Tennessee Valley Authority

Restructuring the risk of renewable energy contracts

The Tennessee Valley Authority (TVA) is a leader in incorporating renewable sources of energy into its generation supply, drawing from solar, wind and hydroelectric sources, among others.

A wind farm in TVA's service area. Credit: Tennessee Valley Authority

Chris Hansen, General Manager of Power Origination at TVA, noted three keys to the company's successful integration of renewables.

First, Hansen noted the size of TVA's service territory and its wide variety of resources, such as gas and hydroelectric. Related to this is the fact that TVA has contracted with a range of renewable sources, all in a continued attempt to manage intermittency and provide customers with reliable power.

"We have an array of programs that once you step over the service area of our seven states, sometimes even in the same state, you have a renewable option for those folks," Hansen said in an interview with FierceEnergy.

But, as Hansen pointed out, perhaps the most important factor allowing TVA to be successful has been a renegotiating and restructuring of renewable energy contracts. By working to find win-win situations between the utility and the supplier, Hansen said that TVA managed to have its wind suppliers take on the majority of intermittency and delivery risks.

He credits TVA's gradual approach to renewables with helping to ease integration concerns. Rather than contracting for a bulk of renewable resources at one time, the utility added sources in small steps beginning in 2010. While about one-third of their renewables are managed in-house, TVA uses four or five different forecasters to help ensure it is getting the most efficient renewable power.

"I think not having a lot of experience in these resources have allowed us to explore all avenues of the intermittency issue," Hansen said. "Not having that relationship allows us to pick the best at each wind farm."

All of this leads back to TVA's goal to produce renewable power that is reliable and affordable, something it plans to continue looking at in the future.

"The one thing we continue to be challenged with is the congestion of power," Hansen said. "Our ongoing renewable issues will always be balancing with TVA's needs to provide low-cost power."

TVA also allows customers to "purchase" green power through its Green Power Switch program, designed to help fund renewable sources of energy and help grow green generation on TVA's grid.