The Institutional Investor Guide to Modern Energy - (Page 7) Co-Published by Vestas built into the system, countering those calling for the buildout of costly storage devices. “The notion that you have to have storage to back up a wind plant is just not correct,” says Edgar DeMeo, the co-author of a U.S. Department of Energy report that finds a 20 percent wind buildout by 2030 can be achieved without storage. There are generation reserves in the system that can be used to accommodate wind energy’s variability. And by building wind plants in a diverse geographic location, one achieves a balancing diversity to counteract intermittency concerns, DeMeo says. The variation then gets averaged out by adding interconnection power to the system. A model for this approach is Denmark, which currently generates 20 percent of its electricity from wind power without dedicated storage. In the United States, achieving this scenario will require significant transmission buildout in the range of 20,000 miles of new transmission corridors, says Brian Parsons, a project leader for grid integration at the National Wind Technology Center in Colorado. “Yes we all know we need to do it,” Parsons says, “but it’s rather daunting when you look at the number of miles.” The U.S. Department of Energy report estimates a $60 billion charge for a high voltage supergrid upgrade and an additional $300 This Special Report was prepared by the Special Projects Department of Institutional Investor. to $450 billion in investment on the wind farm generation side. Independent System Operators and Regional Transmission Operators have made progress identifying renewable energy zones — sometimes called “balancing areas.” California has an ambitious 33 percent renewable target by 2020, and recently approved a transmission access fee program to finance trunk line buildout. “The notion that you have to have storage to back up a wind plant is just not correct.” Edgar DeMeo, U.S. Department of Energy “As the renewable generation planned for that area comes on line,” says Fishman, “it will begin to pay a pro-rated share of the cost of the line — reducing the amount needed from retail customers. This helps erase one of the financial barriers that has been an issue in the past.” Under this feed-in tariff system, Fishman estimates California will see an additional 5,000 to 6,000 MW of new wind generation capacity in the next five to seven years — more than doubling current wind power generation. n March 2009 • Institutional Investor Guide to Modern Energy • 7
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