Since 1959 when the so-called "fence" was erected around the Tennessee Valley as part of a compromise between free-enterprise Republicans and public-power Democrats, TVA has been largely a self-funded utility that produces the vast majority of its power itself within its 7-state territory.
But the Tennessee Valley Authority and other Southern utilities are discussing ways to break down some of their territorial service limits as part of a new power exchange that TVA projects could save at least $10 million a year for TVA ratepayers.
As more power is generated from solar, wind and other interruptible and often cheaper power generation, a group of 20 utilities in the Southeast are looking at ways to take advantage of cheaper renewable generation when the sun shines or the wind blows with quicker and more automated power exchanges across the Southeast.
"We're working as peers in the Southeast on ways to enable a greener footprint utilizing cheaper sources of power while still maintaining the intent of our individual systems," said Aaron Melda, TVA's senior vice president for transmission and power supply. "When you think about the Southeast, TVA is kind of at the center of the doughnut and we want to make sure we are at the table for this discussion."
The energy companies are exploring the creation of a new automated intra-hour energy exchange across the region to facilitate more immediate and short-term power exchanges to help utilities switch quicker to cheaper power sources, when available. Known as the Southeast Energy Exchange Market (SEEM), the alliance would involve major utilities such as TVA, Southern Co., Duke, Progress and others to create a more transparent and automated way of buying and selling power across the electric grid.
In the process, the SEEM may also help encourage the development of more solar and other renewable energy, utility officials said.
"We're physically tied together through our wires on the electric grid so we constantly have discussions around ways to maintain and improve the reliability in the Southeast and how we can do that in the least-cost way," Melda said. "All of our plans (among the utilities in the Southeast) are to add renewables, mostly solar, to take advantage of that low-cost power and to reduce our carbon footprint. One of the challenges we all face is that no one knows quite how much the sun is going to shine every minute of every day."
TVA and most utilities typically try to balance their power generation from all of its nuclear, natural gas, coal, hydro and other production sources with the projected demand for power from the nearly 10 million people and businesses within the 7-state TVA service territory. TVA typically buys or sells about 2% of its power from other utilities and independent power producers, but that share is likely to go up as more solar power is added across the region and additional low-cost power becomes available intermittently across the Southeast.
A new software and hardware platform would be developed to help connect and provide real time power and price information so each of the participating utilities. The new alliance would help each utility balance their energy resources and demands but would not involve shared ownership or entire wholesale power interchanges similar to what occurs within a regional transmission operator such the MidContinent Independent System Operator (MISO) in the central states of America or the the 13-state PJM Interconnection along the East Coast.
Duke and other utilities had discussed opportunities in the past for a Southeast regional transmission operator (RTO) or independent system operator.
"This isn't a regional transmission organization, nor does it prohibit the ability for any of the companies to form or join an RTO in the future," Erin Culbert, Duke spokesperson, told Utility Dive.
The SEEM will be an entirely a voluntary alliance where each utility would continue to have the option of whether it chooses to buy available power or not.
But because solar power is often cheaper than other power sources when the sun is shining, Melda said the SEEM could help TVA take advantage of intermittent solar generation to replace more expensive sources of power at times and save millions of dollars in fuel and other expenses in the process.
"Our priorities, in order, are always power reliability to make sure we keep the lights on and cost to make sure we deliver power at the lowest feasible expense," Melda said.
Under reforms adopted in 1959 to the original 1933 TVA Act, the Tennessee Valley Authority is limited to buying and selling power to only five interconnected utilities to TVA. But through those interconnections, TVA and other utilities hope to able to do more exchanges of solar power, when available, to boost the market for such renewable power and to offer lower costs for consumers.
The creation of SEEM and its exchanges of power between utilities would likely require a centralized data exchange point and would require approval of the Federal Energy Regulatory Commission, which regulates power transfers among utilities. Melda said he expects it would probably be 12 to 18 months to get the new alliance and its operating system up and running.
"While we're still early in the learning phase, we're eager to see the kind of benefits a regional energy market might have for our customers, particularly if it helps improve how we can jointly operate growing solar resources on our systems," Duke Energy spokesperson Erin Culbert told S&P Global Market Intelligence.
Contact Dave Flessner at email@example.com or at 423-757-6340