LADWP’s James Caldwell: Siting,Transmission Present Obstacles for Robust Wind Portfolios

>The Los Angeles Department of Water and Power (LADWP) has set an ambitious target of 20 percent renewables by 2010, which will require wind power to fill a substantial portion of renewable portfolio. Fortunately, the region is rich in wind assets, which has enabled the LADWP to become a leader in developing and integrating wind power. VerdeXchange News is pleased to present the following remarks, given by LA DWP Executive James Caldwell, Jr. during a panel on wind power at the recent GreenXchange Global Marketplace Conference. The wind panel was moderated by G24i’s Eliot Abel and addressed the challenges currently facing public and private efforts to expand the global and U.S. energy market share of wind power.

Eliot Abel: The Global Wind Energy Council projects wind power to have another record year in 2007, with 20 MW of new installations. This figure is up by 30% compared to the new installations in 2006, while the sum of the world’s total installations is estimated to increase by 27% to reach over 94 GW by the end of 2007. I would like our GreenXchange Wind Panelists today to touch on: Why wind power? How these wind projects get started—their origination and development—and some examples of projects you’ve all worked on in the past. Additionally, I hope we can touch on the issues of where we put these turbines; and, finally, on site and planning issues—how do projects secure planning approval in a timely manner?

James Caldwell, Jr.
: I work for the Los Angeles Department of Water and Power, but I’d like to step back and take my personal view of wind and point out that, today, wind produces roughly 1.5 percent of the U.S.’s electricity. I’m here to argue the proposition that we can and should generate roughly 20 percent of U.S. electricity with wind, within the planning horizon. By the planning horizon, I mean the next 10-15 years—the investment horizon for people that are actually in business today.

The issue on that is not the resource space. We have the resource space. If you look in the U.S., onshore U.S. wind on land, we have roughly 400,000 megawatts worth of windy land that is developed....The second thing we have is the technology. The so-called Danish design rules today, and there is nothing on the horizon (at least for bulk wind power) that’s going to change that dynamic. I’m not talking about niches or surprises, but certainly, from an investment standpoint, from a technology standpoint, that is the technology of choice. I relate it roughly to where the automobile industry was in the 1950s.

We can look for improvements in that technology. We can look for bolt-on things. We can look for cost reductions in the 10-15 percent range. We can look at efficiency improvements in that 10-15 percent range. But the technology is there—it’s commercial, it’s proven, it’s out there, and it’s bankable.

The next thing that we don’t have to worry about in this equation is the basic economics. Wind today, with this technology, with this land, is cheaper than new gas, cheaper than any other bulk renewable, cheaper than nuclear, and it’s even comparable in price to new coal before you price carbon. So, it’s in the mix. If we’re at 1.5 percent now, and we have all these fundamentals going forth, what’s wrong? How come we’re not going faster? What needs to happen in order to achieve this potential?

The first thing is, I think, the resource planning paradigm. The way utilities plan resources has to change. Traditional utility resource planning is, first of all, capacity-based. It’s based upon the nameplate capacity. Energy tends to be a secondary consideration. It also tends to be that load can do whatever it wants; load can vary the customer rules. The customer can flip on a light switch at any time, can vary his usage of electricity at any time, and the supply side must respond. Each piece of the supply side must respond in a predictable way.

Going forward, I would submit that most of the types of technology that we’re talking about don’t really work that way. Many of the resources that we talk about using, whether that’s wind or solar or demand-side management or energy efficiency, tend to act like negative load. That is, they create energy whenever and wherever the resource happens to be, wherever the wind happens to blow, wherever the sun shines, where the individual customer decides, based upon his individual circumstances, that he can either cut back or increase his energy. So today, load, in the resource planning exercise, can do that. It’s okay for load to do that.

In order to achieve the potential for wind and other renewable energies like that, we have to be able to believe that that’s okay on the supply side. And that means that the utility itself has a much more difficult role of aggregating all of these loads on the customer’s side, and aggregating all of these energy sources on the supply side, and somehow making those meld in a way that keeps the lights on, keeps the clocks running at 60 cycles a second, and keeps the reliability that we know today. That’s not going to be any easy transition. It can be done: the technology is there; the information technology is there, but it requires a change in the culture of the utility. That’s going to have to happen before wind can achieve its 20 percent potential.

The second thing that’s going to have to happen is that transmission is going to have to be built. I talked about where the wind blows. Where the wind blows is, generally speaking, where people aren’t. And there is a one-for-one correlation to that; civilization does not respond well to extremes in wind. It can respond to extremes in temperature, but it really doesn’t do well with extremes in wind. Buildings, people—they just don’t like a lot of wind. And it’s hard to protect people from the environment where it’s windy...If you go to North Dakota, South Dakota, Eastern Montana, Wyoming—these are the places where there is wind.

There are windy places in California, for example, the Tehachapis, a hundred miles to the north of here. (The word “Tehachapi” means strong wind in an Indian language.) Because of the geographic nature of that end of the Sierra Nevadas, the wind tends to come around that corner, so we have the hot desert on the one side and the cold ocean on the other side, and we have these very, very strong winds.

There is, today, about 1,200 square miles of wind resource that is Class 4 or above that contains enough resource on developable land, either private or BLM land, that is zoned in the master plan for Kern County for wind production to equal all of the nuclear power that’s generated in California today.

The resource is not in Downtown L.A., but it doesn’t have to be all along the center of the United States. There are large pockets of this, particularly the one in the Tehachapis. Both Southern California Edison and we are extending our transmission lines into that area, 100 miles from the city of Los Angeles. It’s a world-class wind resource, but the transmission must be built.

The third thing that has to happen in order to achieve this potential is that the price pressures must be contained. Wind today is roughly 50 percent more expensive that it was two years ago and roughly 70 percent more expensive than it was three years ago. That is not really cost pressures the way we think of cost pressures; those are price pressures. The price pressures come, first of all, from competition in the supply chain, where the growth in wind exceeded the ability of the supply chain and exceeded the investment capacity of the wind turbine manufacturers. They had to see both their margins increase and the fact that the margins and the orders were going to flow at reasonable rate for long enough for them to make the large investments in manufacturing capacity that were necessary to support that growth. And there was a little sort of “step and fetch it” there in the sense that the wind manufacturers didn’t necessarily believe that the orders were going to come through as fast as they were, as soon as they were. So they are behind in the investment strategy, and that drove up prices. That’s not just the General Electrics of this world; that’s through the whole supply chain—the gear box manufacturers, the tower manufacturers, the blade manufacturers, all the way back in the supply chain.

Related to that, the U.S. content of wind turbines is going to have to increase. We can’t continue to import the cells from Europe, the blades from South America, towers from China, and expect to have the sort of economic development potential that we’re going to need in order to get the political will to do this here and to contain the price pressures, given things like the Euro versus the dollar. You’re beginning to see U.S. manufacturers beginning to step up. GE is investing a lot; they’ve just opened a new gear box factory in Pennsylvania. We’re beginning to see many of these foreign wind turbine companies talk about U.S. manufacturing and U.S. content. We’re going to have embrace that, and we’re going to have to accelerate that, if wind is going to achieve its potential.

The final thing that wind is going to have to do in order to achieve that promise is on the siting issues...In order to get that siting done, we’re going to have to get an accommodation on the wildlife issues. In California, we now have a collaborative that was done between the Audobon Society, the Sierra Club, many of the other national environmental groups, and the wind industry, to come up with a set of guidelines about how you site turbines: what you do in pre-construction surveys; how you do post-construction monitoring; what research is required to look at how you can make these compatible land uses with wildlife. It can be done and it will be done, but there has to be that good will on all sides.

That California collaborative experience is going nationwide. The Department of Interior has started similar efforts. This is a solvable issue. It’s going to mean that some of the 400,000 potential megawatts of wind are probably not going to be sited because the risk-reward relationship to wildlife is not right. It is going to mean some reduction in that ultimate potential, but I firmly believe that there is plenty of land for everyone and plenty of ways to get around it.

Another issue that we need to face in siting is air space issues that are, right now, probably bigger than wildlife in terms of the ability to site wind—the interference or suspected interference between the air space issues with the military. Radar issues—and this is something that has cropped up in the last couple of years—where the military does its training tends to be the same places that are windy. They don’t like to do it where there are people around, like Area 51 in the state of Nevada. You have all of these very, very large areas where the military has essentially said, “We need this space, and we don’t want anything or anybody in the air or around that attracts people.” The wind industry is competing with the military for space right now, and that’s going to have to get settled.

In general, as a society we are going to have to come to grips with the equation of the land use issues, the architectural statement of these very large machines, and the industrial message that that sends about the way we generate electricity.

That means, first of all, we’re going to have to share the wealth. We’re going to have to share the wealth with the landowners, we’re going to have to share the wealth in a way that says, “If there is a transmission line that must be built from where the wind farm is to where the people are, at least the people where the wind farm is being built can look at the economic development of that.” If it’s a farmer or if it’s a rancher, the royalties he gets from putting these wind turbines on his land allow him to continue to be a cattle rancher, to get enough income to stay on the farm, to continue in that lifestyle if he wants to. For about 90 percent of the wind farms today, the land use after the wind farm is the same as the land use before. If it was a farm before, it’s a farm now. If it was a cattle ranch before, it’s a cattle ranch afterwards. If there was nothing there, then whatever that was continues to exist.

But we have to figure out how to share that wealth. The transmission owner in the middle gets neither the economic development from the wind farm nor the benefit of the green energy that’s coming, for example, to the city of Los Angeles. So how does that individual who bought a house near Lake Elizabeth like it when the transmission line comes down his backyard, going from the Tehachapis, where the cattle rancher gets a lot of economic development, to the city of Los Angeles, where we get the benefits and the green energy?

Somehow, we’re going to have to solve that equation as a society. We’re going to have to learn to say that these large wind turbines are a legitimate way to generate electricity and we as a society, collectively, want to generate our energy this way. I think that will happen, but it’s not going to be easy, it’s not going to be quick, and there’s going to be a little bit of messiness. But in the end, I don’t think there’s any reason to believe that we will not generate somewhere in the 20 percent range. •••