Critique of the Goldendale Energy Storage Hydroelectric Project (FERC No. P-14861)

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From:

Rocky Mountain Econometrics

 

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ReportsPublished   12/3/2019

The economic analysis of the proposed Goldendale pumped storage project near the Columbia River shows it is unlikely that this project will be financially viable.

Report prepared by Rocky Mountain Econometrics for American Rivers, funded by Hydropower Reform Coalition.

 

EXECUTIVE SUMMARY

On January of this year, 2019, FFP Project 101, LLC, notified FERC of its intent to file an application for an original license for the Goldendale Energy Storage Project No. 14861 (Goldendale), a closed-loop pump storage project, in Washington State close to the Columbia River near to the John Day Dam.1

In the Notice of Intent (NOI) Goldendale’s stated purpose for the project is that:

“Within the region, renewable energy development is growing, primarily through wind power generation. The Project would provide necessary ancillary services and energy storage to the Northwest region, and allow for more reliable management and integration of disparate renewable energy sources into the grid. The Project would provide additional ramping capacity (both up and down) as well as firming for wind energy regulation, coordination, and scheduling services, automatic generation control, and support of system integrity and security (reactive power, spinning, and operating reserves).“2

Rocky Mountain Econometrics (RME) finds that while the project may be technically able to serve in the stated capacity for a portion of each day, it will not be able to serve in that capacity for a large portion of each day when its upper reservoir has been partially or wholly used for power production and needs to be refilled. It is also extremely unlikely that Goldendale will be financially viable.

While Goldendale’s description of project operations are preliminary in nature and not overly detailed, the parameters of pump storage project operations are well understood, Goldendale’s construction costs are sufficiently well defined, and the wholesale energy environment in which it will operate are clear. As a result RME is able to conclude that the Goldendale project is very unlikely to operate profitably given the state of current and future west coast and northwest energy pricing.

As briefly as possible, Goldendale’s challenge is that to service its debt and cover the cost of M&O, as well as the cost of filling its supply reservoir as a prerequisite to generate power, Goldendale will have to charge almost double the going rate of peak hour open market (NP15) energy. Worse, since pump storage project sales hours are necessarily restricted to the portion of the day when the upper reservoir is not being filled, the opportunity to absorb overhead by operating more than about eight hours per day is precluded. Finally, while Goldendale’s costs of operation will likely increase with inflation over time, NW energy prices for the past two decades have been flat or declining as the market transforms to accommodate proportionally larger and larger amounts of solar power, a trend that is destined to continue.

1 Goldendale Energy Storage Hydroelectric Project, (FERC No. 14861), Klickitat County, Washington, NOTIFICATION OF INTENT, Prepared for FFP Project 101, LLC.

2 Ibid., pp. 2.

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