For any other utilities in the MISO area, the potential of a storage arrangement opens up the option for taking on more wind resources.

By Susan Kraemer

A pair of utilities, Minnesota Power and Manitoba Hydro, have inked a Renewable Optimisation Agreement (ROA) under which electricity from excess wind produced in North Dakota can be stored in Manitoba’s hydro reservoir when loads and prices are low, with the potential for selling that power back onto the huge United States Midwest Independent Transmission System Operator (MISO) market at times when needs are high.

The deal involves the pair building a new 400 mile 500 kV transmission line, with a capacity of 750 megawatts, connecting northeastern Minnesota with Winnipeg, at a cost of $1bn split between the two utilities.

Manitoba Hydro is already an external participant with MISO, as a large hydroelectric system with some of the lowest electricity prices in North America.

“We can act as a rechargeable battery for the MISO market,” says Manitoba Hydro Division Manager of Power Sales and Operations David Cormie. “The arrangement we have with Minnesota Power is that they are going to invest in new transmission in the US, and Manitoba Hydro will invest in the transmission in Canada, and at the same time Manitoba Hydro is going to build new power dams that create more storage capability.”

The deal with Minnesota Power would use 51 per cent of the proposed line’s capacity, leaving the remainder available for other US utilities to do the same.

Huge “battery” to the north

The province lies at the centre of a 400,000 square mile watershed that drains from the Rocky Mountains to the west and Lake Superior to the east. The Nelson River drains north to Hudson Bay with an average flow at the sea of 115,000 cubic feet per second - eight times that of the Colorado River.
Manitoba's 1,000 feet of hydro-electric potential remains only half developed and two new hydro projects with associated storage planned for the Nelson River has created the opportunity for further interconnecting the Manitoba battery to MISO.
“We are able to able to operate our hydro system in a manner that takes energy out of the market when the prices are low, and returns the energy to the market in periods when the prices are high,” Cormie explains.

“But the new storage capability of our hydro system can only be useful if the transmission line capacity to the market gets bigger. So between the storage that Manitoba Hydro is developing and Minnesota Power’s willingness to build new transmission, we in effect are making the battery bigger, enabling more two-way trade in electricity.”

The ROA will allow for the storage of a million megawatt-hours of wind power annually and address another 133 MW of excess energy. But building additional big transmission is the key.

“We need some more north - south transmission,” says Executive VP of Minnesota Power Dave McMillan. “And it needs to be built with the bigger-in-diameter wire, bigger conductors that can convey more power. The 500 kV line will be able to transfer 750 megawatts.”

Within the agreement there are provisions that address the possibility that should both utilities need the power at the same time, Minnesota can just buy power on the MISO market, and Manitoba would make up deliveries at a later date or vice versa.

“The storage will go both ways but at the end of the year we’ll look at the bank account and see who owes what, and we’ll sort it out.” McMillan says.

Status

Minnesota Power filed for a Certificate of Need at the end of 2013. That is expected to take about a year, but at the same time Minnesota Power will begin to narrow down route options and file proposals with the Minnesota Public Utilities Commission MPUC). Then subject to permits, construction should begin in 2016 and be online in 2020.

“The new transmission line requires regulatory approval, but our regulators already approved the the base transaction, a 250MW power purchase agreement as in the public interest,” he explains. That power purchase agreement is conditional on building transmission. So now we’re going through the regulatory process for the larger transmission assets and the route selection: as part of that process, we have to find the transmission corridor that minimises impacts on many stakeholders.”

McMillan is confident that Minnesota regulators will also appreciate that the new 500 kV line will potentially enable the development of more wind regionally and points to a recent MISO study confirming the huge benefits to wind from Manitoba hydro storage.

Minnesota Power was 95 percent coal powered until 2005, and has come from just 5 per cent renewable power seven years ago, to a planned 25 per cent renewable power by 2015, ten years ahead of the Minnesota mandate, mostly from wind investment. And that is before this new transmission opens up the additional hydro storage potential.

Many beneficiaries

The arrangement will make the best of wind assets the utility already owns in sparsely populated and windy North Dakota. “We’re geographically lucky to be where we are,” says McMillan.

“We’re between the wind in the west, and the hydro to the north.” And they feel fortunate to be working with their neighbouring utility in Canada. “They’re a wonderful partner,” he adds. “We like Manitoba Hydro a lot.”

For wind developers in the US, the benefit of accessing this storage is indirect. The potential for new wind farms to tap into the line along the transmission route is low, as it doesn’t cross a good wind area in northern Minnesota.

But for any other utilities in the MISO area, the potential of a storage arrangement opens up the option for taking on more wind resources.

“With expansion, the Manitoba Hydro system is like a 4,500 MW battery that you can draw on in the day during the day and recharge at night,” says Cormie. “With the new line, the potential is there to purchase up to 1,500 MW at night and return 3,000 MW during the day, so there’s a huge potential to move energy in and out of the MISO footprint.

And that’s just with what is planned now. Cormie estimates Manitoba's ultimate potential is another 50 per cent.

Future potential

“Manitoba Hydro is in discussions with other folks in MISO,” McMillan explains. “They are looking at other power sales, that will utilise the full capacity of this line. If they built all the dams they want to build now, they’ve still got a lot of megawatts to develop.”

Of course, that depends on Manitoba developing more hydro resources. It has long supplied its own citizens with nearly 100% of their electricity from hydropower, and annually exports up to 40 percent of the 32 billion kilowatt-hours the hydro system already generates. Those exports have only been possible through the cooperative development of past international transmission lines, a model the two utilities intend to continue through the ROA.

“Over the next decades we intend to invest about $20bn in new hydro and transmission,” says Cormie. "Key to these investments is inter-utility co-operation to get the right transmission built. Without willing partners like Minnesota Power, Manitoba's storage potential would be under utilised. Together, greater things are accomplished."