NREL Study Indicates Economic Potential for Wyoming Wind Transmission to California
March 24, 2014
A new study from the Energy Department’s National Renewable Energy Laboratory (NREL) finds that the economic benefit of transmitting wind energy from Wyoming to the California energy market are likely to exceed the cost.
The study, “California-Wyoming Grid Integration Study, Phase 1—Economic Analysis” was conducted by NREL for the Wyoming Infrastructure Authority. It compares two options for providing California with 12,000 gigawatt hours (GWh) per year of new renewable resources between 2017 and 2020. One option would draw on the California in-state renewable energy resources likely to remain undeveloped by that time. The other option would deliver Wyoming wind power to the California marketplace via a 3,000 megawatt high-voltage direct current transmission line.
Key factors examined in the study suggest that the economic benefits of developing the Wyoming to California wind corridor could outweigh the costs, with benefits-to-cost ratios ranging from 1.6 to 3.6. Utilities typically consider a new transmission line project as a worthwhile economic investment if the benefits-to-cost ratio is 1.1 to 1.2.
The goal for this study was to test the extent to which the corridor constitutes a robust economic proposition for major infrastructure development and its long-term benefits, anticipating how some of the most crucial variables could change by 2017. The results also provide an economic benchmark for examining other factors that require more complex modeling.
The benefits were due primarily to the difference in generation cost for the various renewable technologies studied, strongly influenced by the high capacity factor of Wyoming’s wind resource. Benefits-to-cost ratios also varied depending on the treatment of possible avoided transmission build-out in California.
“Wyoming has some of the highest wind capacity factors in the U.S., so developing this resource could be economically attractive for Californians as they pursue more renewable resources for their energy mix,” NREL Laboratory Program Manager David Corbus said. “This study supplements previous system-wide studies that have identified Wyoming wind as potentially economically attractive, and provides a detailed look at the transmission and generation costs to deliver Wyoming wind to the California market.”
The study evaluates options for meeting the last increment of California’s renewables portfolio standard (RPS) — 33% of retail sales by 2020. NREL created scenarios in which 12,000 GWh of Wyoming wind was compared to different combinations of California renewables consisting of primarily utility-scale solar, geothermal and wind.
“Future renewable generation costs are important to the economic outcomes, so we examined a range of future cost scenarios and economic assumptions in an effort to bookend the results,” NREL Senior Policy Analyst David Hurlbut said.
“Our scenarios suggest economic benefits exceed costs in the range of $2.3 billion to $9.5 billion over 50 years on a net present value basis,” Corbus said. “This leaves substantial headroom to work with should subsequent detailed analysis indicate an increase in cost due to several items that could not be included in this study, for example, additional network upgrades or other system impact costs.”
As part of this study, NREL analysts worked with a technical review committee of transmission experts from California, and across the West, who provided review and input.
NREL is the U.S. Department of Energy's primary national laboratory for renewable energy and energy efficiency research and development. NREL is operated for the Energy Department by The Alliance for Sustainable Energy, LLC.