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Avista Utilities Issues RFP for Energy from 50 MW of Wind Capacity Mark Ohrenschall Con.Web, August 28, 2003

Testing The Wind

Avista Utilities has entered the wind power market.

The Spokane-based investor-owned utility has issued a request for proposals for energy from up to 50 megawatts of wind capacity. Avista is seeking a two- to five-year purchase (or purchases) from 2004 to 2008. Bids are due Sept. 15, and the IOU plans a contract award (or awards) by the end of September.

This is Avista's first formal pursuit of wind power, and utility officials view the solicitation as a learning experience. The utility has sufficient energy resources to meet loads through at least 2007, according to its 2003 integrated resource plan, but the IRP contains an action item for continued study of wind integration issues.

"We want to get a feel for how wind would fit into our system," said Clint Kalich, Avista resource planning and analysis manager. Specifically, he told Con.WEB, Avista is interested in finding out the effects and full costs associated with wind integration.

Given the relatively short power purchase period sought in the RFP, "We aren't asking anybody to build [a wind project] for us," he said. "We're hoping we fit into somebody else's puzzle."

The IOU is not specifying potential locations, but Kalich said price--including delivery to Avista's system--will be a "key" consideration in the utility's selection process.

Resource Issues
Avista's 2003 integrated resource plan--filed in April with regulatory agencies in Washington and Idaho--shows the utility has sufficient energy resources to serve its eastern Washington and northern Idaho customers through 2007, "even under critical water and adverse hydro and load conditions," Kalich said. "We're in really good shape relative to some of our [utility] peers. We're pretty fortunate we don't have to go out and interact in the marketplace today."

But the IOU is interested in examining wind power. The IRP includes a preferred strategy to acquire power from 75 MW of wind capacity in 2008 to 2010. However, Kalich said, "One of the concerns we have … is there's just not a lot of operational experience by utilities in the Northwest system to ensure the assumptions in the IRP as far as [wind] integration costs would really be an accurate representation."

Detailing expenses for bringing wind power into Avista's system is "the ultimate point of this exercise," he said. Transmission costs are "fairly well known," he said, but wind integration costs and effects on the utility system are less clear.

Avista's system load totals about 1,000 average megawatts, Kalich said; 50 MW of wind capacity would translate to an approximate range of 15 aMW to 20 aMW, given the resource's intermittency.

Price, Credit, Location, Other Criteria
Kalich believes wind power bids can compete with current wholesale market prices at the mid-Columbia hub from 2004 to 2008. "I think that's part of the opportunity here," he said. "We think wind may have a shot at that type of a price range, which we're comfortable, then, buying … at that [price] level." Avista's IRP projects annual average Northwest wholesale prices of 3.3 cents/KWh in 2004, rising 4.1 percent annually through 2023.

Bid prices, requested in dollars per megawatt-hour, will be "one of the key issues" in Avista's review, he said.

As for where the wind power originates, "Our concern really isn't so much on location as the cost to bring energy to our system," he said. Distant wind farms will clearly be at a disadvantage, he noted.

Creditworthiness of bidders is another "very important" consideration for Avista, "just given today's environment," Kalich said.

Bidders are asked to provide information on pricing structure, power deliveries (location, amount and timing), project location, wind technologies, transmission arrangements, project ownership, permitting, financing, documented wind resources and their own wind backgrounds. "We are asking for the developers to provide up to five projects they've worked with," said Kalich. "That may be difficult for some, but the idea is the more experience you have, the better off we'll be and the better we'll view the proposal."

Avista also is interested in obtaining green tags, the environmental benefits of wind projects.

Although Avista is open to different types of bids within its parameters, Kalich acknowledged the short-range proposed power purchase would be a limiting factor.

"We recognize most people need 20 years to pay these things back," he said. "We're clearly not providing an opportunity for a developer to pay for his project with this RFP." Avista will likely receive bids from the likes of "an existing project or maybe a project another entity might not have a need for a few years from now." Options for wind purchases beyond 2008 are possible, he said, but, "We're really trying to focus on a maximum of five years."

It's "always possible" the utility won't get any bids, but, Kalich said, "We would not have issued the RFP if we didn't think there's an opportunity today."