Wind Power PurchasingBig Ten and Friends Energy and Mechanical Conference

September 30, 2013

Aparna Dial, University Director Energy Services and Sustainability

John Rappleye, Senior Energy Programs Manager

Why Buy Wind Power?

A Commitment to Sustainability

• Sustainability Leadership

• ACUPCC Signatory in 2008

• Commitment to Carbon Neutrality by 2050

• Commitment to Innovative Leadership

How did we do it?

• What worked for us may not work for others

Options depend on the state regulations and the local utility

• The process evolved as we went through it.

How did we do it?• We first approached AEP Ohio, the local utility.

• Due to regulatory constraints, without special approval from the PUCO all they could offer was renewable energy certificates or a buy/sell arrangement from Ohio wind farms.

• Ohio is deregulated and Certified Retail Electric Service (CRES) providers were becoming more competitive with the regulated utilities. However . . .

• AEP Ohio was in the middle of a major rate case which would have a significant impact on the cost of power supplied by a CRES provider. Resolution of the rate case which was settled then reversed then finally settled after 20 months delayed final agreement and implementation.

• We solicited proposals from a few CRES providers to supply our main substation load with a significant portion of the electricity supplied from an Ohio wind farm.

• AEP Energy, formerly known as AEP Retail, the unregulated arm of AEP, proposed providing our electricity load including 50 MW of capacity from the Blue Creek Wind Farm, a subsidiary of Iberdrola SA, located in Van Wert and Paulding Counties. This was an existing wind farm with uncommitted capacity. The 50 MW of capacity was projected to provide 25% of our electric load.

• The AEP Energy proposal included what we felt was a signification mark up and risk avoidance cost so working with AEP Energy we negotiated a direct power purchase agreement with Blue Creek Wind Farm and an agreement with AEP Energy to tunnel the wind power to OSU with a direct pass through of the associated costs and provide the remaining electric power load at a fixed cost.

Iberdrola’s Blue Creek Wind FarmProject LocationTully, Union, and Hoaglin Townships of Van Wert County, Ohio, and Benton, Blue Creek, and Latty Townships of Paulding County, Ohio.

Project Capacity304 Megawatts (MW)

Number of Wind Turbines152 Gamesa G90, 2.0 MW wind turbines on 100m (328 ft) towers, which are primarily made in Pennsylvania.

TechnologyTurbines on a 328 foot (100 meter) tower for a total height of 476 feet when a 148 ft long blade is straight up. Each nacelle weighs 85 tons. Each foundation uses about 60 truckloads of concrete and 60 tons of steel rebar.

Contract Overview• Wind Power Contracted from Blue Creek Wind Farm

• 50 MW wind power capacity

• Estimated to produce 141,000 MWh annually

• 20 year fixed price with annual escalator

• $46.50/MWh with 2% annual increase

• All environmental attributes retained by Ohio State

and delivered to OSU’s GATS account

Contract Overview• Power Supply and Wind Power Delivery Agreement with AEP-E

• Tunnel the wind power through PJM System

• Actual costs and credits passed through to Ohio State

• Supply the rest of the power at a fixed price

• 18 month term

• Pass through costs include -

• PJM Scheduling, System Control and Dispatch Service

• Balancing Operating Reserve

• Synchronized Reserve & Capacity Credits

• CAT Tax Recovery

• Capacity & Transmission Charges

• Wind Congestion Credits or Debits

CHARGES ADJ BILLING LINE ITEM NAME

SOURCE BILLING PERIOD START AMOUNT ($)

1303 PJM Scheduling, System Control and Dispatch Service - Market Support $154.29

1305 PJM Scheduling, System Control and Dispatch Service - Capacity Resource/Obligation Mgmt. $24.49

1306 PJM Scheduling, System Control and Dispatch Service - Advanced Second Control Center $16.33

1307 PJM Scheduling, System Control and Dispatch Service - Market Support Offset $3.71

1310 PJM Scheduling, System Control and Dispatch Service Refund - Market Support ($5.31)

1312 PJM Scheduling, System Control and Dispatch Service Refund - Capacity Resource/Obligation Mgmt. ($0.62)

1313 PJM Settlement, Inc. ($3.71)

1314 Market Monitoring Unit (MMU) Funding $15.83

1375 Balancing Operating Reserve $2,815.88

1376 Balancing Operating Reserve for Load Response $36.56

1375 A Balancing Operating Reserve 1/1/2013 $14.95

1375 A Balancing Operating Reserve 2/1/2013 $11.72

1375 A Balancing Operating Reserve 4/1/2013 $6.43

1375 A Balancing Operating Reserve 5/1/2013 $26.75

1375 A Balancing Operating Reserve 6/1/2013 $4.66

1375 A Balancing Operating Reserve 7/1/2013 $68.00

1376 A Balancing Operating Reserve for Load Response 7/1/2013 $0.10

TOTAL CHARGES: $3,190.06

CREDITS ADJ BILLING LINE ITEM NAME

SOURCE BILLING PERIOD START AMOUNT ($)

2360 Synchronized Reserve $163.28

2600 RPM Auction $4,813.99

TOTAL CREDITS: $4,977.27

TOTAL PJM SETTLEMENT: ($1,787.21)

RECOVERY OF AEP CAT: $6,901.95

GRAND TOTAL: $5,114.74

CHARGES ADJ BILLING LINE ITEM NAME

SOURCE BILLING PERIOD START AMOUNT ($)

1303 PJM Scheduling, System Control and Dispatch Service - Market Support $154.29

1305 PJM Scheduling, System Control and Dispatch Service - Capacity Resource/Obligation Mgmt. $24.49

1306 PJM Scheduling, System Control and Dispatch Service - Advanced Second Control Center $16.33

1307 PJM Scheduling, System Control and Dispatch Service - Market Support Offset $3.71

1310 PJM Scheduling, System Control and Dispatch Service Refund - Market Support ($5.31)

1312 PJM Scheduling, System Control and Dispatch Service Refund - Capacity Resource/Obligation Mgmt. ($0.62)

1313 PJM Settlement, Inc. ($3.71)

1314 Market Monitoring Unit (MMU) Funding $15.83

1375 Balancing Operating Reserve $2,815.88

1376 Balancing Operating Reserve for Load Response $36.56

1375 A Balancing Operating Reserve 1/1/2013 $14.95

1375 A Balancing Operating Reserve 2/1/2013 $11.72

1375 A Balancing Operating Reserve 4/1/2013 $6.43

1375 A Balancing Operating Reserve 5/1/2013 $26.75

1375 A Balancing Operating Reserve 6/1/2013 $4.66

1375 A Balancing Operating Reserve 7/1/2013 $68.00

1376 A Balancing Operating Reserve for Load Response 7/1/2013 $0.10

TOTAL CHARGES: $3,190.06

CREDITS ADJ BILLING LINE ITEM NAME

SOURCE BILLING PERIOD START AMOUNT ($)

2360 Synchronized Reserve $163.28

2600 RPM Auction $4,813.99

TOTAL CREDITS: $4,977.27

TOTAL PJM SETTLEMENT: ($1,787.21)

RECOVERY OF AEP CAT: $6,901.95

GRAND TOTAL: $5,114.74

OSU GATS ACCOUNTOSU GATS ACCOUNT

AEP OhioAEP Ohio

PJMPJM

RECsRECs

while

Projected Actual Difference

Total MWh 414,887 419,649 4,762

Total Wind Power MWh 102,333 100,149 -2,184

AEP Price to Compare $21,902,866 $23,273,309 $1,370,443

AEP Energy w/o Wind $18,566,193 $18,779,309 $213,116

Savings w/o Wind $3,336,672 $4,494,000 $1,157,328

Wind Premium $2,345,111 $2,633,180 $288,068

Total w/Wind $20,911,305 $21,412,489 $501,184

Net Savings $991,561 $1,860,820 $869,259

Costs do not include distribution charges or Ohio kWh Tax

Projected Actual Difference

Total MWh 414,887 419,649 4,762

Total Wind Power MWh 102,333 100,149 -2,184

AEP Price to Compare $21,902,866 $23,273,309 $1,370,443

AEP Energy w/o Wind $18,566,193 $18,779,309 $213,116

Savings w/o Wind $3,336,672 $4,494,000 $1,157,328

Wind Premium $2,345,111 $2,633,180 $288,068

Total w/Wind $20,911,305 $21,412,489 $501,184

Net Savings $991,561 $1,860,820 $869,259

Costs do not include distribution charges or Ohio kWh Tax

How Have We Done ?Results after nine months (December through August)

Benefits Realized

• Reduced Carbon Footprint

• Enhanced Sustainability Ratings

• Significant Publicity

• Utility Cost Security

• Aggregate Utility Cost Savings

• Academic and Research Integration

• Impact on the Campus Community