1. 1 PacifiCorp IRP Operating Impacts Study Update Ken Dragoon ken.dragoon@pacificorp.com Planning for Wind Workshop Portland, Oregon December 3, 2003

2. 2 Background b PacifiCorp integrates approximately 300 MW of wind generation on system of 8,300 MW capacity (3.6%). b At outset of IRP process, wind integration costs thought to be small with low penetration, but rising in unknown ways with higher installed capacity. b Analysis done for IRP exposed to public comment as well as vetting with wind experts in field (DeMeo, Milligan, Caldwell, Hirst). b Analysis suggested costs associated with holding additional reserves and system dispatch (imbalance costs).

3. 3 Imbalance Cost Increases with Installed Wind Capacity

4. 4 Reserve Requirements Increase with Wind Capacity

5. 5 Reserve Requirement Cost Formula Cw = Reserve requirement cost ($/MWh) Pw = Installed wind capacity f = Wind capacity factor A, B = constants (B/f~ $1/MWh) Formula assumes cost of reserves increases linearly with reserve requirement.

6. 6 Site-Specific Integration System Capacity FactorImbalance Reserve Total East 500 MW 35% $1.75 $1.51$3.26 West 500 MW 35% $2.10 $1.39$3.49 East 1,000 MW 30% $3.25 $2.72$5.97 West 1,000 MW 30% $2.95 $2.04$4.99 Cost Calculation Examples

7. 7 IRP Results b IRP identified 1,400 MW of additional wind capacity (~14%) as part of lowest cost resource portfolio over first 10 years of study. b PacifiCorp expects to release RFP for renewables (not just wind) in December.

8. 8 Improving on IRP Analysis b Two pronged approach: Improve analytical techniqueImprove analytical technique –Improve modeling capability –Refine hourly sigma analysis –Address sub-hourly issues –Address capacity credit question Examine actual operating experienceExamine actual operating experience –Operators kept hourly log of wind affects on system for couple months earlier this year.

9. 9 Value of Wind Forecasts b Wind output can be forecast Not as well as temperatureNot as well as temperature Better than precipitationBetter than precipitation b PPM Energy sells wind output on a firm basis, backed up with cash market transactions and options as necessary. b State of wind generation forecast technology rapidly improving.

10. 10 Sample Wind Forecast Data Data courtesy PPM Energy and 3Tier Group

11. 11 Logjam Effect b Initially many severe skeptics-- but experience is breeding acceptance. Operators beginning to understand that their headache with accommodating wind earns money for the company.Operators beginning to understand that their headache with accommodating wind earns money for the company. b Our study is motivating others to pragmatically study costs. Early studies were long on theory, without resulting in actual costs calculations.Early studies were long on theory, without resulting in actual costs calculations.

12. 12 Conclusions b Getting past analysis paralysis is resulting in real resource acquisition. b Much work to be done to improve the analysis-- want to keep analysis in touch with operating experience. b Experience has helped wind resource to achieve acceptability among operators and managers. b Wind forecast technology is improving and providing significant help in managing wind on power systems.

13. 13 41 MW Combine Hills Project in NE Oregon