Fuel markets are changing. Consumer expectations are evolving. And the nation’s G&T cooperatives are on the front lines.
With some 1.5 GW of co-op coal capacity expected to be shuttered by 2030, G&Ts are pushing to diversify and innovate.
“The U.S. electric sector continues to adapt to changing market fundamentals, and these changes in the industry are creating new economic challenges,” says Paul Breakman, senior director in NRECA’s Business and Technology Strategies group. “Those developments provide opportunities for the G&Ts to apply their ingenuity to foster high-value solutions by working closely with their members.”
While markets, fleet economics, and environmental performance drive the transition to cleaner, more efficient natural-gas-fired generation and renewable resources, generation co-ops are also investing in emerging sectors like advanced clean coal technology to preserve coal’s role in power production while protecting existing plant investments.
“The nation’s 63 G&Ts are responding to changing market conditions and the needs of their cooperative members,” says Dan Walsh, NRECA’s senior power supply and generation director. “Millions are invested each year in clean-coal technology, combined-cycle natural gas, and other improvements, while spending on infrastructure to deliver reliable power to homes and businesses continues to increase.”
As costs for solar and wind technology decline, G&Ts are contracting for more renewable energy, primarily through power-purchase agreements.
Electric co-ops have about 9.2 GW of owned and purchased renewable capacity—not including about 10 GW of annual federal hydropower—and at least 1.1 GW more is planned by 2020.
Analysts project continued renewable generation growth due to improving economics, the extension of federal tax incentives, and the likely adoption or expansion of renewable portfolio standards in several states.
The addition of renewables has also been driven by consumers. Recent member surveys by several distribution co-ops indicate widespread interest in environmental stewardship, as well as affordable, reliable power. As the primary power suppliers of distribution co-ops (79 percent of distribution co-ops are members of G&Ts), G&Ts have become more innovative in addressing consumer-member concerns and business demands.
For Wabash Valley Power Association, headquartered in Indianapolis, diversification has also meant savings for members. The G&T began investing in landfill gas generation in 2002, wherein plants capture methane from decaying trash and use it to produce electricity. Wabash Valley Power owns and operates 16 landfill plants that provide 53 MW of baseload capacity, making it a Midwest leader in utility-scale landfill gas generation.
Above ground, a 1.7-MW community solar program launched by the G&T in the fall of 2017 is already being expanded because of rapid adoption. The G&T also just inked two solar projects totaling 198 MW of utility-scale solar and, by 2020, will have 210 MW of wind energy in its power supply portfolio.
Rather than claiming these renewables in its generation portfolio, the G&T sells the environmental credits to other businesses seeking to achieve their compliance goals, which supports the growth of renewables in the marketplace.
“As a result of our flexible portfolio, we’ve capitalized on market opportunities, and our average wholesale rate has dropped for four consecutive years,” says Lee Wilmes, Wabash Valley Power’s executive vice president of risk and resource management.
Innovation Beyond Generation
While power generation options evolve, co-ops are advancing the reliability side of the business too. After a systemwide review of network schematics and identification of local transmission issues, Wabash Valley Power began an infrastructure upgrade of its existing SCADA system that will be complete this year. The initiative included a buildout of fiber-optic communication to each of its distribution co-ops’ headquarters and additional equipment to aid in enhanced monitoring of power grid health.
“The SCADA project is the first step in providing a new level of service reliability to the distribution cooperatives and their nearly 310,000 retail members,” says Rich Mullen, Wabash Valley Power’s manager of field operations. “The next step is to provide additional SCADA system functionality that benefits our 23 distribution co-ops, such as load management and outage restoration services.”
In Texas, Golden Spread Electric Cooperative takes advantage of operating in both the Southwest Power Pool and the Electric Reliability Council of Texas. That unique position allows it to switch more than 550 MW of generation between the two regional transmission grids within one hour’s notice.
The Amarillo-based G&T serves 16 distribution co-ops in a vast territory stretching from the South Texas plains north of the Rio Grande to the Texas Panhandle. Golden Spread member co-ops also serve portions of the Oklahoma Panhandle, southwestern Kansas, and southern Colorado.
Golden Spread employs a new load-forecasting process that enables it to incorporate water table studies, the impact on irrigation, and member feedback related to agricultural and industrial demand.
“This allows for a faster, more accurate energy and demand forecast that has been utilized for power supply optimization,” says J. Jolly Hayden, Golden Spread’s chief operating officer. He notes that it’s also improved overall member satisfaction.
Since 2016, Golden Spread has upgraded software technology to forecast generation output, margins, and ancillary service revenue. The technology is also used to compile annual financials and budgeting, saving time and improving accuracy.
“These initiatives and tools are essential components in our continued success in fulfilling our mission for our members in this rapidly changing time in the energy space,” Hayden says, adding that the G&T is pursuing several other transmission and distributed energy resource initiatives. “We see many opportunities for us to embrace these developments to help us achieve our objectives for our member cooperatives and aid them in their mission to improve the quality of living within their communities.”