Colorado remains ranked in the top 10 states for wind generation in the U.S., with wind giants such as Texas, Iowa and California still surpassing it in 2013. But this ranking, based purely on total generation, does not tell the full story of wind integration in the Centennial State. Regional balancing authorities perform the intricate task of maintaining an equilibrium between generation and demand on electric systems. In Colorado, Xcel Energy’s balancing authority offers a different perspective on the successful use of wind power in the state.

According to the American Wind Energy Association, Colorado currently has 28 wind projects capable of producing more than 2.4 GW of power. In 2013, 13.8% of Colorado’s electricity came from wind energy. While Xcel Energy serves about 60% of Colorado, the company purchases and controls nearly 95% of the state’s wind resources.

In 2013, 19% of Xcel Energy’s Colorado electricity was generated by wind. On an hourly averaged basis, wind power regularly serves more than half of the Xcel system’s electric load in the state, and the system continues to set new records. For instance, from 11 p.m. to midnight on Oct. 31, wind power supplied more than 61% of the energy to meet all of Xcel Energy’s customer needs in Colorado.

Xcel Energy’s Colorado balancing authority is small and serves a limited geographic area, compared to balancing authorities for other top wind-producing states. The Electric Reliability Council of Texas, which covers most of Texas, had a wind penetration level of nearly 10% in 2013. The Midcontinent Independent System Operator (MISO), which includes Iowa, achieved about a 7% penetration level last year, and the California Independent System Operator reached 8.5%.

How is Xcel Energy in Colorado able to integrate wind energy at double the levels of larger system operators in wind-rich states?

Colorado became the first state in the nation to enact a renewable portfolio standard through a voter-approved ballot initiative in 2004. Since then, the state legislature has amended the standard twice to establish one of the most aggressive requirements in the country. Today, investor-owned utilities in Colorado must meet 30% of retail electricity sales with renewable energy by 2020. The state’s rural electric cooperatives and municipal utilities also have renewable standards, which the legislature increased in 2013 to 20% of retail electricity sales by 2020.


Xcel Energy has taken a proactive approach to meeting the state’s standards. By 2007, the company had already acquired and was managing more than 1 GW of wind power on its Colorado balancing authority.

Two renowned federal laboratories with the expertise to advance the development and use of renewable resources are located in Colorado: the National Renewable Energy Laboratory and the National Center for Atmospheric Research (NCAR). Both have contributed to the improved integration of wind resources within the state, around the country and throughout the world.

In late 2008, Xcel Energy began working with NCAR to develop a real-time, turbine-level forecasting system to improve the predictability of wind resources. With new tools and capabilities implemented over the past five years, Xcel Energy has reduced its wind forecasting error rate by more than 38% – and Colorado customers are benefiting. To date, customers have saved about $25 million in fuel costs through the more efficient dispatch of generating units and wind production in the state.

System dispatch policies have evolved, too. In Colorado, Xcel Energy continually considers offline cycling of baseload units to allow for more wind production.

The utility also was the first in the nation to use set-point controls for wind farms, which allow for automatic generation control (AGC) of wind and thermal resources on its system. AGC provides automated balancing of generation and load. It lets wind farms operate at peak levels while reducing production from economical fossil-fuel units and keeping these plants online at their lowest possible production levels. This practice ensures system reliability while minimizing fuel costs, air emissions and wind-generation curtailments.

Wind energy has a reputation for being difficult to control because of its dependence on weather. For reliability purposes, Xcel Energy previously carried 1 MW of reserve capacity for every megawatt of wind generation, in case winds suddenly died down. As the company’s wind portfolio grew, however, it found that wind production takes anywhere from tens of minutes to several hours to ramp down.

Xcel Energy studied the maximum amount of wind energy typically lost within 30 minutes and put in place a 30-minute flexibility reserve. The new practice dramatically decreased costs associated with carrying large wind reserves while maintaining system reliability.

Each balancing authority has some inherent flexibility that allows it to accommodate variable wind and solar generation with minimal curtailment or shutdown of these resources to maintain system reliability. The amount of flexibility depends on the balancing authority’s load profile, generating portfolio and overall size.

For example, a larger balancing authority can generally take on more renewable energy with minimal curtailment because it will have more generating units to ramp up and down as well as more geographic diversity, so the wind is likely always blowing somewhere.

Improved wind forecasting, AGC dispatch and the offline cycling of baseload units are all practices that have increased the flexibility of Xcel Energy’s Colorado balancing authority, helping to reduce the need for curtailments. Transitioning from an older fleet of coal plants to a more modern and flexible portfolio of energy resources has also helped. In response to the state’s Clean Air-Clean Jobs Act, Xcel Energy has a major project under way to transform its Colorado fleet. The company is replacing about 700 MW of aging coal-fueled generation with combined-cycle natural gas generation that can operate more efficiently with variable wind resources.

Today, Xcel Energy curtails about 3% of its total wind generation to achieve annual wind penetration levels around 20%. While the cost of wind production continues to decline, wind curtailments are costly.

In most cases, wind plant owners are compensated for lost megawatt-hours when they are asked to stop energy production. Today, wind owners receive federal production tax credits for every megawatt-hour produced during a wind farm’s first 10 years of operation. When wind farms are curtailed, project owners are typically compensated for these lost tax credits, too. Recently, Xcel Energy began negotiating power purchase agreements that include free curtailment hours to help bring down these costs – a practice that helps reduce energy costs for customers.

Despite these efforts, curtailment will remain an unavoidable consequence of operating higher levels of wind energy. To ensure future wind acquisitions make economic sense, Xcel Energy’s resource planning process includes a special screening, under which a higher incremental curtailment volume is modeled and applied over the lifespan of proposed wind projects.

By doing this, the company includes the cost of potential resources in a way that accounts for the reduced system flexibility available to accommodate new wind farms. The practice has not inhibited new wind acquisitions. Last year, Xcel Energy committed to add 450 MW of wind capacity in Colorado, chosen purely on the economics, including the higher cost associated with curtailments.

Xcel Energy continues to explore opportunities to increase the flexibility of its Colorado balancing authority. The company supports the development of a larger, organized market in the West, similar to MISO. As a step in this direction, Xcel Energy recently filed with the Federal Energy Regulatory Commission to enable the joint dispatch of its resources with the resources of other Colorado utilities within the balancing authority. Joint dispatch will allow for more efficient and cost-effective, real-time system operations, including improved use of wind production.

Joint dispatch should also help reduce wind curtailment volumes for participating utilities.

Although Colorado is not first in the nation in terms of wind-power megawatts produced or turbines installed, the state is leading in terms of successful integration levels. The lessons learned in Colorado to successfully achieve higher wind penetration levels are informing the efforts of other utilities and large system operators throughout the country. With its unique size and location, Xcel Energy’s Colorado balancing authority continues to serve as a demonstration project for the industry as it expands the use of variable renewable resources. w


Eric Pierce is managing director of trading, origination and power operations at Xcel Energy. He can be reached at (303) 571-2805 or eric.pierce@xcelenergy.com.

Spotlight: Colorado

Inside Colorado’s Wind Integration Success Story

By Eric Pierce

Several state-based entities have found ways to increase levels of wind penetration while limiting curtailment.






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