportunity   |                     |
|      |                    |     for end-user  | -   Biomass:        |
|      |                    |     efficiency    |     environmental   |
|      |                    |     improvements  |     constraints     |
|      |                    |                   |                     |
|      |                    | -   Talk of       | -   PV: Cost and    |
|      |                    |     off-shore     |     resource        |
|      |                    |     wind siting   |     availability    |
+------+--------------------+-------------------+---------------------+
| N    | -   Emphasis on    | -   Wind: 1,200   | -   None specified  |
| orth |     reducing       |     MW proposed   |                     |
| west |     reliability on |                   |                     |
|      |     hydro          | -   Biomass:      |                     |
|      |                    |     declining     |                     |
|      |                    |     wood residue  |                     |
|      |                    |     resource;     |                     |
|      |                    |     public        |                     |
|      |                    |     opposition to |                     |
|      |                    |     MSW burn      |                     |
|      |                    |                   |                     |
|      |                    | -   Geothermal:   |                     |
|      |                    |     being looked  |                     |
|      |                    |     at; some      |                     |
|      |                    |     sites         |                     |
|      |                    |     permitted     |                     |
|      |                    |                   |                     |
|      |                    | ```{=html}        |                     |
|      |                    | <!-- -->          |                     |
|      |                    | ```               |                     |
|      |                    | -   PV: Some      |                     |
|      |                    |     distributed   |                     |
|      |                    |     PV            |                     |
+------+--------------------+-------------------+---------------------+
| Ca   | -   Growing NV and | -   9,925 MW of   | -   Better wind     |
| lifo |     AZ demand may  |     projected new |     data reflecting |
| rnia |     lower imported |     capacity by   |     current tower   |
|      |     capacity       |     2020          |     heights         |
|      |                    |                   |                     |
|      | -   Decreased      | -   5,956 MW in   | -   Biomass         |
|      |     run-off limits |     wind by 2020  |     inventories     |
|      |     contribution   |     (likely to be |     reflecting      |
|      |     from hydro     |     higher);      |     location, price |
|      |                    |     1,000 MW in   |                     |
|      | -   Gas prices     |     geothermal by | -   Climate change  |
|      |     projected to   |     2010; 734 MW  |     emissions of    |
|      |     reach          |     in biopower   |     current energy  |
|      |     \$60/mmBtu by  |     by 2010;      |     mix             |
|      |     October, 2001. |     2,235 MW in   |                     |
|      |                    |     PV by 2020    | -   Analysis of     |
|      |                    |                   |     regulatory      |
|      |                    |                   |     changes on      |
|      |                    |                   |     generation      |
|      |                    |                   |     costs           |
+------+--------------------+-------------------+---------------------+
| T    | -   Customer       | -   Legislative   | -   Transmission    |
| exas |     choice         |     goal of 2,000 |     constraints;    |
|      |     underway       |     MW in new     |     capacity in     |
|      |                    |     capacity by   |     west, demand in |
|      | -   Unbundling of  |     2009          |     east            |
|      |     generation,    |                   |                     |
|      |     T&D, retail    | -   1,280 MW in   | -   Reliable        |
|      |     activities     |     wind planned; |     scheduling      |
|      |                    |     49% under     |     dispatch models |
|      | -   Labeling       |     construction  |                     |
|      |     standards,     |                   | -   Off-shore wind  |
|      |     consumer       |                   |     in Gulf         |
|      |     demand, RPS,   |                   |                     |
|      |     and credit     |                   |                     |
|      |     trading        |                   |                     |
+------+--------------------+-------------------+---------------------+

**[Panels on Intermittency, Transmission and Distribution, and Policy
Issues]{.underline}**

# These panels provided the basis for very active discussions of these issues, including numerous questions and comments from the audience in addition to the insights and varied viewpoints presented by the panelists.

One very clear conclusion from these panel sessions is that each of
these issues would benefit from expanded discussions in a workshop
format. This would permit more detailed presentations of what is known,
more specific definition of the critical information needs remaining, as
well as the best experimental and/or analytical approaches to addressing
those needs.

# 

# [Transmission and Distribution Panel]{.underline}

Panel Members:

Merwin Brown, NREL, Chair

Bob Easton, Western Area Power Authority

John Grainger, North Carolina State University

Brendan Kirby, Oak Ridge National Laboratory

Rich Rosen, Tellus Institute

This panel discussed a variety of issues dealing with renewables and
power transmission and distribution systems, as well as broader issues
such as interconnection standards for distributed energy resources and
even transmission system development and regulation. One of the
important general conclusions was that integration of renewables into
transmission or distribution systems doesn't represent a unique issue or
problem. Other resources and loads represent very similar
interconnection, operation, control and safety issues.

Key points made during this session included:

-   The site-specific nature of renewable energy resources makes many
    renewable power systems dependent on transmission system access.

-   Integration of renewable power systems into transmission networks
    shouldn't make operation and control of T&D systems much more
    difficult. For example, wind generators are no more difficult to
    accommodate than many industrial loads, such as arc furnaces, in
    terms of maintaining overall system power quality. In any case,
    transmission system operators will deal with it as a system problem,
    not as a system plus renewables problem.

-   With respect to the costs of maintaining system power quality,
    panelists differed on the appropriate approach. Rich Rosen cautioned
    against trying to marketize too much, while Brendan Kirby stated
    that we should look at all interconnected sources and loads and have
    them all pay for regulation impacts of their respective elements.

-   Today's electricity transmission networks include a very rich set of
    assets in terms of the electrical characteristics of current loads
    and generators, and there is considerable potential to make greater
    use of these assets for power regulation through integrated control
    strategies.

-   The deregulation of the electricity sector is raising some major
    issues relative to transmission systems, issues that are independent
    of renewables:

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-   Responsibility for operation of transmission networks is beginning
    to be clarified with the move toward establishing several major
    regional transmission operators, or RTO's.

-   However, there are serious transmission system planning and
    development issues today. The current transmission networks were
    developed to serve the vertically integrated regulated utilities of
    the past. With deregulation of the electricity sector,
    responsibility for transmission system planning and development
    isn't clear, nor are there clear business opportunities for the
    private sector to get involved. Least cost planning is needed but
    isn't generally being done.

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-   There is a parallel issue with distribution systems. These generally
    have not been operated as system networks, but the looming addition
    of distributed resources including renewables makes the evolution
    towards integrated operation and control of distribution systems
    both necessary (e.g., safety) and fruitful (better reliability and
    power quality).

# 

# [Intermittency Panel]{.underline}

Panel Members:

> Walter Short, NREL, Chair
>
> Jim Hill, Xcel Energy
>
> Tom Hoff, Clean Power Research
>
> Mike Milligan, Consultant to National Wind Technology Center at NREL

Hank Price, Concentrating Solar Power, NREL

Bob Zavadil, Electrotek

This panel covered a range of intermittency-related issues, including
the ability to control intermittent power sources, the scope of
intermittency as an issue, and costs associated with controlling and
integrating intermittent resources into power systems. Key points and
conclusions are presented below.

-   Utility engineers can probably control intermittent resources such
    as wind power plants as part of power systems. However, having
    output profiles well characterized will make that task much easier.
    Hourly output information from a few years is an example of the
    characterization that would be useful for power system control
    purposes. Such data would also enable accurate modeling of output
    profiles.

-   Data is also needed on the degree of output smoothing that results
    from more dispersed wind generators, both within a field of multiple
    generators and between multiple wind farms.

-   Utility engineers already deal with considerable intermittency on
    the demand side. Thus, integration of intermittent supply resources
    may not be much more complicated. A study comparing intermittent
    supply and loads needs to be conducted. More load and operations
    data is needed from utility dispatch controllers to better assess
    the impacts of intermittency.

-   One promising control strategy is to couple demand side controls
    with generation controls. An example is a building controller
    turning down AC equipment when PV power output falls.

-   A major issue with intermittent resources is establishing capacity
    and energy values as required for negotiating Power Purchase
    Agreements (PPA's). Resolving this issue requires better data on
    both power system generation profiles and associated power system
    control area demand profiles. A better understanding of the costs of
    ancillary services is also required.

-   For solar power systems, output frequently matches peak loads, so
    the intermittent output of solar power generators tends to help
    power systems meet peak load capacity requirements.

-   For residential PV systems, net metering is a valuable policy that
    basically insulates the PV owner from intermittency issues.

-   For both solar and wind technologies, there is a very large
    potential benefit to better resource forecasting. Confidence in
    resource forecasting would provide system control benefits as well
    as enabling a better understanding of intermittent resources for
    contracting purposes.

-   Standard production models used by the electric industry need to be
    modified to better capture variability and uncertainties in plant
    output.

-   Overview of global methods, measures, and successes regarding the
    intermittency impact on transmission and operations needs to be
    developed and promoted.

-   As better data, models, and forecasting capabilities are developed,
    it is important to get these in the hands of the individuals
    involved in developing control strategies and in signing PPA's.

# 

# [Policy Issues Panel]{.underline}

Panel Members:

Blair Swezey, NREL, Chair

Jim Caldwell, American Wind Energy Association

Rick Gilliam, Law Fund

Ron Lehr, Attorney

Ryan Wiser, Lawrence Berkeley National Laboratory

This panel focused primarily on policies related to renewables. Key
points presented include these.

-   Policies favoring development of renewables systems are often
    adopted as a part of larger actions, such as resolving a nuclear
    waste issue or adoption of a system benefits charge for supporting
    multiple public purposes.

-   The current regulatory context is very much in flux, with some
    states having undergone significant restructuring, others in the
    process, and still others with virtually unchanged electricity
    markets from those of 10 years ago. Even in states not
    restructuring, the companies are changing their operations and
    portfolio management functions. This condition is likely to continue
    for a number of years.

-   Public utility commissions, which continue to have broad powers over
    electricity markets in their states, tend to rank cost as having
    primary importance in decisionmaking, with reliability second, and
    environmental and resource diversity being the third most important
    factor.

-   Newer approaches to promoting renewables, such as green power
    programs, renewable portfolio standards, and system benefits
    charges, can work in both regulated and restructured markets.

-   A general guideline for developing policies is to make sure they
    provide a way for electricity sector participants to realize
    financial gains.

-   One analytic issue raised is that of understanding fuel price risks
    for natural gas. The importance of valuing those risks is
    highlighted today because of the rapidly expanding use of natural
    gas for power generation, coupled with dramatic natural gas price
    increases in the Fall of 2000.

-   An important practical issue for making renewables policies
    effective is that of implementation guidelines and processes. For
    example, how does a state or its electricity sector ensure that it
    can meet a renewable portfolio standard? How does it get the
    required generation developed, and how does it ensure overall
    compliance?

-   A frequent theme was that of education at all levels, e.g., why
    certain policies may be necessary, ways they can be implemented, and
    their costs and benefits. Decisionmakers in the power industry, in
    regulatory bodies, in state and local government, as well as
    consumers all need better information on the status and needs of our
    power systems.

## **[Analytic Needs Assessment and Conclusions]{.underline}**

At this point in the forum, participants had learned and shared a great
deal of information about current electricity markets in the U.S., about
how renewables are faring in regional power markets, and the current
state of understanding in the critical areas of intermittency,
transmission and distribution, and electricity sector policies. This
background provided a strong context for developing recommendations on
analytic needs.

The 4^th^ Session of the Forum was focused on a structured process for
identifying analytic needs and developing a sense of their priorities.
This was done in 3 breakout Working Groups focused on the 3 Panel
Session topics, let by the respective Panel Chairs from Session 3 above.
The resulting lists are given below.

These lists will be used by NREL and DOE as they plan and develop the
analytic agenda for FY2002 in the coming weeks.

Transmission and Distribution Working Group -- Analytic Needs and
Priorities

  ----------- ------------------------------------------------------------------
  **Votes**   **Analytic Need**

  6           Modeling of the physical and economic impacts of distributed
              generation on T&D design, planning and operations

  6           Integrate the various current modeling capabilities for different
              applications and systems to obtain more robust solutions,
              including transmission reliability issues.

  5           A comprehensive Index that compiles and cites analysis studies
              done in T&D related to renewables and DER applications.

  5           Analyze market principles, rules and implications to design
              equitable market rules, which will assist policy makers and market
              players in preparing for the future marketplace with renewables
              and DER.

  5           Data, algorithms, and models that improve the understanding of the
              unbundled electric distribution system functions, in order to
              determine or estimate impacts and values of renewables and DER
              interactions with the grid.

  4           Analysis and surveys that enhance the understanding of what
              factors create resistance to new transmission lines, and suggest
              solutions

  4           Analysis of the principles, behaviors and values of
              incentive-based ratemaking from RE point of view to answer the
              question: can the T&D business proposition be constructed
              differently with different incentives?

  4           Understand interaction of gas and electric distribution systems,
              because of the growing dependence of electricity generation on
              natural gas, both central station and distributed

  3           Regional *political* planning to compliment regional technical
              planning so that the expansion of the T&D system design reflects
              political realities

  2           Scenarios: identify the T&D system needed to support various
              future scenarios with an eye on optimization at the regional level

  2           Ability to analyze technical solutions proposed for problems of
              integrating renewables into T&D systems

  2           Understand how energy efficiency measures impact T&D design and
              operations.
  ----------- ------------------------------------------------------------------

### 

### Intermittency Working Group -- Analytic Needs and Priorities

  ----------- ------------------------------------------------------------------
  **Votes**   **Analytic Need**

  10          Resource characterization studies to support analysis of the
              intermittent output of renewable power systems

  9           Overview of the global methods, measures, and successes regarding
              the intermittency impact on transmission and operations

  9           Value of ancillary services

  9           Comparison of the intermittency of renewable supply technologies
              with intermittent loads

  7           Improving forecasting/production models to capture intermittency
              and uncertainty in future supplies

  6           Optimizing the size of wind systems vis-à-vis that of a dedicated
              transmission line to more fully load the line

  5           Identify bundling options/Analysis of interaction between central
              and distributed generation Renewables

  4           Value of wind and hydroelectric interactions

  3           Estimating the impact of renewables under a scenario of no net
              metering

  1           Value of storage to wind

  0           Distribution upgrades for distributed wind

  0           Developing a general estimation technique for the capacity value
              of wind within an individual utility\'s grid

  0           How significant is the intermittency issue within an RPS scenario
  ----------- ------------------------------------------------------------------

Policy Issues Working Group -- Analytic Needs and Priorities

  ----------- ------------------------------------------------------------------
  **Votes**   **Analytic Need**

  16          Improve outreach and dissemination of analysis products

  14          Analyses of incorporating fuel price (NG) risk, environmental
              risk, and other uncertainty factors in resource decisions; also,
              issues related to long-run discount rate determination

  14          Transmission scenarios for large amounts of RE; look at
              transmission requirements for large amounts of RE rather than for
              individual projects

  9           Survey assessment of political factors in energy policy
              development

  8           Implementation and administration of RPS; also, determination of
              public benefits, including impact on prices of other fuels

  8           Identification and quantification of RE benefits

  8           Development of regional biomass supply curves

  7           Governance/Regulation of RTOs including RTO issues (public
              participation), rules development, etc.

  7           Where/How to best to apply RE policies; local v. state v. regional
              v. national

  7           Development of supply functions for RE technologies

  6           Policy efficacy metrics

  6           Regional transmission pricing issues

  6           Develop up-to-date RE technology characterizations

  5           Develop better linkages between RE analysts and \'energy program
              evaluators\' community

  4           Articulation of real-life experience with high penetration of
              intermittents

  4           Evaluation of solar policy options for sustainable market
              development

  4           Energy subsidies analysis

  3           Lessons learned from Europe, etc. for RE policy development and
              implementation

  2           Adaptation of public weather information (NOAA) for renewable
              energy resource assessment and prediction

  2           Identification and comparative analysis of different SBC
              approaches

  2           Develop and provision of model power purchase agreements (PPAs)

  2           Moving DG toward cleaner resources \-- data needs; emissions
              avoided

  2           Long term performance characterization of RE technologies

  2           Analysis of expanding the PTC to other RETs (macroeconomic
              impacts)

  1           Structure of real-time markets

  1           Collaborative analysis activities

  1           Analysis of policy bundles to achieve rapid deployment of RE

  1           Analysis of RE and emissions trading systems

  0           Analysis of providing a profit motive for utilities to undertake
              green pricing programs

  0           Assist states/local government in incorporating renewables into
              smart development planning

  0           Address all-REOTs issue

  0           Net metering analysis for large systems

  0           Assessment of time-of-use pricing for PV

  0           Deployment driven technology evolution

  0           Assigning blame
  ----------- ------------------------------------------------------------------

[^1]: Analysis of REPiS database on 8/31/2001. (Renewable Electric Plant
    Information System, <http://www.eren.doe.gov/repis/>).

[^2]: Analysis of REPiS database on 8/31/2001.

[^3]: The 844 MW increase in wind capacity in the period 1998-1999
    reflected continuing cost declines and performance improvements,
    improved market conditions, state policy mandates, and the
    production tax credit (PTC) included in the Energy Policy Act of
    1992. Contributing to the capacity increase in 1999 was also the
    scheduled expiration of the PTC, which was then extended to December
    31, 2001. "REPiS: The Renewable Electric Plant Information System.
    1999 Edition." K.Porter, D.Trickett, L.Bird. NREL/TP-620-28674.
    August 2000.

[^4]: PV capacity was calculated from an integrated database originating
    from the following data sources, with redundant records eliminated:
    REPIS, EIA, Technology Experience to Accelerate Markets in Utility
    Photovoltaics (TEAM-UP), the Sacramento Municipal Utility District,
    the California Energy Commission, and the Million Solar Roofs
    Initiative.

[^5]: Industry representatives have commented that the 10.8 MW capacity
    figure for 1996-1999 seems lower than the actual capacity.

[^6]: As of 1999, about 85 MW off-grid PV had been installed in the U.S
    (only counting systems over 40 watts). The off-grid consumer market
    includes PV for remote residences, boats, motor homes, vacation
    cottages, and farms, while the off-grid commercial/industrial market
    includes telecommunication applications (e.g. remote repeaters,
    amplifiers for all modes of communication such as fiber optics,
    satellite and cable links), sensor power sources and data
    communication power for applications such as weather, and remote
    lighting and signals. "The 2000 National Survey Report of
    Photovoltaic Power Applications in the U.S.," for the IEA
    Co-Operative Programme on Photovoltaic Power Systems by Paul Maycock
    and Ward Bower.

[^7]: Biomass capacity includes 2938 MW municipal solid waste and 894 MW
    landfill gas.

[^8]: Energy mix calculation was done on 1998 data. Mid-Atlantic
    electricity generation data is from DOE EIA website,
    <http://www.eia.doe.gov/cneaf/electricity/st_profiles>, Table 1:
    1998 Summary Statistics, and Table 5: Electric Power Industry
    Generation of Electricity by Primary Energy Source, 1988,1993,1998.
    Percentages for non-renewable energy sources were calculated from
    individual state (PA, NJ, MD, DE, VA, DC) percentages, weighted by
    the state's percent contribution to total Mid-Atlantic electricity
    generation in 1998.

[^9]: Analysis of REPiS database on 8/31/2001. Wind and PV capacity for
    Mid-Atlantic region include systems installed in 2000. The biomass
    capacity includes 758 MW municipal solid waste and 100 MW landfill
    gas.

[^10]: Mid-Atlantic electricity generation data is from DOE EIA website,
    as documented in preceding footnote.