◊ Part of the ‘wind energy’ series of articles ◊
Wind farms require a significant amount of land to accommodate the wind turbines. This limits their installation to rural areas that may not have the necessary infrastructure to accommodate generation while insuring the necessary power quality and reliability standards are met.
Wind farms may be connected to the transmission (high voltage) or distribution (low voltage) parts of the grid. Either way, the infrastructure requires modification to accommodate the additional resources. Transmission system connected generation has more stringent requirements than distribution-connected resources and will require more infrastructure modification, however the high voltage connection enables much higher energy capacities.
Infrastructure costs are paid primarily by generators – not other ratepayers
Prior to September 2009, generators were required by code to pay all incremental costs resulting from a generator connection. As a result of the large number of generator connections being driven by government policy, connection cost allocation was subject to an extensive review by the Ontario Energy Board. In paraphrasing the results of the review, connection costs from September 2009 and on fall into one of three groups.
1) connection assets specific to the generator
2) expansion of the transmitter/distributor’s assets that are of benefit to the transmitter/distributor or part of a planned investment
3) modification to transmission/distribution assets that benefit the broader delivery system
Infrastructure upgrade costs in (1) are the responsibilty of the generator and paid up front. Costs attributed to (2) & (3) are the responsibility of the connecting utility. The generator still pays their own costs, however, costs that are of shared benefit to other generators and load customers are paid by the connecting utility and subsequently recovered by two different mechanisms. The utility costs are recovered primarily through delivery charges on the generator’s bill – not from other ratepayers. A small amount is collected by the IESO in their wholesale service fee on all customer’s billing and reimbursed to the utility. On an average customer’s bill the amount would be immaterial (around $1 a year).
In some cases the need for infrastructure upgrades only becomes apparent after the generator begins operation. Occasionally, generators will cause voltage disturbances that result in them being frequently ‘tripped’ from the grid. Remedial action will be required in those instances which typically involves infrastructure investment. Reference Ontario Energy Board case EB-2010-0229 – Hydro One.
Costs that cannot be allocated to the generator are recovered through electricity delivery rates or regulatory charges. In the overall scheme of things, the magnitude will be so small it is not material to ratepayers.
A more detailed explanation of the infrastructure upgrades is available in the Canadian Energy Research Institute Study No. 168 dated February, 2018.
Henvey Inlet
In the case of Ontario’s 300 MW Henvey Inlet First Nation Wind Farm a 104 km 230 kV transmission line had to be built to deliver power to the grid. There are also modifications required at several transmission stations to make the physical connections, provide switching and protection devices.
Constructing and maintaining 104 km of 230 kV transmission lines is a substantial cost that will drive up the energy unit-cost to the top end of any LCOE range. The infrastructure upgrades could make up 50% of the total investment depending on how the line is constructed and what land costs are incurred. The total investment for Henvey Inlet is estimated at $1 billion CAD. Regulatory filings with the Ontario Energy Board show that the generator paid the cost for the transmission lines required to connect Henvey Inlet.
Derek
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