Wednesday, September 7, 2011

The bigger picture

I'm reminded there is a "Transmission Ranking Cost Report" that California utilities file with the CPUC.  The report shows transmission costs which they add to renewable bids before the bids are ranked for selection.  The purpose is to arrive at the total cost, from ratepayers' perspective, for the power from each project bid -- including the transmission to get the project's power to load.  This total cost theoretically can be compared to a bid from a DG project -- comparing a rural project's transmission cost to an urban DG's more expensive land (but little to no transmission cost).  This would be a valid comparison if time were not a factor.  The DG can be permitted and installed in about 24 months, whereas a typical transmission project today requires a minimum of eight years to permit and install, if ever.  So what is the time value benefit of faster DG?  Is there a time value benefit?  If not, then the more expensive land the DG project can justify is only about 2 cents/kwh.  This is the average cost of transmission for delivering rural power to load in the Transmission Ranking Cost Reports.  This leaves a lot of LA Basin land out of the DG picture.