September 2017
RENEWABLE ENERGY ZONE (REZ)
TRANSMISSION PLANNING PROCESS:
A GUIDEBOOK FOR PRACTITIONERS
Nathan Lee, Francisco Flores-Espino, and David Hurlbut | National Renewable Energy Laboratory, Golden, Colorado
Renewable Energy Zone (REZ) Transmission Planning Process i
ACKNOWLEDGMENTS
e authors would like to thank the following individuals for their valuable contributions
and reviews of this work: Jennifer Leisch (United States Agency for International
Development); Andrea Watson, and Karin Haas (National Renewable Energy Laboratory).
e authors also thank Karen Peterson, Stacy Buchanan, and Joelynn Schroeder (National
Renewable Energy Laboratory) for editing, design, and graphic support.
e authors are also grateful for the peer reviews conducted by Je Billo (Electric Reliability
Council of Texas); Pitoon Junthip (Abt Associates); Jessica Katz (National Renewable Energy
Laboratory); Asami Miketa, Tijana Radojicic, and Dennis Volk (International Renewable
Energy Agency).
ii Renewable Energy Zone (REZ) Transmission Planning Process
LIST OF ACRONYMS
CREZ Competitive Renewable Energy Zones
DAF development adjustment factor
ERCOT Electric Reliability Council of Texas
HVDC high-voltage, direct-current
IA interconnection agreement
PUCT Public Utility Commission of Texas
REZ renewable energy zone
TAC technical advisory committee
Transmission WG transmission and generation modeling working group
WG working group
Zone WG zone identication and technical analysis working group
Renewable Energy Zone (REZ) Transmission Planning Process iii
RENEWABLE ENERGY ZONE (REZ)
TRANSMISSION PLANNING PROCESS
1. Other constraints, such as congestion on existing lines that leads to curtailment of renewable energy generation, can be addressed through traditional transmission planning activities
and do not require the REZ process.
Achieving clean energy goals may require
new investments in transmission, especially
if planners anticipate economic growth
and increased demand for electricity. e
renewable energy zone (REZ) transmission
planning process can help policymakers
ensure their infrastructure investments
achieve national goals in the most
economical manner.
What is a REZ?
A REZ is a geographic area that enables
the development of protable and cost-
eective grid-connected renewable energy.
A REZ has high-quality renewable energy
resources, suitable topography and land use
designations, and demonstrated interest
from developers, all of which support cost-
eective renewable energy development.
What is the REZ
transmission
planning process?
REZ transmission planning is a process
to plan, approve, and build transmission
infrastructure that connects REZs to the
power system. e REZ process helps to
increase the share of solar, wind, and other
renewable energy resources in the power
system while maintaining reliability and
economics. e REZ process focuses on
large-scale wind and solar resources that
can be developed in sucient quantities to
warrant transmission system expansion and
upgrades. ese variable renewable energy
resources are similar to large hydropower in
that transmission systems must be brought
to the location of the resource to connect
them to the grid.
e REZ process focuses on large-scale
wind and solar development because
other renewable energy resources (e.g.,
geothermal or mini-hydropower) are
seldom found in sucient concentration to
warrant consideration as a REZ. However,
when located within a designated REZ,
these supplemental renewable energy
resources may provide additional value to a
designated REZ, as described in step 2.
Why is the REZ
transmission planning
process necessary?
Traditional transmission planning may be
ill-suited to the characteristics of renewable
energy development because transmission
planning decisions need to be made
well in advance of renewable generation
development decisions. Wind and solar
power need to be located in windy and
sunny areas that are sometimes far from large
load centers. Transmission system access to
these areas may require 5–10 years to plan
and construct; however, wind and solar
generation projects only require 1–3 years
to construct. Financing for these remote
generation projects is not available without
transmission access, but transmission lines
cannot be built without a demonstrated
need for service. Siting for conventional
generation such as coal is seldom as
constrained. Renewable energy planning that
does not consider transmission expansion
may limit countries to less economical
renewable energy development.
e REZ process presented here applies
to renewable energy expansion that
is constrained by the lack of existing
transmission. e REZ process may
not be applicable in situations in which
other reasons limit renewable energy
development, or if the existing transmission
system already has capacity to accommodate
new renewable energy development.
1
Box 1. Defining Renewable Energy Zones (REZs) and
the REZ Transmission Planning Process
A REZ is a geographic area that enables the development of protable and
cost-effective grid-connected renewable energy. A REZ has high-quality
renewable energy resources, suitable topography and land-use designations,
and demonstrated interest from developers, all of which support cost-effective
renewable energy development.
The REZ transmission planning process is an approach to plan, approve,
and build transmission infrastructure that connects REZs to the power
system. The REZ process helps to increase the share of solar, wind, and other
renewable energy resources in the power system while maintaining reliability
and economics. The REZ process focuses on large-scale wind and solar
resources that can be developed in sufcient quantities to warrant transmission
system expansion and upgrades.
iv Renewable Energy Zone (REZ) Transmission Planning Process
Who should use this
guidebook, and how?
Policymakers, planners, and system operators
around the world have used variations of the
REZ process to chart the expansion of their
transmission networks and overcome the
barriers of traditional transmission planning.
is guidebook seeks to help power system
planners, developers, key decision makers,
and stakeholders understand and use the
REZ transmission planning process to
integrate transmission expansion planning
and renewable energy generation planning.
2. Find additional information on the REZ process and related topics at the Greening the Grid website, greeningthegrid.org.
e rst sections of this guidebook present
the organizational structure of the REZ
process and an outline of the steps involved
in the process. e remaining sections
describe each step of the REZ process in
detail.
e broad outline presented here is based
on the Competitive Renewable Energy
Zones (CREZ) process used in Texas
between 2005 and 2015 (see REZ Process:
Organizational Structure) and may be
modied based on unique circumstances.
Where can readers nd
additional information?
is overview is part of the United States
Agency for International Development’s
REZ Technical Platform, which describes
international best practices for transmission
development. Additional information is
available on the Greening the Grid website.
2
Renewable Energy Zone (REZ) Transmission Planning Process v
TABLE OF CONTENTS
The REZ Process: Organizational Structure.....................................................................1
The REZ Process: Overview.........................................................................................3
STEP 1. Process Design and Vision Statement..................................................................4
1.1 Identify the scope of the REZ process.............................................................................. 4
1.2 Develop a vision statement ........................................................................................ 4
1.3 Establish a detailed process design ................................................................................. 4
STEP 2. Renewable Energy Resource Assessment .............................................................6
2.1 Conduct technical potential analysis ............................................................................... 6
2.1.1 Produce renewable energy resource maps ................................................................. 6
2.1.2 Exclude areas not available for development ................................................................ 7
2.1.3 Identify priority development areas ......................................................................... 7
2.2 Conduct economic analysis ........................................................................................ 8
2.2.1 Determine development adjustment factor ................................................................. 8
2.2.2 Develop a supply curve for each study area ................................................................. 8
2.3 Continue updating resources database ............................................................................. 8
STEP 3. Candidate Zones Selection ...............................................................................9
3.1 Gauge commercial interest......................................................................................... 9
3.2 Produce candidate zone map......................................................................................10
STEP 4. Transmission Options Development ...................................................................11
4.1 Produce transmission enhancement options ......................................................................11
4.2 Perform transmission planning studies ............................................................................12
4.3 Conduct a cost-benet analysis ...................................................................................12
STEP 5. Final Transmission Plan Designation...................................................................13
5.1 Perform a full reliability analysis ...................................................................................13
5.2 Issue nal transmission order .....................................................................................13
STEP 6. Transmission System Upgrade ..........................................................................14
Outcomes of the REZ Transmission Planning Process .......................................................15
Glossary.................................................................................................................16
References .............................................................................................................17
vi Renewable Energy Zone (REZ) Transmission Planning Process
LIST OF FIGURES
Figure 1. General REZ transmission planning organizational structure....................................................... 2
Figure 2. Renewable energy zones transmission planning process outline ................................................... 3
Figure 3. Process of screening resource potential to calculate the technical potential of study areas . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 4. Hypothetical supply curve for renewable energy generation technologies ......................................... 8
Figure 5. Candidate zone selection example from Texas CREZ .............................................................10
Figure 6. REZs and new transmission infrastructure necessary to access these zones
identied in the Texas CREZ process.............................................................................13
LIST OF TABLES
Table 1. Transmission System Transfer Capabilities in Various Texas CREZ
Transmission Optimization Study Options .........................................................................11
LIST OF BOXES
Box 1. Dening Renewable Energy Zones (REZs) and the REZ Transmission Planning Process..............................iii
Box 2. Example REZ Process Decision Makers and Stakeholders ........................................................... 1
Box 3. Example Vision Statement from the Texas CREZ Initiative ........................................................... 5
Box 4. The Texas CREZ Approach to Producing Transmission Enhancement Options.......................................12
Renewable Energy Zone (REZ) Transmission Planning Process 1
THE REZ PROCESS:
ORGANIZATIONAL STRUCTURE
3. is general institutional structure may require modications when applied to specic country or other contexts.
e relationship between decision makers
and stakeholders is important in the REZ
process. While laws and institutional
frameworks vary from one power system to
another, a successful REZs eort depends
on active stakeholder engagement and the
ow of information between stakeholders
and decision makers throughout the
process. e authority to plan for and
approve investment decisions rests with
the decision makers. Examples of decision
makers and stakeholders for the REZ
Process are listed in Box 2. Stakeholder
involvement is critical to the REZ process.
Although stakeholders do not make legally
binding decisions, they have important
interests in the electricity system and will
be aected by those decisions. In many
cases, stakeholders also have technical
information and expertise that can enhance
the decision.
Figure 1 proposes an organizational
structure for an eective, stakeholder-
inclusive REZ process, as referenced
throughout this document.
3
is begins
with the Lead Entity—the decision maker
that launches and oversees the planning
activity and ensures its completion. A
technical advisory committee (TAC)
empowered by the Lead Entity guides
and reviews the work of the REZ process.
e working groups (WGs) conduct the
technical and analytical work of the REZ
process and generally include both:
• A zone identication and technical
analysis WG (Zone WG)
• A transmission and generation modeling
WG (Transmission WG).
e Lead Entity has authority to
approve new transmission and to convene
stakeholders and other decision makers.
e Lead Entity would also arbitrate
any disagreements that cannot be settled
within the TAC. e Lead Entity may
be an energy ministry, an environment
ministry, the regulatory authority, or other
relevant authority. As an example, the
Texas Legislature directed the Public Utility
Commission of Texas (PUCT) to take
action in 2005 that paved the way for the
Texas CREZ initiative (Hurlbut 2013).
e TAC guides and reviews specic REZ
tasks and outputs. e committee may
include representatives of the Lead Entity, the
technical WGs, other government agencies,
stakeholders, and organizations that can
support the process such as transmission
system operators. e Zone and Transmission
WGs deliver their work products to the
TAC for review and discussion. e TAC
mediates any diering views within the WGs
throughout the process.
e Zone WG conducts the step-by-step
screening that results in a list of candidate
REZs. e Zone WG’s membership includes
organizations that can help assess the
productive potential of renewable energy
resources, and any signicant constraints
to renewable energy project development,
at specic locations. Members can include
renewable energy technology experts,
meteorological experts, power system
planners, land use planners, wildlife experts,
civil society groups, and other stakeholders.
e work might begin by dening initial
study areas (see step 2), which the group then
screens more rigorously into smaller candidate
zones (see step 3). In the Texas CREZ
initiative, the Electric Reliability Council of
Texas (ERCOT)—the system operator—
conducted a wind resource potential study
and identied areas with signicant potential
for generation (Lasher 2008).
Box 2. Example REZ Process Decision Makers
and Stakeholders
Decision Makers Stakeholders
Energy ministry or
agency ofcials
Environment ministry
and other relevant
ministry ofcials
Regulators
Power system planners
Transmission
system operators
Renewable energy project developers
Electric utilities
Environment, natural resource, and land
use authorities
Economic and social development authorities
Environment, wildlife, social, and other
interest groups
Non-governmental organizations
2 Renewable Energy Zone (REZ) Transmission Planning Process
e Transmission WG models options
for connecting the candidate zones to the
existing transmission network to deliver
energy generated in candidate zones to
demand. e Transmission WG performs
the requisite transmission planning studies
(e.g., operational and reliability analyses)
and develops transmission expansion
options (including cost estimates for the
necessary transmission facilities). e
group analyzes and compares the results
of each option based on the amount of
new renewable energy delivered, changes
in the cost of production, total cost of
transmission upgrades, and any other
metrics of interest. e Transmission
WG may consist of transmission system
operators, energy research institutes,
government agencies, and other
stakeholders. Transmission WG discussions
also include representatives of existing
and planned generation to share generator
characteristics and support modeling
activities.
Figure 1. General REZ transmission planning organizational structure
LEAD ENTITY
TECHNICAL ADVISORY COMMITTEE (TAC)
ZONE IDENTIFICATION AND
TECHNICAL ANALYSIS WG
WORKING GROUPS (WG)
Initiaties and oversees the planning activity
Convenes relevant parties and ensures the process will meet the
project vision—i.e., that transmission expansion and upgrades occur
Guides and reviews the outputs of the
working groups
Ensures the technical validity and relevance of the integrated clean
energy transmission and generation planning analysis eorts
Responsible for the identication of study
areas and candidate zones
Identies and validates candidate renewable energy zones
TRANSMISSION AND GENERATION
MODELING WG
Responsible for dening and analyzing new
transmission and generation expansion
and upgrade options
Conducts development and modeling of transmission
system expansion and upgrade options
Renewable Energy Zone (REZ) Transmission Planning Process 3
THE REZ PROCESS: OVERVIEW
Figure 2 outlines the six steps of the REZ process. ese steps are individually described in the sections that follow, providing detailed
description of their purpose, outputs, and the key decision makers and stakeholders involved.
Figure 2. Renewable energy zones transmission planning process outline
STEP 6. TRANSMISSION SYSTEM UPGRADE
STEP 5.
FINAL
TRANSMISSION
PLAN DESIGNATION
- Select transmission option that best
complies with predetermined criteria,
including reliability standards, economic
benets, and environmental goals
Summary:
Select transmission option
according to pre-set criteria
Output:
Final transmission order
STEP 4.
TRANSMISSION
OPTIONS
DEVELOPMENT
- Select scenario creation (bundling)
methodology
- Conduct cost-benet analysis of options
- Steady-state, dynamic stability,
production cost, and reliability analysis
Summary:
Bundle candidate zones and
conduct analyses of the options
Output:
Cost, benet, and reliability impacts
for each transmission alternative
STEP 3.
CANDIDATE
ZONES
SELECTION
- Gauge commercial interest
- Identify areas where high
quality resources intersect with
commercial interest
Summary:
Identify zones with highest
probability of development
Output:
Candidate zone map and
supply curves (one per area)
STEP 1. PROCESS DESIGN & VISION STATEMENT
STEP 2.
RENEWABLE
ENERGY RESOURCE
ASSESSMENT
- Assess resource
- Screen exclusion areas
- Identify the areas with the highest
quality, developable resource
Summary:
Select areas with highest potential
Output:
Study areas map and supply
curves
4 Renewable Energy Zone (REZ) Transmission Planning Process
STEP 1. PROCESS DESIGN AND
VISION STATEMENT
An eective REZ process is rmly rooted
in applicable laws and regulations.
is ensures that decision makers have
the authority to approve and direct
transmission investment and guarantees
that the designation of REZ has relevant
legal ramications.
1.1 Identify the scope
of the REZ process
e scope denes the geographic
boundaries and the renewable energy
resources included in the REZ process.
e geographic area being considered in
the REZ process denes the boundary of
application. A clear boundary of application
is important because it focuses the scope of
the REZ process. e Lead Entity sets the
geographic boundary based on the existing
layout, operation, and regulation of the
transmission infrastructure. is boundary
may include a local, regional, national, or
multinational area.
e scope of the REZ process also
establishes the renewable energy resources
included in the REZ process. e criteria
for this decision may include government
priorities and/or availability of spatially
linked resource data. is step does not
consider the production cost of electricity
for dierent renewable energy resources
because this is evaluated in step 2. For
example, wind and solar are the most often
dened resources for the REZ process.
1.2 Develop a
vision statement
After establishing the scope of the REZ
process, the Lead Entity reviews relevant
laws and regulations to create a vision
statement for the REZ process. While
decision makers and stakeholders may
provide comments, the vision statement
comes from the Lead Entity. e vision
statement has two practical purposes:
1. To establish the goal of the REZ
process—for example, to build new
transmission infrastructure and make
improvements that cost-eectively and
fully use the best renewable resources in
the region.
2. To clearly state the scope of the REZ
process. A clear scope sharpens the focus
of the process and manages stakeholder
requests and expectations. is may
include the boundary of application
and the renewable energy resources
considered.
1.3 Establish a detailed
process design
e Lead Entity may also publish a REZ
process design document describing the
process in more detail, including steps,
responsibilities, deliverables, timelines,
and goals. e design document adds
transparency and creates a process baseline
that bounds subsequent changes as the
dierent decision makers and stakeholders
provide input on the scope and adjust
the process to accommodate unforeseen
circumstances. Prior to publication, the
Lead Entity may share the process design
document for review and input from
decision makers and stakeholders.
Summary: Design a specic process and develop a vision statement
Final outputs: Vision statement and program design document
Estimated time: 3 months
Central decision makers and stakeholders: Lead Entity
Renewable Energy Zone (REZ) Transmission Planning Process 5
Box 3. Example Vision Statement from the
Texas CREZ Initiative
The Texas CREZ vision statement was included in the Texas Utility Code
(Texas Public Utility Regulatory Act 1999):
The commission, after consultation with each appropriate independent organization,
electric reliability council, or regional transmission organization: (1) shall designate
competitive renewable energy zones throughout this state in areas in which renewable
energy resources and suitable land areas are sufcient to develop generating capacity
from renewable energy technologies; (2) shall develop a plan to construct transmission
capacity necessary to deliver to electric customers, in a manner that is most benecial
and cost-effective to the customers, the electric output from renewable energy
technologies in the competitive renewable energy zones; and (3) shall consider the
level of nancial commitment by generators for each competitive renewable energy
zone in determining whether to designate an area as a competitive renewable energy
zone and whether to grant a certicate of convenience and necessity.
6 Renewable Energy Zone (REZ) Transmission Planning Process
STEP 2. RENEWABLE ENERGY
RESOURCE ASSESSMENT
e REZ process identies regions through
a systematic and transparent procedure
based on resource quality, topography, land
use, and developer interest. e theoretical
renewable energy resource potential
(unconstrained by cost or land use issues) is
the base layer for this process.
e goal of step 2 is to estimate the
renewable energy resource potential and
identify a set of study areas (and associated
supply curves) capable of supporting high
levels of clean energy development.
2.1 Conduct technical
potential analysis
e technical renewable energy potential
estimates the achievable installed capacity
and generation of a specic technology
based on the topographic limitations, land
use constraints, and system performance.
is step identies areas with abundant
renewable energy resources that are
technically developable.
e Zone WG screens the theoretical
renewable energy potential (data often
presented in the form of a renewable energy
resource map) with the areas not available
for project development. is process can
also highlight known priority renewable
energy development areas (e.g., “eco-
towns” or economic development areas) to
identify the set of study areas—the output
of the technical resource analysis. Figure
3 depicts this process of screening the
resource potential for excluded and priority
development areas to calculate the technical
potential for renewable energy generation
in each of the study areas. e steps of this
process are detailed below.
2.1.1 Produce renewable
energy resource maps
Renewable energy resource maps show
the theoretical resource potential for the
technologies considered within each region
of interest. Spatially referenced renewable
energy resource data form the base layer
that is ltered in order to identify the study
areas and are particularly important for
site-constrained resources such as wind
and solar. ese resource potential layers
consist of modeled or measured geospatial
data. Ideally, ground measurements validate
the modeled data. ese data layers allow
for calculation of power density (W/m
2
)
or potential electricity generation per unit
Summary: Identify areas with the highest potential for low-cost development; allow governments to
identify priority or avoidance areas
Final output: Study areas map and supply curves (one per area)
Estimated time: 8 months
Central decision makers and stakeholders: TAC and Zone WG
Figure 3. Process of screening resource
potential to calculate the technical
potential of study areas.
Adapted from Lopez (2016)
Renewable Energy Zone (REZ) Transmission Planning Process 7
of area over a given period of time (kWh/
m
2
/day) for renewable energy resources
under consideration. At a minimum,
annual average resource data are needed
to identify study areas; however, higher
temporal resolution data provide additional
insight for decision makers. Solar resource
layers ideally consist of direct normal
irradiance, diuse horizontal irradiance,
air temperature, and wind speed. Wind
resource layers ideally consist of wind
speed, wind direction, air pressure, and air
temperature. Local sources for these data
may include energy ministries, environment
ministries, or research institutes. Where
local data is not available, high-quality,
global data sets are publicly available.
4
Additionally, commercial rms can create
these data with a high degree of accuracy.
2.1.2 Exclude areas not
available for development
Many areas may be undevelopable despite
having high-quality renewable energy
resources. is step identies and excludes
4. High-resolution, modeled annual average solar and wind resource data are available on the Global Solar Atlas from the World Bank and the Global Wind Atlas from the Danish
Technical University, respectively. More information is available at globalsolaratlas.info and globalwindatlas.com. Also, the Renewable Energy Data Explorer is a no-cost, web-based
application that provides spatial data and analysis capabilities for renewable energy resources in select regions. Additional information is available at re-explorer.org.
areas within the boundary of application
where development is prohibited or not
possible for technical or other reasons.
Constraints to project development may
include:
• Land use: water features, urban areas,
roads, other transportation infrastructure
• Topographic: slope, minimum
contiguous area
• Protected lands: government-protected,
critical environmental areas (e.g., bird
migratory pathways), radar footprints,
areas important for social or cultural
reasons
• Other state or local issues that prohibit or
severely restrict development.
Study areas do not have to be located close
to load centers, existing transmission, or
planned transmission, and proximity to
these is not a criterion used for exclusion.
is step aims to capture all of the
study areas that represent high-quality,
developable resources—ensuring that these
areas are considered in subsequent steps.
Constraining study areas to the vicinities
of existing transmission or load centers
may result in targeting less productive (and
therefore less cost-eective) resources. In
many power systems, areas that are far
from existing transmission and load centers
often host the most cost-eective and viable
renewable energy resources. In later steps
(steps 4 and 5), decision makers evaluate
the associated trade-os of the transmission
enhancements necessary to connect these
potentially remote, high-quality resources.
2.1.3 Identify priority
development areas
Economic development or other priority
areas may exist that oer benets like
expedited permitting or special incentives
for (renewable) energy projects. ese areas
might intersect high-quality, renewable
energy resources, and early identication
in the REZ process could be an important
step in achieving multiple policy objectives.
8 Renewable Energy Zone (REZ) Transmission Planning Process
2.2 Conduct
economic analysis
e technical potential analysis identies
areas where development is technically
feasible (i.e., study areas) but does not
include considerations of economic
feasibility. An economic analysis further
lters the study areas based on economic
considerations such as the cost of
generation.
2.2.1 Determine development
adjustment factor
In practice, only a few technically
feasible sites within a zone may actually
be developed even if transmission were
available. Project developers have limited
capital and will seek out the sites where cost
is minimized and returns maximized.
To account for this, the Zone WG estimates
how much new capacity may actually be
developed in each study area through the
use of a development adjustment factor
(DAF). e DAF is typically technology-
specic and represents an estimated
percentage of total potential capacity likely
to be developed after accounting for the
potential reasons that investment might
not occur on a specic site (e.g., limited
capital) despite technical feasibility. e
DAF mathematically reduces the estimated
capacity potential of a study area without
having to specify exactly where each
reduction would occur. e considerations
captured by the DAF require stakeholder
engagement and consensus as these
potential reasons that investment might
not occur are often subjective. e Zone
WG determines the DAFs based on the
characteristics of the specic market and
context of the REZ process.
e adjusted developable capacity informs
later transmission modeling steps in the
REZ process.
2.2.2 Develop a supply curve
for each study area
A supply curve for each study area helps
project developers and the regulatory
authority quantify the resource that can be
developed for a particular cost in that area
and compare these prices across the set of
study areas. On its vertical axis, the supply
curve shows the levelized cost of each unit
of energy produced by potential generators
sited in each area. On its horizontal axis,
the supply curve shows the total amount of
energy that such generators would produce
annually at or below a given levelized cost.
Figure 4 shows electricity generation
technologies by type along the horizontal
axis from lowest cost per unit of energy
produced annually to highest. e curve
shows that the zone could provide up to
10,363 GWh/year at a levelized cost of
no greater than $102/MWh, for example.
Supply curves enable comparison of
potential zones based on the cost of energy
that can be obtained.
Large-scale wind and solar are the focus of
the REZ process because other renewable
energy resources (e.g., geothermal, mini-
hydropower) are seldom suciently
concentrated in a location to warrant
development as a REZ. However, when
co-located within a designated REZ, these
supplementary renewable energy resources
may provide additional value such as
controllability from geothermal resources
and reliability attributes.
2.3 Continue updating
resources database
e initial resource database for identifying
study areas is generic across a wide area
and relies on simplied assumptions that
discount project-specic variations. Later,
private developers use more detailed
resource data to examine projects and focus
on areas within an identied zone. ese
resource data updates are not required
before the selection of the nal REZs.
$102/MWh
10,363 GWh/year
Figure 4. Hypothetical supply curve for renewable energy generation technologies.
Technology cost and performance data based on NREL (2016)
Renewable Energy Zone (REZ) Transmission Planning Process 9
STEP 3. CANDIDATE ZONES SELECTION
5. Interconnection studies require nancial commitments from developers in the form of fees and deposits. Using a 10 MW generator as an example, a developer in ERCOT could pay $15
per MW for a full interconnection study and a $5,000 security screening study deposit (ERCOT 2017). For the same size generator, the Midcontinent Independent System Operator could
pay a $5,000 application fee as well as a total of $224,000 (deposits and fees) for a denitive planning study (MISO 2017). In the California Independent System Operator area, a similar
generator could incur an interconnection study deposit of $60,000 as well as a generator site exclusivity deposit of an additional $100,000 (CAISO 2017).
Certain areas with excellent renewable
energy resources may not be attractive to
private developers for reasons the previous
assessment step (step 2) fails to capture. In
the candidate zone selection step, the Zone
WG invites developers to demonstrate their
interest in the screened areas to ensure that
the chosen REZs are commercially attractive
for development. is step provides a level
of certainty that development will occur in
the chosen REZs and that any investment in
transmission lines would be used and these
costs could be recovered.
3.1 Gauge
commercial interest
To gauge the likelihood of development
occurring in the previously identied
study areas, the Zone WG and the
regulatory authority request indications of
commercial interest from private renewable
energy project developers. e regulatory
authorities determine the threshold that
constitutes enough commercial interest or
nancial commitment by developers for a
zone to be considered a candidate zone.
Private developers can demonstrate nancial
commitment or commercial interest in
dierent ways. e acceptable forms of
commitment can be specied during step
1–Program Design and Vision Statement of
REZ. Examples of commercial interest and
nancial commitment may include:
• Pending or signed interconnection
agreements
• Leasing agreements
• Letters of credit
• Interconnection studies by a transmission
owner or grid operator
5
• Any other indication deemed appropriate
by the regulatory authority.
Summary: Select areas with the highest probability of commercial development
Final output: Candidate zones map
Estimated time: 2–6 months
Central decision makers and stakeholders: TAC and Zone WG
10 Renewable Energy Zone (REZ) Transmission Planning Process
3.2 Produce candidate
zone map
Once the period to provide information has
ended, the Zone WG and the regulatory
authority evaluate the submitted evidence
and decide which study areas have
generated sucient developer interest. is
nding leads to a selection of candidate
zones, which have high-quality resources
and high probabilities of being developed.
e Zone WG and the regulatory authority
may at this point decide to modify
candidate zones, combine some adjacent
zones into a single zone, or eliminate a
candidate zone for reasons that may only
become obvious at this stage of the process
as new information is available, such as
supply curves and developer interest.
Figure 5 (left) shows three types of metrics
used in the Texas CREZ initiative to
compare levels of developer commitment
for study areas: the amount of existing
development in the study area; signed
interconnection agreements (IAs) with
ERCOT; and pending IAs for projects
under study by ERCOT.
Figure 5 (right) also presents an example
candidate zone map from the Texas CREZ
process, in which 10 candidate zones
were selected out of 25 study areas based
on demonstrable commercial interest of
developers. Study areas that did not receive
enough interest, such as zones 8, 13, and
20, were not included in the nal selection
of candidate zones.
Figure 5. Candidate zone selection example from Texas CREZ. Left – Existing wind development, signed IAs, and pending IAs in each
study area. Right – Candidate zone map: 10 candidate wind zones selected from 25 initially identied study areas, outlined in red.
Source: Adapted from ERCOT (2006).
21
3
4
1
2
25
14
18
12
23
22
15
10
19
9
5
11
16
7
7
8
6
5
6
15
13
20
17
24
24
24
24
17
19
Existing
Pending
Signed IA
NA
Existing
Pending
Signed IA
Existing
Pending
Signed IA
NA
Renewable Energy Zone (REZ) Transmission Planning Process 11
STEP 4. TRANSMISSION OPTIONS DEVELOPMENT
Delivery of the electricity generated in the
candidate zones to load requires upgrades
and/or extension of the existing transmission
system. After selecting the candidate zones,
the analysis focuses on developing a set of
transmission enhancement options to cost-
eciently connect candidate zones to load
and yield the most benets. A set of feasible
options allows the TAC and Transmission
WG to select the most attractive option
based on pre-set criteria.
4.1 Produce transmission
enhancement options
Knowing the location and target installed
RE capacity of candidate zones enables the
Transmission WG and system operator to
formulate transmission expansion options
for a REZ transmission optimization
study. ere are often a large number
of potentially feasible approaches to
connecting candidate zones to load. To
reduce this complexity, the transmission
optimization study includes a reasonable set
of transmission development options (e.g.,
three to ve options) that cover the diverse
range of feasible solutions, including the
addition of new lines and other transmission
improvements such as equipment upgrades,
new substations, or transformers.
Each option includes a list of specic
transmission upgrades, transfer capability,
and associated costs. Some of the options
developed might not contain the entire
set of candidate zones. Additionally, the
voltage level of new transmission and
other upgrades may dier due to alternate
assumptions about the carrying capacity
needed to bring new renewable energy to
the rest of the grid. Table 1 depicts example
REZ transmission optimization study
options and corresponding additional zone
and total transfer capacities from the Texas
CREZ process. is total transfer capability
also includes existing wind capacity in
the state. is table shows the potential
diversity of the considered options. For
example, Option 4 does not connect Zone
4 and as a result does not have transfer
capability (MW) from this zone. Also, the
CREZ transfer capability of each of the
options diers and the transmission levels
range from 5,150 MW to 17,956 MW for
Options 1 and 3, respectively.
Table 1. Transmission System Transfer Capabilities in Various Texas CREZ Transmission
Optimization Study Options
Option 1
(MW)
Option 2
(MW)
Option 3
(MW)
Option 4
(MW)
Zone 2A
1,422 3,191 4,960 6,660
Zone 4
1,067 2,393 3,720 -
Zones 5/6
829 1,859 2,890 3,190
Zone 9A
1,358 3,047 4,735 5,615
Zone 19
474 1,063 1,651 2,051
CREZ transfer capability 5,150 11,553 17,956 17,516
Total transfer capability 12,053 18,456 24,859 24,419
Sources: ERCOT (2008); Lasher (2008)
Summary: Bundle candidate zones and develop transmission enhancement options
Final output: Transmission planning studies and cost-benet results for each option
Estimated time: 9–18 months
Central decision makers and stakeholders: TAC and Transmission WG
12 Renewable Energy Zone (REZ) Transmission Planning Process
4.2 Perform transmission
planning studies
e Transmission WG performs three types
of transmission planning studies for each of
the options in an iterative fashion: steady-
state analysis, dynamic stability analysis,
and production cost analysis. e steady-
state and dynamic stability analyses help the
Transmission WG understand the reliability
limitations and needs of the transmission
network. Production cost analysis helps
the Transmission WG understand the
performance of the transmission network
and expansion options. Outcomes
include transmission system limitations,
potential transmission improvements,
total production costs over a test year,
projected constraints, congestion costs,
and local marginal cost of electricity. e
Transmission WG can use the production
cost analysis to determine the costs and
benets of each set of transmission system
improvements for a given option.
It is not typically economically ecient
to build the transmission network such
that there is no curtailment of renewable
resources because of transmission
reliability constraints. For example, in
the Texas CREZ process, an assumed
system-wide wind generation curtailment
of approximately 2% of annual energy
potential was economically ecient
(ERCOT 2008).
4.3 Conduct a
cost-benet analysis
Cost-benet analyses allow for comparison
of the production cost savings to the cost of
new transmission. e Transmission WG
and system operator analyze a sucient
number (e.g., three to ve) of transmission
options to understand the costs and benets
of each option. A cost-benet analysis of
the transmission enhancement options
may include additional factors such as
reliability benets, legislative intent (i.e.,
the legal intent to develop clean energy),
environmental benets, future expansion
capability, and other factors (e.g., social
criteria). e TAC and the system operator
can recommend the inputs used for the
cost-benet analysis as well as the individual
criteria employed to evaluate the options.
At any point, the Transmission WG and
regulatory authority may choose to drop
a candidate zone with less commercial
interest if the cost-benet analysis suggests
resources are better spent connecting other
zones. e commercial interest shown by
developers in step 3 can be quantied and
included with factors from the cost-benet
analysis to rank the REZs.
Box 4. The Texas CREZ Approach to Producing
Transmission Enhancement Options
Because there are many feasible approaches to connecting candidate zones to
load, the Texas CREZ initiative reduced this complexity by studying a set of diverse
transmission enhancement options that covered the range of feasible solutions.
In the Texas CREZ the Public Utility Commission of Texas (PUCT) bundled
a set of selected candidate zones into a reasonable number of scenarios
(e.g., three to ve). These scenarios represented different levels of transfer
capability for the transmission system based on the assumed installed capacity
(MW) in each zone as well as the number of zones included. The PUCT asked
the Electric Reliability Council of Texas (ERCOT) to develop transmission
enhancement options to connect candidate zones to load and conduct a
transmission optimization study to identify attractive, feasible options for each
of these scenarios.
ERCOT then explored a diverse range of options for connecting candidate
zones to load under each of the scenarios shared by the PUCT. These options
included lower-voltage 345 kV networks, higher-voltage 765 kV networks, high-
voltage, direct-current (HVDC) lines, hub-and-spoke circuits, and loop circuits
around zones. Each option consisted of a list of specic transmission upgrades,
transfer capability, and associated costs. An analysis of these transmission
enhancement options and hybrid options—including the addition of new
lines and other transmission improvements such as equipment upgrades, new
substations, or transformers—identied the lowest cost, preferred option
within each scenario.
Detailed studies of the nal, preferred transmission enhancement option under
each scenario were then possible. The studies conducted included steady-state
analyses, dynamic stability analyses, production cost analyses, and a cost-benet
analysis (ERCOT 2008).
Renewable Energy Zone (REZ) Transmission Planning Process 13
STEP 5. FINAL TRANSMISSION
PLAN DESIGNATION
e appropriate authorities (e.g., regulatory
authority) may need to ensure specic
reliability and other requirements before
selecting the nal transmission plan from
the set of previously considered transmission
development options from step 4. To
select the most appropriate option, the
Transmission WG and TAC make an
interim selection of a transmission option—
with the information provided by the
system operator from step 4—pending full
reliability modeling results. Finally, in step 5
the regulatory authority designates the nal
transmission plan to be implemented.
5.1 Perform a full
reliability analysis
e Transmission WG and TAC perform
reliability and ancillary cost impact analyses
on the selected transmission option
and disclose any major problems. e
appropriate authorities use these reliability
analysis and modeling results together to
determine whether the selected transmission
plan meets all requirements to issue a nal
transmission order.
5.2 Issue nal
transmission order
e regulatory authority’s nal order
memorializes and authorizes the body
of decisions made throughout the REZ
process. is means including the selected
transmission enhancements in ocial
transmission planning documents.
e designation includes a geographic
description of the selected REZs; identies
major transmission improvements needed
to cost-eectively deliver the electricity;
identies who will pay for the transmission
improvements; and updates the estimate of
the maximum generating capacity in the
REZs based on capacity upgrades.
Figure 6 shows a map of the REZs and new
transmission infrastructure necessary to
access these zones as identied through the
Texas CREZ process.
Summary: The appropriate authority issues transmission plan
Final output: Final transmission plan
Estimated time: 3–9 months
Central decision makers and stakeholders: TAC and Transmission WG
Panhandle A
Substation
Transmission line
Fort Worth
•
Houston
•
Corpus Christi
•
McAllen
•
Lubbock
•
•
Austin
•
Brownsville
•
San Antonio
•
El Paso
•
Dallas
Central West
Central
McCamey
Panhandle B
Renewable Energy Zone
Figure 6. REZs and
new transmission
infrastructure
necessary to
access these
zones identied in
the Texas CREZ
process. Source: Hurlbut,
Chernyakhovskiy, and
Cochran (2016)
14 Renewable Energy Zone (REZ) Transmission Planning Process
STEP 6. TRANSMISSION SYSTEM UPGRADE
e ultimate goal of the REZ process—
part of the vision statement of the Lead
Entity (step 1)—is the construction and
upgrade of transmission infrastructure.
e Lead Entity designs and conducts the
REZ process with this goal in mind. e
sixth and nal step of the REZ process
is the coordinated implementation of
the transmission enhancements and the
development of the REZs.
Building transmission lines is capital-
intensive and understanding nancial
constraints can help to optimize
investments in transmission system
upgrades. When nancing constraints
limit the feasibility of a single transmission
system infrastructure overhaul, the REZ
process can consist of a staged investment
and development approach. e outputs
and the time horizon for each REZ process
may dier, and they may range from larger,
complete transmission system expansions to
smaller or staged upgrades.
Summary: Execution of the transmission development plan through the implementation of system upgrades
Final output: Transmission upgrades
Estimated time: 1–10 years
Central decision makers and stakeholders: Lead Entity, utilities, and private developers
Renewable Energy Zone (REZ) Transmission Planning Process 15
OUTCOMES OF THE REZ TRANSMISSION
PLANNING PROCESS
Successful implementation of the REZ
process enables integrated transmission
expansion and renewable energy generation
development—helping to cost-eectively
increase the share of solar, wind, and other
renewable energy resources in the power
system.
Following implementation of expansion
and upgrades, the transmission system
can harness the best and most developable
renewable energy resources and deliver the
lowest possible cost renewable energy. is
improved transmission infrastructure can
reduce potential curtailment resulting from
congestion, connect high capacity factor
locations for development, and help to
more eciently load transmission lines.
Ultimately, the REZ process is a proactive
transmission planning approach that
can assist policymakers and planners
in meeting clean energy goals, meeting
increased demand, and providing economic
power generation through the successful
integration of REZs and the signicant
scale-up of renewable energy deployment.
16 Renewable Energy Zone (REZ) Transmission Planning Process
GLOSSARY
Boundary of application. e geographic
area being considered in the REZ process,
which may consist of a local, regional,
national, or multinational region—
principally determined by the existing
layout, operation, and regulation of the
transmission infrastructure.
Candidate zone map. Map showing the
location of the candidate zones.
Candidate zones. Subset of study areas
that have high-quality resources and
high probabilities of being developed, as
demonstrated by sucient commercial
interest.
Decision makers. Entities with the
authority to launch planning and approve
investment decisions (e.g., ministry ocials,
regulators, and others with power granted
to them by the government).
Development adjustment factor (DAF).
An estimated percentage of total potential
capacity likely to be developed after
accounting for the potential reasons that
investment might not occur on a specic
site (e.g., limited capital) despite technical
feasibility—typically technology-specic.
Lead Entity. e decision maker that
initiates and oversees the planning activity
and ensures its completion.
Transmission and generation modeling
working group (Transmission WG).
Responsible for modeling options for
connecting candidate zones to the rest
of the grid. It develops transmission
enhancement options and models how each
option might change, among other things,
the total cost of generating electricity—may
consist of transmission system operators,
energy research institutes, government
agencies, and other stakeholders.
Priority development areas. Economic
development areas identied by the
government that oer benets like
expedited permitting or special incentives
that may intersect with high-quality
renewable energy resources.
Resource maps. Show the theoretical
resource potential for technologies
considered within each region of interest
and form the base layer that is gradually
ltered down to identify study areas.
Renewable energy zone (REZ).
Geographic area characterized by high-
quality renewable energy resources,
suitable topography, and a strong
interest in commercial development that
supports cost-eective renewable energy
development.
REZ process design document. Describes
the REZ process in more detail, including
steps, deliverables, timeline, responsibilities,
and goals in addition to adding
transparency and creating a process baseline
that bounds subsequent changes as decision
makers and stakeholders discuss and adjust
the scope.
REZ transmission optimization study.
Series of studies (steady-state analysis,
dynamic stability analysis, and production
cost analysis) for a set of feasible
transmission development options (three
to ve), including both new lines and/
or other transmission improvements such
as equipment upgrades, new stations, or
transformers.
REZ transmission planning. Process
that enables planning and construction
of transmission infrastructure that cost-
eectively transports renewable electricity
from a REZ to load.
Stakeholders. Group that does not make
legally binding decisions but has interests
and/or rights in the electricity system and
will be aected by decisions. ey often
have technical information and expertise
that can enhance a decision.
Study areas. Regions within the boundary
of application capable of supporting
large levels of high-quality clean energy
development.
Technical advisory committee (TAC).
Group that oversees and guides the
work of the REZ process. It may include
representatives of the Lead Entity, the
technical WGs, government agencies,
stakeholders, and possibly other
organizations that can support the process
such as transmission system operators.
Transmission development option.
Feasible transmission expansion plan
to connect candidate zones to load—
includes transmission system limitations,
potential transmission improvements, total
production costs over a test year, projected
constraints, congestion costs, and local
marginal cost of electricity
Vision statement. Establishes the goal of
the REZ process—a process to enhance
transmission infrastructure that cost-
eectively and fully uses the best renewable
resources in the region—in addition to
clarifying the scope of the REZ process.
Zone identication and technical analysis
working group (Zone WG). Conducts the
step-by-step screening that results in a list
of candidate zones—may include renewable
energy technology experts, meteorological
experts, power system planners, land
use planners, wildlife experts, and other
stakeholders.
Renewable Energy Zone (REZ) Transmission Planning Process 17
REFERENCES
CAISO. 2017. “Planning - Generator
Interconnection.” California Independent
System Operator (CAISO). https://
www.caiso.com/planning/Pages/
GeneratorInterconnection/Default.aspx.
ERCOT. 2006. “Analysis of Transmission
Alternatives for Competitive Renewable
Energy Zones in Texas: Attachment A.”
Austin: Electric Reliability Council of Texas
(ERCOT). http://www.ercot.com/news/
presentations/2006/ATTCH_A_CREZ_
Analysis_Report.pdf.
———. 2008. “Competitive Renewable
Energy Zones (CREZ) Transmission
Optimization Study: Attachment A.”
Austin: Electric Reliability Council of Texas
(ERCOT). http://www.ercot.com/content/
news/presentations/2008/ERCOT_Website_
Posting.zip.
———. 2017. “New Generation Resources -
Steps to Register.” Electric Reliability Council
of Texas (ERCOT). http://www.ercot.com/
services/rq/re/newgen-steps.
Hurlbut, D.J. 2013. “Multistate Decision
Making for Renewable Energy and
Transmission: An Overview.” University of
Colorado Law Review 81 (3): 677–703.
Hurlbut, D.J, Ilya Chernyakhovskiy, and
Jaquelin Cochran. 2016. “Renewable Energy
Zones: Delivering Clean Power to Meet
Demand, Greening the Grid.” NREL/
FS-6A20-65988. Golden, CO: National
Renewable Energy Laboratory (NREL).
http://www.nrel.gov/docs/fy16osti/65988.pdf.
Lasher, W. P. 2008. “e Development of
Competitive Renewable Energy Zones in
Texas.” In 2008 IEEE/PES Transmission and
Distribution Conference and Exposition, 1–4.
doi:10.1109/TDC.2008.4517254.
Lopez, Anthony. 2016. “High-Level Overview
of Data Needs for RE Analysis.” Presentation
NREL/PR-6A20-67835. Golden, CO:
National Renewable Energy Laboratory
(NREL). http://www.nrel.gov/docs/
fy17osti/67835.pdf.
MISO. 2017. “Planning - Generation
Interconnection - Procedures and
Requirements.” Midcontinent Independent
System Operator (MISO). https://
www.misoenergy.org/Planning/
GeneratorInterconnection/Pages/
ProceduresRequirements.aspx.
NREL. 2016. “2016 Annual Technology
Baseline.” Golden, CO: National Renewable
Energy Laboratory (NREL). http://www.nrel.
gov/analysis/data_tech_baseline.html.
Texas Public Utility Regulatory Act. 1999.
Utilities Code. 76th Leg., Ch. 405, Sec. 39.904
(G). http://www.statutes.legis.state.tx.us/
Docs/UT/htm/UT.39.htm#39.904.
18 Renewable Energy Zone (REZ) Transmission Planning Process
National Renewable Energy Laboratory
15013 Denver West Parkway
Golden, CO 80401
303-275-3000 • www.nrel.gov
NREL is a national laboratory of the U.S.
Department of Energy, Ofce of Energy
Efciency & Renewable Energy, operated
by the Alliance for Sustainable Energy, LLC.
NREL/TP-7A40-69043 • September 2017
U.S. Agency for
International Development
Ronald Reagan Building
Washington, D.C. 20523-1000
www.usaid.gov
CONTACTS
Jennifer Leisch
U.S. Agency for
International
Development
+1-303-913-0103
jleis[email protected]ov
Nathan Lee
National Renewable
Energy Laboratory
+1-303-384-7241
nathan.lee@nrel.gov
Photo credits: front cover, iStock 188076117;
page iv, iStock 522473858; page 5, iStock 155353280;
page 7, iStock 157588110; page 9, iStock 501095406;
page 12, iStock 515803636; page 14, iStock 507105484;
page 15, iStock 672741882; pages 18–19, iStock 174433078;
back cover, iStock 187087247
