[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                       REAL-TIME FORECASTING FOR
                      RENEWABLE ENERGY DEVELOPMENT

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 16, 2010

                               __________

                           Serial No. 111-100

                               __________

     Printed for the use of the Committee on Science and Technology


     Available via the World Wide Web: http://www.science.house.gov




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                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                   HON. BART GORDON, Tennessee, Chair
JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR., 
LYNN C. WOOLSEY, California              Wisconsin
DAVID WU, Oregon                     LAMAR S. SMITH, Texas
BRIAN BAIRD, Washington              DANA ROHRABACHER, California
BRAD MILLER, North Carolina          ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois            VERNON J. EHLERS, Michigan
GABRIELLE GIFFORDS, Arizona          FRANK D. LUCAS, Oklahoma
DONNA F. EDWARDS, Maryland           JUDY BIGGERT, Illinois
MARCIA L. FUDGE, Ohio                W. TODD AKIN, Missouri
BEN R. LUJAN, New Mexico             RANDY NEUGEBAUER, Texas
PAUL D. TONKO, New York              BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey        MICHAEL T. McCAUL, Texas
JIM MATHESON, Utah                   MARIO DIAZ-BALART, Florida
LINCOLN DAVIS, Tennessee             BRIAN P. BILBRAY, California
BEN CHANDLER, Kentucky               ADRIAN SMITH, Nebraska
RUSS CARNAHAN, Missouri              PAUL C. BROUN, Georgia
BARON P. HILL, Indiana               PETE OLSON, Texas
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
JOHN GARAMENDI, California
VACANCY
                                 ------                                

                 Subcommittee on Energy and Environment

                  HON. BRIAN BAIRD, Washington, Chair
JERRY F. COSTELLO, Illinois          BOB INGLIS, South Carolina
EDDIE BERNICE JOHNSON, Texas         ROSCOE G. BARTLETT, Maryland
LYNN C. WOOLSEY, California          VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois            JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
DONNA F. EDWARDS, Maryland           RANDY NEUGEBAUER, Texas
BEN R. LUJAN, New Mexico             MARIO DIAZ-BALART, Florida
PAUL D. TONKO, New York                  
JIM MATHESON, Utah                       
LINCOLN DAVIS, Tennessee                 
BEN CHANDLER, Kentucky                   
JOHN GARAMENDI, California               
BART GORDON, Tennessee               RALPH M. HALL, Texas
                  CHRIS KING Democratic Staff Director
         SHIMERE WILLIAMS Democratic Professional Staff Member
          ADAM ROSENBERG Democratic Professional Staff Member
            JETTA WONG Democratic Professional Staff Member
            ANNE COOPER Democratic Professional Staff Member
            ROB WALTHER Democratic Professional Staff Member
             DAN BYERS Republican Professional Staff Member
          TARA ROTHSCHILD Republican Professional Staff Member
                      JANE WISE Research Assistant
                    ALEX MATTHEWS Research Assistant


                            C O N T E N T S

                             June 16, 2010

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Paul D. Tonko, Acting Chairman, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................     7

    Written Statement by Representative Brian Baird, Chairman, 
      Subcommittee on Energy and Environment, Committee on 
      Science and Technology, U.S. House of Representatives......     7

Statement by Representative Randy Neugebauer, Subcommittee on 
  Energy and Environment, Committee on Science and Technology, 
  U.S. House of Representatives..................................     8
    Written Statement............................................     9


                               Witnesses:

Ms. Jamie Simler, Director, Office of Energy Policy and 
  Innovation, Federal Energy Regulatory Commission
    Oral Statement...............................................    10
    Written Statement............................................    12
    Biography....................................................    14

Dr. Alexander MacDonald, Deputy Assistant Administrator, 
  Laboratories and Cooperative Institutes, Office of Oceanic and 
  Atmospheric Research, National Oceanic and Atmospheric 
  Administration
    Oral Statement...............................................    15
    Written Statement............................................    16
    Biography....................................................    27

Dr. David Mooney, Director, Electricity, Resources, and Building 
  System Integration Center, National Renewable Energy Laboratory
    Oral Statement...............................................    27
    Written Statement............................................    29
    Biography....................................................    34

Dr. Pascal Storck, Vice President, 3TIER
    Oral Statement...............................................    34
    Written Statement............................................    36
    Biography....................................................    41

Mr. Grant Rosenblum, Manager of Renewable Integration, California 
  Independent System Operator
    Oral Statement...............................................    41
    Written Statement............................................    42
    Biography....................................................    48

Dr. Robert Michaels, Senior Fellow, Institute for Energy Research
    Oral Statement...............................................    48
    Written Statement............................................    49
    Biography....................................................    54

Discussion
  Potential Economic Savings.....................................    55
  Potential Burdens on Energy Resources and Transmission.........    56
  Allocating Costs for Renewables................................    57
  Wind Power Impacts on Pollutants and Emissions.................    58
  Roles for the Federal Government and Private Industry..........    58
  Wind Power.....................................................    59
  More on Private Industry.......................................    60
  Storage and the Limited Availability of Fossil Fuels...........    60
  More on the Need for Renewables................................    61
  Power Plant Siting.............................................    62
  Information Gathering and Sharing..............................    64
  Potential Savings Versus Instrumentation and Data Gathering 
    Costs........................................................    65
  Adapting Energy Demand to Intermittent Sources.................    66
  Potential for Job Creation.....................................    67
  Closing........................................................    69

             Appendix 1: Answers to Post-Hearing Questions

Ms. Jamie Simler, Director, Office of Energy Policy and 
  Innovation, Federal Energy Regulatory Commission...............    72

Dr. Alexander MacDonald, Deputy Assistant Administrator, 
  Laboratories and Cooperative Institutes, Office of Oceanic and 
  Atmospheric Research, National Oceanic and Atmospheric 
  Administration.................................................    73

Dr. David Mooney, Director, Electricity, Resources, and Building 
  System Integration Center, National Renewable Energy Laboratory    74

Dr. Pascal Storck, Vice President, 3TIER.........................    77

             Appendix 2: Additional Material for the Record

NREL Response to the Report Study of the Effects on Employment of 
  Public Aid to Renewable Energy Sources from King Juan Carlos 
  University (Spain).............................................    80

Supplemental Testimony of Dr. Robert Michaels, Senior Fellow, 
  Institute for Energy Research, dated June 28, 2010.............    89

The Institute for Energy Research: The NREL's Flawed White Paper 
  on the Spanish Green Jobs Study................................    93


         REAL-TIME FORECASTING FOR RENEWABLE ENERGY DEVELOPMENT

                              ----------                              


                        WEDNESDAY, JUNE 16, 2010

                  House of Representatives,
                     Subcommittee on Energy and Environment
                        Committee on Science and Technology
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:02 a.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Brian 
Baird [Chairman of the Subcommittee] presiding.



                            hearing charter

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                 SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                     U.S. HOUSE OF REPRESENTATIVES

                       Real-Time Forecasting for

                      Renewable Energy Development

                        wednesday, june 16, 2010
                         10:00 a.m.-12:00 p.m.
                   2318 rayburn house office building

Purpose

    On Wednesday, June 16, 2010 the Subcommittee on Energy and 
Environment of the House Committee on Science & Technology will hold a 
hearing entitled ``Real-Time Forecasting for Renewable Energy 
Development.''
    The Subcommittee will receive testimony on the roles that various 
Federal agencies as well as the private sector play in providing 
forecasting data and services relevant to expanding the availability of 
reliable, renewable power, and the extent to which these efforts are 
coordinated. The hearing will also explore any research, development, 
demonstration, and monitoring needs that are not currently being 
adequately addressed.

Witnesses

          Ms. Jamie Simler is the Director of the Office of 
        Energy Policy and Innovation at the Federal Energy Regulatory 
        Commission. Ms. Simler will testify on FERC's recent activities 
        to survey the issues surrounding the utilization of 
        intermittent renewable energy sources on the electric grid, as 
        well as viable technical and policy options to address these 
        issues.

          Dr. Alexander MacDonald is the Deputy Assistant 
        Administrator for Laboratories and Cooperative Institutes in 
        the National Oceanic and Atmospheric Administration's (NOAA's) 
        Office of Oceanic and Atmospheric Research. Dr. MacDonald will 
        describe the data, information, and services currently provided 
        by NOAA in support of renewable energy, and how these 
        capabilities could be further developed to better serve the 
        needs of renewable energy developers and consumers.

          Dr. David Mooney is the Director of the Electricity, 
        Resources, and Building Systems Integration Center at the 
        National Renewable Energy Laboratory (NREL) in Golden, 
        Colorado. Dr. Mooney will testify on NREL's activities with 
        other Federal agencies as well as the private sector to 
        identify and address issues with grid integration of renewable 
        energy resources.

          Dr. Pascal Storck is the Vice President of 3TIER. Dr. 
        Storck will provide testimony on the role that private 
        renewable power forecasters play relative to and in 
        collaboration with services offered by the public sector.

          Mr. Grant Rosenblum is Manager of Renewable 
        Integration for the California Independent System Operator 
        (California ISO). Mr. Rosenblum will testify on his experience 
        in balancing intermittent renewable power with baseload power 
        sources, and on ways to ensure the reliability of a 
        transmission system with significant renewable energy 
        components.

          Dr. Robert Michaels is a Senior Fellow of the 
        Institute for Energy Research. Dr. Michaels will testify on 
        economic and other challenges associated with renewable energy 
        sources.

Background

    A significant barrier to the widespread adoption of many forms of 
renewable energy, including wind, solar, and marine and hydrokinetic 
power (MHK), is that these sources are intermittent. Electric grid 
managers address this intermittency by adjusting the delivery of other 
sources of power based on expected changes in renewable power output. 
These expected changes are called power production forecasts. Such 
forecasts must take into account changing weather conditions in 
conjunction with the land's topography near a renewable energy device, 
along with the device's expected technical performance. The larger the 
uncertainty in these forecasts, the more baseload \1\ power must be 
kept in reserve or stored to ensure the reliability of electricity to 
consumers, thus ultimately increasing the total cost of electricity 
generation. Several recent reports \2\ have determined that improving 
the accuracy and frequency of these forecasts can have a major impact 
on the economic viability of renewable energy resources.
---------------------------------------------------------------------------
    \1\ ``Baseload'' power refers to power that can be delivered 
continuously. Examples include coal, nuclear, natural gas, and power 
delivered from energy storage systems such as batteries, fuel cells, 
and compressed air energy storage (CAES).
    \2\ Examples include the National Renewable Energy Laboratory's 
Western Wind and Solar Grid Integration Study published in May 2010 and 
the Department of Energy's 2008 report entitled 20% Wind Energy by 
2030.

Wind, Solar and Marine and Hydrokinetic Power Forecasting Needs
    Current observational networks in the United States are relatively 
sparse and widely spaced, and are therefore not well-suited to forecast 
wind energy generation. These networks emphasize data collection at a 
height of 10 m or less above the surface compared to today's typical 
wind turbine hub height of roughly 80 m. This makes it difficult to 
detect and forecast weather events such as large wind speeds over short 
time periods. The American Wind Energy Association's (AWEA's) detailed 
Action Plan to 20% Wind Energy by 2030, which is a follow-up to DOE's 
wind energy report, also notes that there is ``currently a disconnect 
between wind forecasters and grid operators regarding what wind 
forecasting information is most useful for system operators.'' The plan 
recommends greater cooperation between these groups and enhanced system 
operator training, as well as a significant effort to integrate wind 
forecasting tools into energy management system applications. In 
addition, collaborative field and computational modeling research is 
considered necessary in strategic areas of the country to better detect 
and forecast complex flow regimes that lead to unexpected turbine 
outages, long-term turbine performance issues, and wind forecasting 
errors.
    Forecasting needs for marine and hydrokinetic energy projects are 
similar to wind. High-resolution wind data, enhanced frequency in which 
data is collected, and increased local observation sites near potential 
MHK projects can improve long- and short-term power forecasts. Wave 
energy technologies also benefit from accurate ocean surface wind 
simulations. Although tidal and current energy are more predictable 
than wave energy, DOE's National Marine Renewable Energy Centers are 
currently developing numerical models to simulate the mechanics of flow 
around single turbines and full arrays with the goal of significantly 
improving their reliability and power forecasts. Finally, 
meteorological data focused on the surface boundary layer of the water, 
combined with the already collected astronomical tidal forecasts 
conducted by the National Oceanic and Atmospheric Administration's 
(NOAA) National Ocean Service, can assist in providing more accurate 
tidal power forecasts.
    Solar power forecasting is heavily dependent on satellite data, 
much of which has a resolution that is a factor of 10 or more too 
course to meet the real-time needs of grid managers. The power output 
of utility-scale concentrating solar power systems also depends on the 
level of direct, as opposed to diffuse, sunlight incident on the 
systems' components, which in turn is dependent on the concentration of 
aerosols as well as cloud cover in the local atmosphere. This compounds 
the monitoring and modeling requirements to achieve an accurate 
forecast.

Public and Private Sector Roles in Renewables Forecasting
    NOAA's capability to understand and predict changes in the Earth's 
environment enables the agency to support renewable energy at multiple 
scales. NOAA's weather forecasts support energy demand predictions 
today, and these forecasts are expected to be critical as sources which 
depend on real-time meteorological conditions such as solar, wind, and 
MHK power increase in importance. At the most basic level, most 
renewable energy sources depend on the atmospheric and oceanic data 
that NOAA provides. NOAA furthers the development and integration of 
renewable energy sources through models, analysis tools, and by 
providing reliable weather, hydrological \3\, climatic, and ecological 
data and forecasts. To accomplish this, NOAA employs a diverse array of 
data collection tools and leverages internal and external partnerships. 
NOAA utilizes an integrated system of Earth observing networks supplied 
by such tools as remote sensing and satellite imagery and a surface 
network of weather radars, upper air balloons, ocean buoys, ships, 
aircraft, and seafloor observations to enhance observation networks, 
improve weather forecasts, and incorporate climatic changes into long 
term resource forecasts for the energy industry and utilities. For 
example, the Earth System Research Laboratory (ESRL) and the National 
Weather Service (NWS) work to improve the sensing, characterization, 
and prediction of weather elements in the Planetary Boundary Layer 
(PBL) through advances in research and implementation of the next 
generation operational weather forecast model (called the Weather 
Research and Forecasting computer model, or more commonly WRF). NOAA 
leverages research capacities across the agency, as well as 
partnerships with other Federal agencies and national laboratories, 
cooperative institutes, universities, and international research 
organizations.
---------------------------------------------------------------------------
    \3\ Including researching, monitoring, and predicting ocean 
currents, tides, water levels, ocean circulation, and temperature.
---------------------------------------------------------------------------
    The National Center for Atmospheric Research (NCAR), sponsored by 
the National Science Foundation (NSF), conducts collaborative research 
in atmospheric and Earth system science, encompassing meteorology, 
climate science, atmospheric chemistry, solar-terrestrial interactions, 
and environmental and societal impacts. Since 2009, a priority of NCAR 
has been to develop its capacity to support a transition to renewable 
energy sources through its breadth of atmospheric science knowledge, 
experience with technology transfer, and access to university 
researchers. For example, NCAR entered into a partnership with DOE's 
National Renewable Energy Laboratory (NREL) and a regional utility 
company, Xcel Energy, to develop sophisticated, localized wind 
forecasts for operational use. These products aim to inform the siting 
of new wind turbine farms, to better integrate wind-generated 
electricity into the power grid, and to make critical decisions about 
powering down traditional power plants when sufficient winds are 
predicted. In addition, NCAR incorporates observations of current 
atmospheric conditions from a variety of sources, including NOAA models 
and meteorological data, satellites, aircraft, weather radars, ground-
based weather stations, and sensors on the wind turbines into three 
powerful NCAR-based tools: WRF (referenced above); the Real-Time Four-
Dimensional Data Assimilation System (RTFDDA); and the Dynamic 
Integrated Forecast System (DICast).
    NREL has published several studies on the regional integration of 
intermittent renewables into the electric grid over the last several 
years. The laboratory currently works with private renewable technology 
developers and forecasters to test and supply relevant data on the 
effect that varying atmospheric conditions can have on particular types 
of renewable energy systems. NREL also works with NOAA and other 
relevant agencies to map and update its assessment of renewable energy 
resources throughout the United States, and it carries out modeling and 
simulation research activities to better inform the siting and 
operation of a variety of renewable energy projects. In addition to 
these ongoing efforts, on June 1st DOE announced funding for up to $6 
million over two years to improve short-term (0-6 hour) wind energy 
forecasting--$2 million of which will be provided to NOAA this year to 
fund its technical support of the selected projects and $1 million will 
be awarded to one or two competitively selected teams. DOE anticipates 
providing an additional $3 million in fiscal year 2011 to NOAA and the 
recipient team(s) for completing the project.
    Private sector companies, often called Forecasting Service 
Providers (FSP), have been in the business of producing site and 
technology specific renewable power forecasting products for over a 
decade. These companies are generally third-party vendors which provide 
confidential forecasting products. The power forecasting products are 
usually based on three main inputs. The first input is the foundational 
numerical weather prediction (NWP) models using NOAA, NASA and NCAR 
meteorological and atmospheric data. The second input is site specific 
observations collected from meteorological (or ``met'') towers and 
other on-site observation devices. Finally this information is combined 
with technical specs based on the energy output of the specific 
renewable technologies (i.e. a certain kind of wind turbine or solar 
panel). Then using advanced computational techniques, simulations and 
local scale specific models a power forecasting product is created.
    Renewable energy project developers, financiers, energy generators, 
utilities, and electricity balancing authorities use power forecasts. 
Generally there are two kinds of products, one is used for long-term 
planning to build and site new renewable projects and the other is 
short-term (day-ahead or hour-ahead time frames) for optimization of 
renewable energy integration onto the grid. The long-term forecast 
helps assess the amount of energy a specific location may be capable of 
producing using a certain technology. This information helps determine 
characteristics of a project such as what technology to install and how 
large an installation should be. The short-term power forecasts are 
used for efficient scheduling of generation resources. This is 
important to energy generators as well as to balancing authorities such 
a Regional Transmission Organizations (RTO) and Independent Systems 
Operators (ISO) which are charged with managing the flow of electric 
power on the grid. Accurate power forecast products help generators 
maximize profits by making their resources more reliable for scheduling 
as well as better at precisely predicting their energy output. 
Increased accuracy may reduce fines, penalties, and eventually the 
amount of reserve energy required to back-up or firm-up the same 
quantity of renewable resource. This is important to RTOs and ISOs 
because it reduces the risk of over or under loading the power grid, 
which can damage the grid and possibly lead to catastrophic blackouts.

FERC Notice of Inquiry on Variable Energy Resources
    To gain further information on these issues, the Federal Energy 
Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) in 
January on ``the extent to which barriers may exist that impede the 
reliable and efficient integration of variable energy resources (VERs) 
into the electric grid, and whether reforms are needed to eliminate 
those barriers.'' The NOI goes on to state that:

         ``[i]n order to meet the challenges posed by the integration 
        of increasing numbers of VERs, ensure that jurisdictional rates 
        are just and reasonable, eliminate impediments to open access 
        transmission service for all resources, facilitate the 
        efficient development of infrastructure, and ensure that the 
        reliability of the grid is maintained, the Commission seeks to 
        explore whether reforms are necessary to ensure that wholesale 
        electricity tariffs are just, reasonable and not unduly 
        discriminatory.''

    To date, FERC has received responses to this NOI from over 100 
parties, including relevant government agencies and laboratories, 
electric utilities, RTOs, ISOs, and private forecasting companies.
    Mr. Tonko. [Presiding] This hearing will now come to order.
    Good morning, and welcome to today's hearing on real-time 
forecasting for renewable energy development.
    The United States has tremendous potential to expand our 
use of renewable energy resources. According to a study by the 
Pacific Northwest National Laboratory, the accessible wind 
potential in just 12 states could power the entire country over 
twice. Lawrence Berkeley National Lab has also shown that if we 
took one percent of the total United States land area and 
covered just a quarter of it with currently available solar 
panels, we could meet all of our energy needs. In addition, the 
Electric Power Research Institute has found that we could more 
than double our electricity generation from waterpower just by 
harnessing our nation's ample marine and hydrokinetic energy 
resources.
    But as we have often pointed out in this Committee, and it 
is a stunning observation, the wind doesn't always blow and the 
sun doesn't always shine. Now, the intermittency of these 
sources could eventually be addressed through the widespread 
adoption of energy storage technologies such as batteries, fuel 
cells and compressed air energy storage systems, and this 
Committee has passed significant legislation to accelerate the 
advancement of each of these options.
    Right now, electric grid managers throughout the country 
are doing their best to integrate and balance several gigawatts 
of wind with baseload power options on an hour-by-hour and even 
minute-by-minute basis. To ensure a steady flow of electricity 
to their consumers, these managers rely on forecasts of power 
production, which take into account weather information 
provided by NOAA as well as energy technology research carried 
out by DOE or the private sector.
    Recent studies led by the National Renewable Energy 
Laboratory have shown that improving the accuracy and 
frequencies of these forecasts can have a major impact on the 
economic viability of renewable energy resources. I look 
forward to learning more from this excellent panel of witnesses 
on how we should best be addressing this important issue.
    [The prepared statement of Chairman Baird follows:]
               Prepared Statement of Chairman Brian Baird
    The United States has tremendous potential to expand our use of 
renewable energy resources. According to a study by the Pacific 
Northwest National Laboratory, the accessible wind potential in just 12 
states could power the entire country twice over. Lawrence Berkeley 
National Lab has also shown that if we took one percent of the total 
U.S. land area and covered just a quarter of it with currently 
available solar panels, we could meet all of our energy needs. In 
addition, the Electric Power Research Institute has found that we could 
more than double our electricity generation from water power just by 
harnessing our nation's ample marine and hydrokinetic energy resources.
    But as we've often pointed out in this Committee--and it is a 
stunning observation--the wind doesn't always blow and the sun doesn't 
always shine. Now; the intermittency of these sources could eventually 
be addressed through the widespread adoption of energy storage 
technologies such as batteries, fuel cells, and compressed air energy 
storage systems, and this Committee has passed significant legislation 
to accelerate the advancement of each of these options.
    Right now, electric grid managers throughout the country are doing 
their best to integrate and balance several gigawatts of wind with 
baseload power options on an hour-by-hour and even minute-by-minute 
basis. To ensure a steady flow of electricity to their consumers, these 
managers rely on forecasts of power production, which take into account 
weather information provided by NOAA as well as energy technology 
research carried out by DOE or the private sector.
    Recent studies led by the National Renewable Energy Laboratory have 
shown that improving the accuracy and frequency of these forecasts can 
have a major impact on the economic viability of renewable energy 
resources. I look forward to learning more from this excellent panel of 
witnesses on how we should best be addressing this important issue. 
With that I yield to our distinguished Ranking Member, Mr. Inglis.

    Mr. Tonko. With that, I yield to our distinguished Ranking 
Member, Mr. Neugebauer, for his comments.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    I appreciate you holding this hearing and bringing together 
the subject matter experts on not only energy, of course, but 
also the views of the national labs, the Federal regulator, and 
economists, as well as forecasting from the private sector.
    At its most fundamental level, renewable power is about 
harnessing energy from the environment in some fashion. In that 
sense, being able to forecast the availability of those 
environmental sources, wind, solar, water, for example, at any 
one time is critical to knowing when and how much energy will 
be generated.
    Because of its rich oil and gas resources, there has long 
been an impression that Texas is behind the times when it comes 
to pursuing renewable energy. To the contrary, though, Texas is 
firmly established as the country's leader when it comes to 
wind energy--almost 10,000 megawatts of installed capacity, 
more than double any other state. And I am sure many members 
have heard by now, because I never miss the opportunity to 
remind folks, that the highest concentration in wind energy in 
America is produced in my Congressional district.
    Despite many years, even decades, of growth in subsidies 
and vast resources targeted toward research and development, 
renewable energy sources remain significantly more expensive 
than conventional counterparts: coal, gas and nuclear.
    Yet still today, wind generation costs are averaging over 
$150 per megawatt-hour and solar over $250 per megawatt-hour 
compared to conventional costs of approximately $100 per 
megawatt-hour, to the frustration of many.
    Nonetheless, the last decade has seen significant 
integration of renewable energy into the electric grid fueled 
by many of the subsidies as well as state-level renewable 
portfolio standard mandates. This growth has resulted in new 
and increasing challenges for both the industry and government, 
in particular because renewable energy sources such as wind and 
solar provide only intermittent contributions to the grid. They 
result in an increased reliability concerns, as they ultimately 
must be backed by baseload power from conventional resources.
    The additional burden on baseload power supply to ensure 
overall grid reliability adds to the cost of delivering 
electricity. A key question that must be answered is: whom 
shall pay for this cost, the renewable energy companies that 
are being assisted, or the baseload providers that are doing 
the assisting? Regardless of the answer to the key question, 
there are potential reduced reliability concerns associated 
with integration of renewable energy with better weather 
forecasting and the incorporation of real-time information. As 
noted in today's testimony, improving forecasting accuracy by 
even just one or two percent can lead to millions of dollars in 
savings and can alleviate reliability concerns.
    It seems the key to these improvements lies with NOAA, 
which has the responsibility for providing weather and water 
forecasts and developing computer models that are then used by 
the private sector to develop forecasting products for 
electricity suppliers. To this end, we need to make sure NOAA 
has the authority to pursue these activities through support of 
appropriately focused research and development and renewables-
focused weather forecasting service.
    I thank the witnesses for appearing before the Subcommittee 
today and I look forward to the testimony. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Neugebauer follows:]
         Prepared Statement of Representative Randy Neugebauer
    Thank you Mr. Chairman, I appreciate you holding this hearing and 
bringing together subject matter experts on not only energy of course, 
but also the views of the national labs, the Federal regulator, an 
economists as well a forecasting provider from the private sector.
    At its most fundamental level, renewable power is about harnessing 
energy from the environment in some fashion. In that sense, being able 
to forecast the availability of those environmental sources--wind, 
solar, or water for example--at any one time is critical to knowing 
when and how much energy will be generated.
    Because of its rich oil and gas resources, there has long been an 
impression that Texas is ``behind the times'' when it comes to pursuing 
renewable energy. To the contrary, though, Texas is firmly established 
as the country's leader when it comes to wind energy, with almost 
10,000 Megawatts of installed capacity, more than double any other 
State.
    And I'm sure members by now have heard it, but I never miss the 
opportunity to remind folks that the highest concentration of wind 
energy in America is produced in my district.
    Despite many years--even decades--of growth in subsidies and vast 
resources targeted towards research & development--renewable energy 
sources remain significantly more expensive than conventional 
counterparts (coal, gas, nuclear).
    Yet still today, wind generation costs are averaging over $150 per 
megawatt/hour and solar over $250 per megawatt/hour, compared to 
conventional costs of approximately $100 per mw/hour, to the 
frustration of many.
    Nonetheless, the last decade has seen significant integration of 
renewable energy onto the electric grid, fueled by many of these 
subsidies as well as State-level Renewable Portfolio Standard mandates.
    This growth has resulted in new and increasing challenges for both 
industry and government. In particular, because renewable energy 
sources such as wind and solar provide only intermittent contributions 
to the grid, they result in an increase of reliability concerns and as 
they ultimately must be backed by baseload power from conventional 
sources.
    The additional burden on baseload power supply to ensure overall 
grid reliability adds to the cost of delivering electricity. A key 
question that must be answered is who should pay for this cost--the 
renewable energy companies that are being assisted, or the baseload 
power providers that are doing the assisting.
    Regardless of the answer to that key question, there is potential 
to reduce reliability concerns associated with integration of renewable 
energy with better weather forecasting and the incorporation of real-
time information. As noted in today's testimony, improving forecasting 
accuracy by even just one or two percent can lead to millions of 
dollars in savings and alleviate reliability concerns.
    It seems the key to these improvements lies with NOAA, which has 
responsibility for providing weather and water forecasts and developing 
computer models that are then used by the private sector to develop 
forecasting products for electricity suppliers. To this end, we need to 
make sure NOAA has authority to pursue these activities through support 
for appropriately focused R&D and renewables-focused weather 
forecasting services.
    I thank the witnesses for appearing before the subcommittee today, 
and I look forward to the testimony and discussion.
    Thank you Mr. Chairman.

    Mr. Tonko. Thank you, Mr. Neugebauer, and certainly with 
the increased pressure being felt by many to encourage 
alternate supplies of energy, I think today's witnesses will 
enable us to create that more effective, more efficient outcome 
out there, especially as we look at the situation in the Gulf 
today and the need to, I think, strengthen our entire 
comprehensive energy strategy.
    With all that being said, it is my pleasure to introduce 
our first panel of witnesses at this time. We begin with Ms. 
Jamie Simler, who is the Director of the Office of Energy 
Policy and Innovation for the Federal Energy Regulatory 
Commission, or FERC. Seated next to Ms. Simler is Dr. Alexander 
MacDonald, who is the Deputy Assistant Administrator of 
Laboratories and Cooperative Institutes within the Office of 
Oceanic and Atmospheric Research at NOAA. Then Dr. David 
Mooney, who is the Director of the Electricity, Resources and 
Building Systems Integration Center for the National Renewable 
Energy Laboratory. Then we have Dr. Pascal Storck, who is the 
Vice President of 3TIER, and Mr. Grant Rosenblum, who is the 
Manager of Renewable Integration at the California Independent 
System Operator. And then finally, Dr. Robert Michaels, who is 
a Senior Fellow for the Institute for Energy Research. We 
welcome each and every one of you to the panel and look forward 
to hearing your testimony.
    As our witnesses should know, you will have five minutes 
for your spoken testimony. Your written testimony will be 
included in the record for the hearing, and when you have 
completed your spoken testimony, we will begin with questions. 
Each Member will have five minutes to question the witnesses.
    Ms. Simler, you would begin, please.

 STATEMENTS OF JAMIE SIMLER, DIRECTOR, OFFICE OF ENERGY POLICY 
      AND INNOVATION, FEDERAL ENERGY REGULATORY COMMISSION

    Ms. Simler. Good morning, Mr. Tonko, Mr. Neugebauer, and 
members of the Subcommittee. Thank you for the opportunity to 
appear before you today. My name is Jamie Simler and I am the 
Director of the Office of Energy Policy Innovation of the 
Federal Energy Regulatory Commission. I appear before you as a 
staff witness. My testimony does not necessarily represent the 
views of the Commission or any individual Commissioner. My 
testimony will cover the motivations of the Commission's 
January 21st Notice of Inquiry on the Integration of Variable 
Energy Resources and a summary of some of the more relevant 
responses to the forecasting issues in that notice.
    The Commission regulates transmission and sales for resale 
of electric energy in interstate commerce. Its primary 
responsibility is to assure that the rates, terms and 
conditions of transmission service and wholesale power 
transactions are just and reasonable and not unduly 
discriminatory or preferential. As part of its ongoing 
responsibilities, the Commission issues public notices to 
solicit information on emerging issues that may affect 
jurisdictional rates and terms of service.
    The Notice of Inquiry on the Integration of Variable Energy 
Resources sought comment on the extent to which barriers may 
exist that impede the reliable and efficient integration of 
variable energy resources into the electric grid and whether 
reforms are needed to eliminate those barriers. The Notice 
noted that while variable energy resources have many desirable 
characteristics, including low marginal energy costs and 
reduced greenhouse gas emissions as compared to conventional 
fossil fueled generation, they also present unique challenges. 
For example, because variable energy resources cannot store or 
control their fuel source, they have limited ability to control 
their production of electricity.
    With regard to forecasting, the Commission sought comment 
on several issues. These include the current practices used to 
forecast power production from variable energy resources, and 
whether those practices would be adequate as the number of 
these resources increases. The Notice also sought information 
on whether additional data, tools and reporting requirements 
are necessary to accommodate state-of-the-art forecasting. A 
related question is whether safeguards need to be in place to 
ensure that commercially sensitive data remain protected.
    As to the issue of current forecasting practices, 
commenters note the importance of understanding two aspects of 
variable energy forecasting, specifically, national weather 
forecasts and power production forecasts. National weather 
forecasts span large geographic regions and are developed by 
NOAA and associated government agencies. Power production 
forecasts are designed to predict the energy output of 
individual facilities. They build on the national forecasts by 
incorporating additional, site-specific information, such as 
local atmospheric phenomena and specific generator equipment, 
to then develop a more detailed forecast of the anticipated 
power output of a given facility. These power production 
forecasts are generally developed by commercial forecast 
service providers and are specifically tailored to the needs of 
their clients, which could be a variable resource owner, a 
local utility, or a regional transmission organization. Some 
commenters note that existing national weather forecasts are 
optimized for predicting temperature and precipitation and that 
additional data, models, and computing capabilities are needed 
to generate more detailed weather forecasts suited to the 
challenges of predicting the output of variable energy 
resources.
    A number of commenters also encouraged the development of 
rapid-update national weather models that utilize data obtained 
and shared from variable energy resources. Many commenters 
indicate that such improvements to the underlying national 
weather forecasts could provide significant improvements to the 
ability of those in industry to predict the output of variable 
energy resources.
    Additionally, because different market participants are 
often simultaneously engaged in predicting the output of the 
same variable energy resources, the notice included questions 
about whether the Commission should encourage centralized or 
decentralized forecasting protocols. Centralized forecasts are 
power production forecasts developed for system operators. The 
system operators use these forecasts and generator unit 
commitment process to ensure sufficient generation is online to 
meet load. Decentralized forecasts, on the other hand, are 
developed for individual variable energy resources and are used 
by them so that they can schedule their energy production.
    Comments indicate that there is likely a role for both 
centralized and decentralized forecasts. The accuracy of these 
power production forecasts is ultimately affected by the data 
inputs that are used. Because different data sets are available 
to different market participants, some forecasts may include 
less than ideal information. The notice, therefore, sought 
comment on this, and the commenters provided information on 
what type of additional information may be needed. Some 
commenters also discussed the confidentiality of commercially 
sensitive data, and they suggested that meteorological data 
collected from individual generators could be reported to a 
centralized repository such as NOAA.
    In summary, the Commission's Notice of Inquiry on the 
Integration of Variable Energy Resources brought forth a wealth 
of information on the topic of forecasting, much of which the 
Commission staff is still digesting. The full record, which is 
available through the Commission's document retention system, 
will be used by staff in making recommendations to the 
Commission for next steps. Thank you.
    [The prepared statement of Ms. Simler follows:]
                   Prepared Statement of Jamie Simler

Introduction

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear before you today. My name is Jamie Simler, and I 
am the Director of the Office of Energy Policy and Innovation of the 
Federal Energy Regulatory Commission (FERC or Commission). I appear 
before you as a staff witness; my testimony does not necessarily 
represent the views of the Commission or any individual Commissioner. 
My testimony will cover the requested area of the Commission's Notice 
of Inquiry on Variable Energy Resources and filed comments of interest.

Background

    The Commission regulates transmission and sales for resale of 
electric energy in interstate commerce to assure the rates, terms and 
conditions of transmission service and wholesale power transactions are 
just and reasonable and not unduly discriminatory or preferential.
    The existing wholesale electricity supply function relies on the 
coordinated operation of transmission and generation resources. There 
exist two models to accomplish this. In some parts of the country 
Regional Transmission Organizations (RTOs) and Independent System 
Operators (ISOs) coordinate the transmission and generation resources 
from a number of utilities and provide service to load serving entities 
through organized wholesale markets. In this model, the RTO/ISO uses 
day-ahead and real-time markets to assess the demand for electricity 
and to commit and dispatch generation and transmission resources to 
meet that demand. In other parts of the country (primarily western and 
southern regions), individual utilities use their own generation and 
transmission resources and may enter into bilateral arrangements with 
third-party generators and transmission providers to ensure that they 
have sufficient generation available to serve load reliably.
    At all times, regardless of the model used to provide electric 
service, system operators must maintain a balance between the amount of 
energy put on the grid and the amount of energy being taken off of the 
grid. Complicating this task is the fact that there is a significant 
degree of variability in the moment by moment operation of the grid. 
For example, the demand for electricity (known as load) changes on a 
constant basis, and generation resources must be dispatched to meet 
this demand. Additionally, outages can occur whenever generation or 
transmission resources unexpectedly trip offline.
    System operators have developed a set of tools that allow them to 
both plan for and react to these variations. In the case of load 
variability, system operators have significant experience in developing 
load forecasts, which rely on statistical analysis, temperature 
forecasts, and historical load patterns, to estimate the amount of load 
at any point on the grid in any given time period. These load forecasts 
are then incorporated into unit commitment and scheduling processes, in 
which system operators determine the generation and transmission 
resources needed to serve the anticipated load. Conventional generation 
resources, under normal conditions, are scheduled assuming precision in 
power production. However, variable energy resources cannot be 
scheduled with the same precision as conventional generation resources, 
so accurate power production forecasts play a more important role in 
allowing system operators to make accurate before-the-fact 
determinations of power production.
    By their nature, load and power production forecasts are not 
perfect, and conditions such as weather can deviate from those 
forecasted. Accordingly, system operators have developed a variety of 
remedial actions that can be employed in real-time to maintain the 
balance between generation and demand for electricity and to react to 
unforeseen circumstances. For example, system operators deploy 
operating reserves, which are generation (or demand response) resources 
that stand ready to quickly increase or decrease power production or 
consumption as needed. Reserves are also available to accommodate what 
are called contingency events, such as the forced generation or 
transmission outages mentioned above. By forecasting anticipated 
conditions and having the tools in place to react to events as they 
happen, system operators maintain a balance in what is a constantly 
changing electric system.
    As greater numbers of variable energy resources come online, system 
operators are increasingly faced with additional challenges. Variable 
energy resources have a limited ability to control their output. They 
can also experience significant increases or decreases in the amount of 
power they produce when a weather system moves through the area.

Notice of Inquiry

    To gain a better understanding of the impact of increasing numbers 
of variable energy resources on the electric grid, the Commission 
issued a Notice of Inquiry (Notice) in January of this year. The stated 
purpose of the Notice was to seek comment on the extent to which 
barriers may exist that impede the reliable and efficient integration 
of variable energy resources into the electric grid and whether reforms 
are needed to eliminate those barriers. The Commission explained that 
it is taking a fresh look at existing policies and practices in light 
of the changing characteristics of the nation's generation portfolio. 
To that end, the Notice posed a number of questions on a wide range of 
subjects. Many of these questions explore ways in which existing 
operational practices or market rules may have the effect of imposing 
unnecessary costs or burdens on both variable energy resources and the 
transmission systems in which they are located. Thus, the Notice 
included a number of questions related to scheduling practices, unit 
commitment protocols, and reserve requirements.
    Most relevant to the subject of today's hearing, the Notice 
included inquiries into existing power production forecasting 
techniques and data provision requirements. Among other things, the 
Notice posed questions about current practices used to forecast power 
production from variable energy resources, and whether those practices 
would be adequate as the number of these resources increases. The 
Notice also sought information on whether additional data, tools, and 
reporting requirements are necessary to accommodate state-of-the-art 
forecasting techniques, and whether safeguards need to be in place to 
ensure that commercially-sensitive data remain protected.
    Commission staff is currently in the process of reviewing comments 
from more than 130 parties, and we are evaluating what future action 
may be appropriate. A consistent theme in many of these comments is 
that improved forecasts will play a critical role in facilitating the 
integration of variable energy resources into the grid. A few examples 
are provided.

National Weather and Power Production Forecasts

    Several commenters noted the importance of understanding two 
aspects of variable energy forecasting: national weather forecasts and 
power production forecasts. National weather forecasts span 
comparatively large geographic regions and are developed by NOAA and 
associated government agencies. These national weather forecasts form 
the foundation for power production forecasts. Power production 
forecasts are designed specifically to predict the energy output of 
individual wind and solar facilities. They go beyond the national 
weather forecasts and incorporate additional site-specific 
information--such as terrain features, local atmospheric phenomena, and 
specific generator equipment--to develop a more detailed forecast of 
the anticipated power output of a given facility. These power 
production forecasts are generally developed by commercial forecast 
service providers and are specifically tailored to the needs of their 
clients, which could be a variable energy resource, a local utility, or 
an RTO or ISO.
    Some of these commenters indicated that existing national weather 
forecasts are optimized for predicting temperature and precipitation, 
and that additional data, models, and computing capabilities are needed 
to generate more detailed weather forecasts that are suited to the 
challenges associated with predicting the output of variable energy 
resources. A number of commenters encouraged the development of rapid-
update national weather models that utilize data obtained and shared 
from variable energy resources. Many commenters indicated that such 
improvements to the underlying weather forecasts, developed by 
government agencies like NOAA, could provide significant improvements 
to the ability of those in the industry to predict the output of 
variable energy resources in both the day-ahead and real-time 
operational time frames.

Different Uses of Power Production Forecasts

    Additionally, because different market participants are often 
simultaneously engaged in predicting the output of the same variable 
energy resources, the Notice of Inquiry included questions about 
whether the Commission should encourage the development of either 
centralized or decentralized forecasting protocols. ``Centralized'' 
forecasts are power production forecasts developed for system 
operators. These forecasts are used in the generator unit commitment 
process to ensure that sufficient generation is scheduled to meet 
anticipated load. ``Decentralized'' forecasts are developed for 
individual variable energy resources and are used to create energy 
production schedules and offering strategies.
    Comments indicated that there is likely a role for both 
decentralized and centralized power production forecasts. Commenters 
noted that different market participants use power production forecasts 
in different ways. Variable energy resource operators need accurate 
power production forecasts to submit bids to system operators that they 
are capable of meeting in real-time. By submitting bids they can meet 
in real-time, these resource operators mitigate their exposure to 
penalties as well as requirements to buy energy in spot markets to make 
up for any imbalances. System operators, on the other hand, need 
accurate power production forecasts to determine an appropriate 
commitment schedule for generation resources in advance of the 
operating hour and to deploy reserves as conditions change in real-
time.
    While different market participants use power production forecasts 
to different ends, the accuracy of these forecasts is ultimately 
affected by the data inputs that are used. Because different data sets 
are available to different market participants, some forecasts may 
include less-than-ideal information. The Notice therefore sought 
comments on whether there is a need for data reporting requirements 
among market participants. A number of commenters indicated that 
additional data reporting among market participants is needed. They 
provided various lists of the types of data and the frequency with 
which data are reported to support advances in power production 
forecasting capabilities. Commenters generally pointed to the need for 
additional meteorological, operational, and specifically generator 
outage and de-rate data in developing state-of-the-art forecasts. Some 
commenters, concerned about the confidentiality of commercially 
sensitive data, suggested that meteorological data collected from 
individual generators could be reported to a centralized repository 
such as NOAA because NOAA has no economic stake in the electric 
industry.

Conclusion

    The Commission received over 2,800 pages of comments to its Notice 
of Inquiry; and Commission staff is in the process of analyzing how 
power production forecasts are used in existing electric markets and 
how potential regulatory reforms may achieve the Commission's goals of 
ensuring just and reasonable rates and result in benefits to market 
participants. Upon completing its analysis, the Commission staff will 
make recommendations to the Commission on possible courses of action on 
these issues. Thank you again for the opportunity to testify today. I 
would be happy to answer any questions you may have.

                       Biography for Jamie Simler
    Jamie L. Simler is Director of the Office of Energy Policy and 
Innovation at the Federal Energy Regulatory Commission.
    Prior to heading the Office of Energy Policy and Innovation, Ms. 
Simler served from 2005 to 2009 as Deputy Director of FERC's Office of 
Energy Market Regulation. Ms. Simler has held several other positions 
at the Commission, including Director of the Western Division of the 
Office of Markets, Tariffs and Rates and Advisor to Commissioner Nora 
Mead Brownell. Before joining FERC in 1997, she was employed in private 
industry, working for the Interstate Natural Gas Association of 
America, Panhandle Eastern Pipeline Corporation and the Potomac 
Electric Power Company.
    Ms. Simler earned a Bachelor of Science in Petroleum and Natural 
Gas Engineering from the Pennsylvania State University and a Masters in 
Business Administration from the George Washington University.

    Mr. Tonko. Thank you, Ms. Simler.
    Dr. MacDonald, please.

      STATEMENTS OF ALEXANDER MACDONALD, DEPUTY ASSISTANT 
ADMINISTRATOR, LABORATORIES AND COOPERATIVE INSTITUTES, OFFICE 
   OF OCEANIC AND ATMOSPHERIC RESEARCH, NATIONAL OCEANIC AND 
                   ATMOSPHERIC ADMINISTRATION

    Dr. MacDonald. Good morning, Mr. Chairman, Mr. Tonko, 
Congressman Neugebauer and other Members of the Subcommittee. I 
am Alexander MacDonald, Deputy Assistant Administrator of 
NOAA's Office of Oceanic and Atmospheric Research. Thank you 
for the opportunity to testify today.
    The ongoing Deepwater Horizon spill in the Gulf of Mexico 
reminds us that there are indeed risks of producing and 
delivering energy. These events also emphasize the need as a 
Nation to look for new cleaner forms of energy. As we explore 
possibilities for new power sources, it is exciting to 
contemplate creating clean and renewable energy from the sun, 
wind and ocean. Today I will describe NOAA's current support of 
the renewable energy sector and how NOAA's data forecasts and 
information play a critical role in maximizing the potential 
benefits from renewable energy.
    NOAA's current contributions to renewable energy include 
siting operation and support of management from our mission-
driven and focused efforts. NOAA provides weather, water and 
climate forecasts and information over a full range of time and 
geographical scales. It accomplishes this through remote 
sensing and imagery from satellites, surface networks, weather 
radars, upper air balloons, ocean buoys, ships, aircraft, and 
subsurface ocean observations. It uses sophisticated weather 
and climate models running on supercomputers to make forecasts 
such as those that accurately predicted the East Coast 
snowstorms this past winter. NOAA also has expertise to 
effectively evaluate the impacts of coastal and ocean energy 
projects, thereby protecting our natural resources of our 
coastal communities that our national economy relies on.
    With respect to hydropower, NOAA provides regular forecasts 
of precipitation, hydrologic forecasts of snow melt and runoff, 
as well as monthly precipitation outlooks. At the cutting edge 
of precipitation forecasting, NOAA's hydrometeorology test bed 
is researching how to forecast the most intense precipitation 
events.
    In each of these instances, NOAA works in a partnership 
with other Federal agencies like the Departments of Energy and 
Interior, FAA, NASA and others. NOAA also works closely with 
the private sector and recognizes the contributions that 
private weather and climate service enterprise will continue to 
make in the Nation's renewable energy capabilities. NOAA 
understands that cooperation--and not competition with the 
private sector, academic, and research entities--best serves 
the public interest, and best meets the varied needs of 
individuals, organizations, and economic entities.
    In light of the tremendous information that NOAA currently 
provides the renewable energy industry, the needs of the 
industry are relatively new compared to the evolution of NOAA's 
other products and services, and the pace of industry expansion 
is driving us toward developing new capabilities. The solar and 
wind energy sectors have generally highlighted that they 
require improved observations, global models, predictions 
across a range of time scales, and high-resolution forecasts to 
support the improved operational weather forecasts needed for 
their industry. Wind, for example, is typically not measured at 
the levels where wind turbines operate, over 300 feet above the 
ground. The lack of observations at these heights leads to 
inaccurate forecasts which are important for us to remedy. 
These inaccuracies drive added wind integration costs.
    With respect to solar energy, there are relatively few 
high-quality, continuous, ground-based observations with which 
to evaluate current and future solar potential, and even fewer 
measurements of direct solar beam, which is essential for 
concentrating solar systems.
    These are good examples of the new and emerging 
requirements from the renewable energy sector that NOAA must 
address. We are collaborating with DOE and the private sector 
on a planned 12 month field demonstration project to improve 
the efficiency of wind energy through enhanced modeling and 
forecasting. We are working with the private sector and would 
like to play the role of honest broker, which would allow us to 
collect data that would help improve the information we have.
    Last night, President Obama framed the challenge of 
renewing America's energy system as similar to the challenges 
America faced in its industrial expansion in World War II and 
putting a man on the moon. In the future, the renewable energy 
sector will need observations, forecasts, and analysis in order 
to better integrate weather-driven renewable energy. NOAA has 
the experience and mission expertise to work in partnership to 
address these needs. This Nation can create a reliable, 
efficient energy system depending significantly on weather-
driven renewable resources. The United States is big enough 
that if the wind is not blowing or if it is cloudy in one part 
of the country, it is most likely blowing and sunny in another 
part. Improved forecasts along with improvements in our 
national power transmission and storage would allow us to meet 
President Obama's challenge.
    Thank you for the opportunity to testify today.
    [The prepared statement of Dr. MacDonald follows:]
               Prepared Statement of Alexander MacDonald

INTRODUCTION

    Good morning Chairman Baird, Ranking Member Inglis, and other 
Members of the Subcommittee. I am Alexander E. MacDonald, Deputy 
Assistant Administrator for Laboratories and Cooperative Institutes in 
the Office of Oceanic and Atmospheric Research at the National Oceanic 
and Atmospheric Administration (NOAA), in the Department of Commerce. 
Thank you for inviting me to discuss NOAA's science and research that 
has the potential to support the increased use and efficiency of 
renewable energy.
    The Nation's renewable energy sources--solar, wind, and water--are 
largely driven by weather and dependent on climate. This fundamental 
connection of renewable energy to the atmosphere and oceans is at the 
core of NOAA's participation in today's hearing and explains our key 
role in developing renewable energy.
    The U.S. energy sector is a $1 trillion-per-year enterprise \1\ 
central to our Nation's economy. The Obama Administration has called 
for the expansion of our Nation's capacity to provide energy from 
renewable sources to help reduce our dependence on fossil fuels, 
increase our energy security, build the green jobs and economy of the 
future, and reduce greenhouse gas emissions. While numerous climate 
assessments completed by United States and international climate 
science bodies agree on the long-term impacts of greenhouse gases, the 
Deepwater Horizon/BP oil spill is a reminder of the potential 
catastrophic, short-term, and acute environmental impacts of a fossil 
fuel-based energy system. NOAA's scientific data, forecasts, and 
information can play a critical role in maximizing the potential 
benefits from all forms of renewable energy, and minimizing the 
environmental impacts of marine renewable energy.
---------------------------------------------------------------------------
    \1\ U.S. Energy Information Administration, Annual Energy Review 
2008, Report No. DOE/EIA-0384 (2008). http://www.eia.doe.gov/emeu/aer/
overview.html
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    Today, I will describe NOAA's current support of the renewable 
energy industry and the essential role of NOAA data, information, and 
services in sound renewable energy planning. Some of the challenges to 
increased use of renewable energy have the potential to be addressed by 
further developing NOAA's weather, climate, and ecological observations 
and predictions. While renewable energy sources offer a positive 
option, they are not necessarily environmentally benign. Therefore, I 
will also summarize NOAA's role in ensuring that renewable energy 
projects are developed consistent with NOAA's mission to conserve and 
manage coastal and marine resources to meet our Nation's economic, 
social, and environmental needs.

NOAA's CURRENT CONTRIBUTIONS TO RENEWABLE ENERGY

    NOAA provides weather, water, and climate forecasts and information 
over a full range of temporal and geographical scales. NOAA 
accomplishes this through remote sensing and imagery from satellites, 
surface networks of weather radars and observing systems, upper air 
balloons, ocean buoys, ships, aircraft, and seafloor observations. 
NOAA's network of integrated Earth observing systems monitor changes in 
ocean, land, air, and space that are critical to siting decisions by 
the energy sector. NOAA provides the marine renewable energy industry 
with relevant ecological data to facilitate siting decisions and 
construction and operational requirements to minimize and mitigate 
adverse effects on living marine resources and ecosystems. NOAA also 
works to ensure that siting decisions and operations do not adversely 
impact other key NOAA missions, such as wind power facility impacts on 
weather radar installations.
    NOAA's contributions to energy facility siting, operation, and 
management are based on a wide range of legal authorities, including 
energy-specific authorities, as well as authorities related to 
conservation, management, observation, and forecasting (see Appendix A 
for a list of authorities). In addition, although licensing authority 
for most energy projects resides with other Federal agencies, NOAA does 
have authority for licensing ocean thermal energy conversion (OTEC) 
facilities. Overall, NOAA plays an active and important role in the 
siting and management of energy facilities through legal authorities 
that direct NOAA to:

          Collect data on sensitive species and habitats, 
        topography, tides and currents, and meteorological conditions. 
        This data, along with information about protected areas and 
        human use patterns, provides the basis for siting decisions.

          Evaluate potential environmental impacts of energy 
        facilities on coastal and marine resources and recommend 
        mitigation measures to minimize those impacts.

          Assess and predict the impact of oil spills and 
        hazardous substance releases on natural resources, identify 
        response strategies, and implement restoration.

          Forecast weather conditions. Based on the forecasts, 
        energy facilities can adjust their operations to optimize 
        energy production or minimize the negative impacts from 
        inclement weather.

          Provide scientific expertise and technical and 
        management assistance to Federal agencies, states, the energy 
        industry, and other stakeholders.

          Determine energy-related content of state Coastal 
        Management Plans, mediate Coastal Zone Management Act (CZMA) 
        energy-related disputes and decide appeals of state CZMA 
        objections to energy projects to the Secretary of Commerce.

    While many of the authorities are NOAA-specific, NOAA implements 
some of the authorities in cooperation with other Federal agencies. The 
Federal agencies with energy-related authorities include Federal Energy 
Regulatory Commission, Department of Transportation, Maritime 
Administration, United States Coast Guard, Department of Energy (DOE), 
Department of the Interior (DOI), and Environmental Protection Agency. 
In an effort to focus on key authorities related to energy facility 
siting and management, this testimony does not cover the full scope of 
NOAA's legal authorities. Many other important authorities support the 
extensive work that NOAA does related to energy issues. For example, 
legal authorities related to climate are not listed in this testimony, 
but NOAA's climate change efforts provide valuable contributions to the 
advancement of renewable energy.
    Additionally, in providing mission-relevant information and 
services in support of renewable energy development, NOAA works in 
partnership with and draws upon the data and information of other 
Federal agencies in this area, including but not limited to the DOI, 
DOE, the National Aeronautics and Space Administration, and the 
National Science Foundation. For example, NOAA and the Department of 
Energy's National Renewable Energy Laboratory together signed a Letter 
of Intent to allow the exchange of scientific resources, personnel, and 
technical knowledge to support the improvement or development of 
atmospheric and ocean sciences, instrumentation, climate modeling, and 
renewable energy. Furthermore, NOAA and DOE's Office of Energy 
Efficiency and Renewable Energy are exploring a Memorandum of 
Understanding to collaborate to achieve the necessary advancements in 
short-term environmental forecasts and long-term resource projections 
for the integration of renewable energy into the Nation's energy 
system.
    NOAA also works closely with the private sector, and recognizes the 
contributions the private weather and climate service enterprise can 
make toward the Nation's renewable energy capabilities. NOAA's role in 
providing forecast data and information for the renewable energy 
industry will be guided by the 2006 NOAA Policy on Partnerships in the 
Provision of Environmental Information, based on the National Research 
Council's 2003 report, ``Fair Weather, Effective Partnerships in 
Weather and Climate Services.'' The Nation benefits from government 
information disseminated both by Federal agencies and by diverse 
nonFederal parties, including commercial and not-for-profit entities. 
NOAA recognizes that cooperation, not competition, with private sector, 
academic, and research entities best serves the public interest and 
best meets the varied needs of specific individuals, organizations, and 
economic entities. NOAA will take advantage of existing capabilities 
and services of commercial and academic sectors to support efficient 
performance of NOAA's mission and avoid duplication and competition.

Observations and Forecasts for Operation of Renewable Energy Systems
    NOAA's observations and forecasts are used by the renewable energy 
industry to efficiently operate its systems and plan for future sites. 
NOAA's historical climate records provide essential information 
required to optimize the siting of wind farms and solar energy plants. 
Not only are historical records essential to optimize the location of 
new production facilities, but accurate weather predictions are 
critical to renewable energy operations because they provide the 
information needed to ensure balance between electric supply and 
demand. For example, in order to increase operating efficiency, 
renewable energy operators must know how much energy a particular wind 
farm or solar energy farm will generate. Likewise, forecasts can help 
energy grid operators predict how much renewable energy will be 
available to distribute to the energy grid and inform the decision 
whether to supplement renewable energy with other generation sources, 
such as coal or natural gas plants. The more accurate the forecasts 
NOAA can provide, the more efficient the energy industry can become.
    NOAA's predictions form the core of capability that is used by a 
thriving commercial weather industry to support the weather information 
needs of the Nation. In general, as NOAA's predictions have improved, 
the size and value of the commercial weather providing sector has grown 
commensurately, as it should for the improved renewable energy 
predictions discussed below.

Current Wind Observations

    NOAA's wind observation capability includes surface measurements as 
well as measurements from aircraft, ships, satellites, Doppler radar, 
wind profilers, and radiosondes--instruments lifted through the 
atmosphere by weather balloons which provide wind data up to about 10 
miles high. All of these data are critical for NOAA's success in 
forecasts and warnings, but wind is not typically measured at levels 
critical for wind turbine operators, about 100 meters above the ground. 
Also, none of these data sources provide information at the density 
that is needed by the wind industry. Even fewer observations are 
available offshore, and these data are critical for any offshore wind 
farms that are being planned.
    While the observations at the 100 meter level are not available, 
NOAA's sophisticated computer simulations of the atmosphere can model 
and predict winds at 100 meters and some of these data are now becoming 
available to the private sector. However, these models were not 
designed to provide the information at the temporal and spatial 
resolution needed by the wind industry.

Current Wind Forecasts

    The wind energy industry uses standard NOAA weather forecasts. 
These forecasts were developed to improve surface meteorological 
predictions and aviation needs. They have been extremely successful in 
addressing these goals but the weather models underlying these 
forecasts were never designed and optimized to provide the temporal or 
spatial resolution or the accuracy needed by the wind industry.

Solar Observations and Forecasts

    NOAA's Surface Radiation network is a network of seven state-of-
the-art Continental United States (CONUS) surface sites that measure 
diffuse, direct, and total solar radiation as well as surface 
reflectivity. NOAA also measures solar radiation at eight global 
monitoring sites. NOAA's Climate Reference Network measures total 
incoming solar radiation at about 140 sites in the CONUS and additional 
sites outside CONUS. These data provide a record of radiation coverage 
for CONUS.
    NOAA has developed techniques to forecast solar radiation, and 
currently provides a forecast for ultra-violet (UV) radiation, which is 
used by the Environmental Protection Agency to warn the public of 
health risks. This product has the capability to be extended to address 
the radiation wavelengths relevant to solar renewable energy.

Precipitation Observations and Forecasts to Support Hydropower

    NOAA's monthly and seasonal temperature and precipitation outlooks 
provide information for water management. In particular, NOAA 
hydrologic forecasts of seasonal snow melt and runoff are important to 
manage water flow feeding hydro-generation plants. Further, the 
National Integrated Drought Information System (NIDIS), a multi-agency 
effort which NOAA leads, provides information and early warnings of 
droughts while NOAA's Hydrometeorological Test Bed (HMT), a 
demonstration project, provides water information across a wide range 
of time and space scales with a focus on high precipitation events. HMT 
and NIDIS thus provide extensive expertise on water resources, helping 
the Nation design a future renewable energy system that maximizes our 
country's vast natural resources, while preserving water allocations to 
support our country's many needs.

Ocean and Coastal Observations and Forecasts to Support Ocean Thermal 
                    Energy Conversion and Marine Hydrokinetic Energy

    Under the Ocean Thermal Energy Conversion Act (OTECA), NOAA has the 
responsibility for administering a consolidated licensing program for 
authorizing ocean thermal energy conversion (OTEC) facilities. OTEC is 
a technology which uses the differences between the temperature of 
deep, cold ocean water and warm ocean surface waters to produce 
electricity much like a heat pump. Although the technology has been 
proven to work, it has not been developed yet at a commercial scale. A 
substantial effort is underway by industry and the Navy to develop a 
commercial-scale OTEC facility with the most likely site being offshore 
of Hawai'i. Last November, NOAA brought together leading engineers in 
the offshore technology field to assess the feasibility of developing 
an OTEC technology at a commercial scale. The findings of that workshop 
are scheduled to be released this summer. Later this month, NOAA is 
holding a workshop in Hawai'i on the assessment of potential impacts 
from an OTEC facility. Both workshops are in preparation for a 
rulemaking for the licensing of OTEC facilities.
    Marine hydrokinetic energy uses the energy of waves, tides, and 
currents in rivers and oceans to produce electricity. While these 
systems do not yet provide power to the electrical grid in the United 
States, a few tidal systems operate in other parts of the globe.
    NOAA's observations and forecasts of the oceans, waves, tides, and 
rivers provide data critical for the development of OTEC and marine 
hydrokinetic energy. The U.S. Integrated Ocean Observing System (IOOS) 
generates and disseminates continuous data, information, models, and 
services on coastal waters, ecosystems, Great Lakes and oceans. NOAA is 
an integral partner in IOOS.

Observations and Forecasts to Support Biomass Energy

    NOAA provides forecasts of precipitation, cloud cover, temperature, 
winds, and water flow that are important to biomass production. As 
these resources are developed, NOAA will work to improve forecasts of 
precipitation and temperature, which are critical factors in 
determining variation in U.S. biomass supply.

Predictions of Climate Variability and Change to Inform Siting of 
                    Renewable Energy Systems

    Continued expansion of the Nation's renewable power capacity will 
require considerable infrastructure investments, whether in facilities 
or the grid that will be necessary to efficiently provide Americans 
with the power they need. To optimally plan tomorrow's energy system, 
the Nation needs information to understand how the influences of 
climate and climate change, including natural variability and large-
scale climate-drivers, such as El Nino, may affect renewable energy 
resources such as wind, solar, and water in the future. In the same 
way, information about the location and likely intensity of weather- 
and climate-driven energy demand is needed by the industry, such as 
projections of climate and climate change effects on degree heating and 
cooling days. NOAA observation data, including wind, temperature, cloud 
cover, solar radiation, and climate variability and change predictions 
are critical pieces of information for forecasting the future 
availability and location of renewable sources of energy and the likely 
future demand for energy in the different regions of the nation. These 
forecasts in turn inform industry and public sector investment 
decisions about the best locations to build facilities like wind farms 
or solar energy platforms, as well as grid design.
    For example, utilities need information about the likelihood of 
future increases in degree heating days to ensure ample power 
generation and distribution to meet cooling needs. In the same way, 
developers of coastal wind and hydropower need predictions of sea-level 
rise and the likelihood of increase in severe coastal storms to site, 
engineer, and design those facilities to withstand future conditions. 
And lastly, hydropower developers require information about the future 
timing and availability of water to adequately design reservoir and 
power storage capability and dam operation.
    However, it is important to note that the optimal location for 
renewable energy production may not be the optimal location for social 
or environmental reasons. For example, an optimal energy production 
site may be in the heart of a prime fishing ground, in an important 
endangered species migratory corridor, or in a location that interferes 
with our Nation's important radar assets. Not only can NOAA assist by 
providing relevant information on these other factors to optimize site 
selection, but it also has regulatory and oversight obligations that 
are addressed below.

Evaluating the Environmental Impacts of Coastal and Ocean Renewable 
                    Energy

    NOAA is also a regulatory agency with responsibilities under the 
National Environmental Policy Act, the Endangered Species Act, the 
Marine Mammal Protection Act, the Magnuson-Stevens Fishery Conservation 
and Management Act, and the National Marine Sanctuaries Act. NOAA 
ensures that coastal and ocean energy projects are conducted in 
compliance with these authorities. NOAA provides information on health, 
abundance, distribution, and ecological requirements of living marine 
resources to ensure industry and other regulatory agencies, such and 
the U.S. Army Corps of Engineers, Federal Energy Regulatory Commission, 
and Minerals Management Service have information to meet their 
obligations under these environmental statutes. NOAA also works with 
industry and other regulatory agencies to ensure that projects they 
fund or permit are reviewed and authorized consistent with the relevant 
environmental statutes.
    In regard to providing ecological data relevant to environmental 
permitting or review of coastal and ocean renewable energy, NOAA 
conducts investigations of the status of various fish stocks that 
support commercial and recreational fisheries, threatened and 
endangered species, and marine mammal stocks. It also conducts 
ecosystem assessments that help define the ecological relations in the 
ecosystems of which these species are a part and upon which they 
depend. This information is critical to making sound siting decisions 
and accurately identifying effects of energy projects. NOAA's 
regulatory role can also facilitate the development of mitigation 
measures that will minimize environmental impacts; thereby potentially 
resolving conflicts with competing users of a location. NOAA's 
investment in studying and understanding our coastal and marine 
ecosystems is essential to the development of an environmentally sound 
renewable energy industry.

Avoidance of Radar Interference from Wind Energy

    NOAA and other Federal agencies evaluate industry requests for 
turbine siting to minimize potential interference of turbines on our 
Nation's network of radars. NOAA is working with the Departments of 
Defense, Homeland Security and Transportation to develop software to 
model potential wind turbine impacts on radars in advance of turbine 
installation to better support the evaluation of industry siting 
requests. Turbines, when sited close to weather radars, can cause false 
returns that can disrupt forecaster situational awareness and weather 
radar algorithms. For example, a study has shown that when turbines are 
located within about 18 km (10 nm) of NOAA/NWS Doppler weather radars, 
the interference can cause tornado and severe thunderstorm detection 
algorithms to malfunction. NOAA is working with the academic community 
to develop radar software that mitigates the turbine interference in 
the weather radar's returned signal. The interference with air 
surveillance radars can be significantly different.

MEETING THE DATA AND INFORMATION NEEDS OF AN EXPANDING RENEWABLE ENERGY 
                    SECTOR

    NOAA's observations, forecasts, and analyses are at the core of 
integrating weather-driven renewable energy in an efficient manner. 
NOAA has worked with the renewable energy industry, other Federal 
agencies, and academic partners to understand current and future 
observation and forecast needs to support renewable energy. For 
example, the wind energy sector identified its need for improved 
observations, global forecast models, predictions across a range of 
time scales, and high-resolution forecast models to support an improved 
operational weather forecast. In multiple public meetings, private 
sector weather service vendors, wind farm operators, utilities, and 
power balancing authorities have requested that NOAA provide these 
improved services. A strong collaboration with Federal partners and the 
industry would result in improved siting of renewable energy 
facilities, more accurate weather forecasting to support efficient 
operations, and an opportunity for growth in the renewable energy 
sector. In the end, advancements in observations and forecasts that 
help address the emerging needs of the renewable energy sector 
contribute to the broader national interest in reducing our dependence 
on foreign fuels, increasing our energy security, building the green 
jobs and economy of the future, and reducing greenhouse gas emissions.
    In addition to the need for improved forecasts and observations 
from NOAA, the need for coastal and marine spatial planning (CMSP) in 
the U.S. is critical to the development of renewable energy resources. 
CMSP is a comprehensive, adaptive, integrated, ecosystem-based, and 
transparent spatial planning process, based on sound science, for 
analyzing current and anticipated uses of ocean, coastal, and Great 
Lakes areas. As the Nation's primary ocean agency, NOAA will continue 
to play a leadership role in advancing the implementation of CMSP 
throughout U.S. waters for purposes that include the development of 
renewable energy. To this end, NOAA brings a unique mix of: diverse 
legal authorities for place-based ocean stewardship; robust and 
cutting-edge scientific and technical expertise to understand and 
observe ocean and coastal ecosystems and their uses; effective ocean 
management programs with decades of expertise in spatial planning and 
meaningful stakeholder engagement; and long-standing partnerships with 
coastal states, regional ocean governance organizations, tribes, and 
other Federal agencies who share a common interest in sustainable, 
healthy oceans.
    CMSP's comprehensive approach to planning the full range of human 
uses in the ocean provides many opportunities, and indeed imperatives, 
for substantive collaboration between Federal agencies, the private 
sector, and stakeholders on matters such as the siting and development 
of renewable energy sources. For these and other current and emerging 
ocean uses, private interests will play a key role in providing spatial 
data and insight into the requirements, plans and implications of 
siting decisions that maximize benefit while minimizing conflicts and 
impacts.

Onshore and Offshore Wind Energy: Forecasts and Observations

    Since NOAA's current weather forecasts were not developed to 
support the wind energy industry specifically, and because there are 
limited observations that are publicly available where wind turbines 
reside, NOAA's forecasts do not provide information at temporal scales 
that the wind industry requires. Further, because the amount of wind 
energy produced depends on wind speed cubed, even small differences in 
projected wind speed can yield large differences in the predicted wind 
energy produced. Although such differences are addressed and overcome 
on a daily basis in the E.S. and everywhere wind provides electricity, 
power production based upon an intermittent resource adds additional 
elements of complexity when managing power production and delivery. For 
example, the Bonneville Power Administration imposed wind integration 
charges (WIC) of $5.85/MWh on wind producers due to scheduling 
discrepancies and the cost to maintain power reserves in the event that 
wind generation falls short of forecasts. The national electric system 
has evolved to support more temporally consistent energy sources like 
coal, nuclear, and natural gas, so integrating wind energy has 
presented some difficulties to system operators. NOAA can partner with 
the renewable energy industry to improve our understanding and 
predictions of wind energy and work together to provide better 
forecasts.
    An additional challenge for wind energy forecasting is in the 
identification and prediction of so-called ``ramp events.'' A ramp 
event is any large and sudden change in wind speed or direction that 
can significantly alter wind energy generation. NOAA's weather models 
were not developed to identify these features in such small scales and 
pose challenges to wind farm operators across the Nation. Power 
balancing authorities and system operators often ``curtail'' wind 
energy production when wind farms produce significantly different 
amounts of energy than what was expected, at least partly based on 
NOAA's wind forecasts. Better observations, forecast models, and wind 
forecasts (especially the timing and amplitude of ramp events) are a 
key to improving the ability to align electricity production from wind 
and other sources to meet demand most efficiently.
    NOAA has the scientific expertise to partner with industry and help 
it to improve the understanding of atmospheric processes in the lower 
part of the atmosphere (called the boundary layer) where wind turbines 
reside and affect the operation, performance, and longevity of wind 
turbines. Finding out what is actually occurring in the boundary layer 
would entail the development of wind-energy demonstration projects, 
which would be research sites to study the lower part of the 
atmosphere. Based on NOAA's experience deploying atmospheric research 
demonstration projects, an array of industry-supported projects to 
advance an understanding of wind to support wind energy would: (1) 
collect observations of the boundary layer for studies of phenomena 
that affect wind resources; (2) provide data sets for weather-forecast 
model development and verification; (3) determine the most effective 
sensors for assimilation into weather-forecast models; (4) identify 
optimal sensors for a national observational network supporting wind 
energy. Off-shore turbine-height winds could be measured using buoy-
based boundary layer profiling systems. Measurements of thermal-
atmospheric eddies would support offshore wind energy. New observations 
that would inform the conditions that an offshore turbine tower will 
face include measurements of the vertical distribution of temperature 
in the ambient water, as well as of currents and waves.
    These observations would advance the understanding of low-level 
winds and turbulence, which would allow the provision of forecasts of 
winds with greater accuracy in space and time. These observations also 
would help NOAA provide guidance to the developing national Network of 
Networks (NoN), called for by a recent National Research Council 
report, to ensure that the needs of the renewable energy industry are 
considered as this NoN is developed. With these observations, the wind 
energy industry would have the potential to meet its needs and 
contribute towards a national reference data set that would be managed 
by NOAA for the renewable energy industry that contains historical, 
real-time, and even projected/modeled data (discussed below), all of 
which have been subject to quality-control measures.
    NOAA is currently collaborating with DOE to improve the efficiency 
of wind energy through improved models and forecasts on a small, 
regional scale. The area will be selected based on responses to a 
Funding Opportunity Announcement released earlier this month. A 
valuable part of this collaboration with DOE and the private sector is 
the request that the private sector (wind farm operators and balancing 
authorities) share proprietary atmospheric observations that they 
already collect. NOAA would act as an ``honest broker'' by keeping 
these data private and protected, but using them in our weather models 
to make our forecasts more accurate.
    NOAA has fulfilled this ``honest broker'' role before in other 
sectors. A valuable example is seen within the airline industry, when 
during the 1990s airlines began to send their proprietary weather data 
from aircraft to NOAA to assimilate and provide improved forecasts for 
aviation. NOAA has improved its model forecasts, including those for 
aviation, significantly over the last 15 years. The improvements 
resulted from more observations, at all atmospheric levels, to better 
define the current 3-dimensional weather conditions; more frequent 
observations to allow models to be initialized more frequently; faster 
computers allowing higher spatial resolution in the models; and better 
understanding of weather phenomena. Over the last 15 years, the errors 
for 6-hr wind forecasts, used for air traffic management, have been 
reduced by 50 percent over the United States. These improvements also 
benefited many other NOAA programs which depend on better predictions 
(e.g., thunderstorms).

Solar Energy: Forecasts and Observations

    NOAA's potential contributions to expanding solar energy could 
include building upon existing meteorological and climatological 
observation networks, such as the Historical Climate Network. The most 
difficult challenge in solar energy forecasting is providing precise 
cloud-coverage measurements. NOAA has the scientific expertise to 
design and deploy solar demonstration projects to make detailed and 
comprehensive measurements of cloud parameters and aerosols using 
remote-sensing instrumentation. Such research would allow an evaluation 
of weather forecast models by comparing their model output to the 
observations from demonstration projects. After pinpointing where 
inaccuracies arise in the models, the forecasts of clouds and aerosols 
could be improved.
    To respond to industry identified needs, NOAA in partnership with 
other Federal agency and private sector partners could lend the 
scientific expertise necessary for the development of a national solar 
radiation and aerosol network. NOAA experience would contribute to the 
creation and maintenance of a national reference database of 
historical, real-time, and projected solar data. NOAA also has 
expertise in assimilating satellite solar radiation data to generate 
the best analysis fields for forecasting solar energy at various times 
scales, as well as for developing advanced methods for quickly and 
accurately computing net solar radiation under various weather 
conditions.

Ocean Thermal Energy Conversion (OTEC) and Marine Hydrokinetic Energy

    As a source of renewable energy, OTEC has the potential to make a 
significant energy contribution in the locations where it is suitable. 
Islands that are currently almost entirely reliant on imported fossil 
fuel could take strides for self-sufficiency if the commercial 
development of OTEC proves feasible. However, while NOAA is working to 
develop a clear regulatory pathway for OTEC development, that pathway 
needs to include an assessment of the impacts, risks and mitigation 
requirements for OTEC facilities particularly in regards to the 
enormous volumes of water that will be required. Additional research 
will be needed to understand the environmental impacts of OTEC. This 
will provide greater regulatory certainty and confidence levels for 
OTEC developers, their financial backers and the public.
    Marine hydrokinetic technologies currently depend on extensive 
testing of prototype devices on a pilot scale to guide technology 
design for eventual commercialization. Commercial scale projects will 
most likely have to compete with existing ocean user groups, but NOAA's 
potential contributions include resolving conflict by working with 
others under the Ocean Policy Task Force's Coast and Marine Spatial 
Planning Framework to develop regional coastal and marine spatial 
plans. Those plans, representing the best technological and spatial 
knowledge, should build on traditional mandates and agency roles.
    Additional science, research and monitoring of coastal and ocean 
resources are needed to effectively inform siting of new renewable 
coastal and ocean energy projects. New observations of the vertical 
distribution of currents and of temperature in rivers and coastal 
areas, and of the living resources using those habitats, would also be 
needed for future siting and operations of marine hydrokinetic 
facilities. NOAA is well poised to provide this information by 
enhancing its current data gathering operations. In addition, NOAA 
requires comprehensive benthic habitat maps to fill gaps in current 
habitat characterization data that is needed to conduct essential fish 
habitat consultations.

Biomass/Biofuels

    Improved and more geographically precise weather and climate 
forecasts of precipitation, cloud cover, temperature, winds, and water 
flow are needed for biomass/biofuel agriculture; improved vegetation 
index products; information about environmental impacts of land-use 
changes on coastal and ocean areas; and measurements and predictions of 
the distribution of atmospheric gases produced by biofuel production.

Climate Services for Renewable Energy

    NOAA has a world-class scientific leadership in documenting and 
understanding climate variability and change, and in improving model 
forecasts of what the future climate will look like under different 
greenhouse gas emission scenarios. NOAA's capabilities and expertise in 
this discipline offer major contributions to the sound planning of a 
domestic renewable energy system by providing key climate services and 
information. NOAA also has the technical capability to provide the 
long-term data sets, the climatology, re-analyses (model-facilitated 
descriptions of past climate conditions), and projections into the 
future of wind and other renewable energy sources needed to support the 
private sector's decisions on selecting optimal locations for renewable 
energy facilities.
    NOAA has the technical capability to conduct studies of how natural 
variability and anthropogenic climate change may affect renewable 
resources (wind, solar, water, marine hydrokinetic) in the future. The 
renewable energy industry has identified requirements for seasonal, 
annual, and longer-term predictions of renewable sources, as well as 
information about how renewable energy resources co-vary across time 
and space. NOAA's scientific expertise in weather and climate offer 
significant contributions to studies that would be necessary to 
optimize an electricity system based on weather-driven renewable 
energy, and address the advantages of increasing the diversity of 
energy sources, both in type and spatial location.
    Little is known about the possible inadvertent impacts of deploying 
large numbers of renewable energy systems on the natural environment, 
across a range of time scales, including changes to local and regional 
climate. For example, wind farms could have the potential to cause 
small downwind changes in soil moisture or the number of frost days. 
NOAA could address these potential problems with targeted analyses in 
conjunction with academic and industry partners.
    Providing meteorological observations, analyses, and forecasts is 
at the core of NOAA's mission. These needed products and services would 
fit appropriately within a NOAA Climate Service. Providing the 
atmospheric and oceanic research and services required for increased 
use of renewable energy is arguably one of the most effective ways that 
NOAA can support mitigation of climate change.

CONCLUSION

    More detailed observations from the atmosphere, land, and ocean 
will feed into improved computer model forecasts for weather, water, 
and climate. This is at the core of NOAA's mission and it is well-
positioned to partner with the private sector and support its efforts. 
These improvements offer substantial benefit not only for the renewable 
energy enterprise, but for the Nation as a whole. Thank you for 
inviting me to discuss NOAA's important current and potential roles in 
supporting this growing sector of our economy.





                   Biography for Alexander MacDonald



    Dr. Alexander E. (Sandy) MacDonald was named the first Director of 
the Earth System Research Laboratory and first Deputy Assistant 
Administrator for NOAA Research Laboratories and Cooperative Institutes 
on July 27, 2006. Dr. MacDonald served as Acting Director for the Earth 
System Research Laboratory and Director of the ESRL Global Systems 
Division during the consolidation of the Boulder Laboratories into the 
Earth System Research Laboratory in 2006. Prior to the consolidation, 
Dr. MacDonald led the Forecast Systems Laboratory.
    Dr. MacDonald was the Director of the Program for Regional 
Observing and Forecasting Services (PROFS) from 1983 to 1988. From 
1980-1982, he was Chief of PROFS' Exploratory Development Group and 
from 1975-1980 he was a Techniques Improvement Meteorologist in the 
Scientific Services Division, Western Region, National Weather Service 
in Salt Lake City, UT. He was an Air Force Officer while a member of 
the U.S. Air Force from 1967-1971.

    Mr. Tonko. Thank you, Dr. MacDonald.
    And we move to Dr. Mooney, please.

 STATEMENTS OF DAVID MOONEY, DIRECTOR, ELECTRICITY, RESOURCES, 
  AND BUILDING SYSTEM INTEGRATION CENTER, NATIONAL RENEWABLE 
                       ENERGY LABORATORY

    Dr. Mooney. Good morning, Mr. Chairman, Members of the 
Subcommittee. I appreciate the opportunity to appear before you 
today to discuss wind and solar resource forecasting. My name 
is David Mooney. I am the Director of the Electricity, 
Resources and Building Systems Integration Center at the 
National Renewable Energy Laboratory. NREL is the U.S. 
Department of Energy's primary laboratory for research and 
development in renewable and efficiency technologies.
    I would like to emphasize three main points in my testimony 
today. First, high-accuracy, high-resolution wind and solar 
forecasts are critical for enabling reliable and cost-
effective, large-scale deployment of wind and solar power 
generation. Second, while current state-of-the-art forecasts 
are very valuable to systems operators, there is considerable 
room for improvement. And third, there are important roles for 
both the public and the private sector in furthering 
forecasting technology.
    As we all appreciate, forecasts are needed because we are 
unable to control the weather that is a source of uncertainty 
in wind and solar generating power plant outputs. The inability 
to dispatch wind and solar then becomes a significant 
integration challenge to systems operators in high-penetration 
scenarios. Therefore, reduction of uncertainty in renewable 
power plant output that can be achieved through forecasting is 
critical, and it serves two functions. First, forecasts allow 
the power system to be operated more reliably under high wind 
and solar generation deployment. Second, higher-resolution 
forecasts with enhanced accuracy significantly reduce the cost 
of integrating large amounts of renewable generation into the 
existing power system.
    Renewable resource forecasts for utility operations have 
two main components. First is the prediction of the wind speed 
or the solar intensity at different times in the future, and 
second is the conversion of that data to power plant output. 
The first component has historically been the government's 
role. NOAA, through the National Weather Service, provides 
weather forecasts from which wind speed and solar intensity 
forecasts can be estimated.
    Industry's role is to convert those weather forecasts into 
predicted power plant outputs that are then packaged into 
customized products for systems operators to plan their 
generation mix. Currently, for a single wind power plant, 
energy production forecast error varies from about 10 to 15 
percent for hour-ahead forecasts and as much as 25 to 30 
percent for day-ahead forecasts. At these accuracy rates, 
though, forecasts are very valuable. An example is shown in 
NREL's western wind and solar integration study which found 
that, for 27 percent wind and solar penetration across the 14-
state western interconnection, the use of state-of-the-art day-
ahead wind and solar forecasts in systems operations compared 
to not using any forecast at all would save $5 billion per 
year, which is about 14 percent of total operations costs, so a 
significant savings.
    Even considering this impact, though, many improvements can 
be made to today's forecasts. To that end, the public sector 
should undertake simultaneous improvement on three fronts. 
First, there is a need to further develop weather prediction 
models that focus on the physical phenomena that impact wind 
speeds and solar intensity. This involves improved 
understanding and representation of the atmospheric conditions 
that impact those quantities. Second, there is a need to better 
observe those phenomena that are needed as inputs to the 
weather prediction models, and third, there is a need to 
operate these models at higher temporal and spatial resolution.
    The public and private sectors currently work together very 
constructively. Private sector entities provide tailored 
renewable forecasts to systems operators using inputs to their 
models from the public sector. Given the substantial cost of 
conducting fundamental research in the areas of atmospheric 
physics, modeling, and observation, the acquisition and 
assimilation of that data from the observations and then 
running very computationally intensive models at high 
resolutions over vast geographic areas, the public sector is 
likely best positioned to undertake these challenges that are 
of common benefit to all private sector forecasting industry 
members. It is anticipated that the higher-quality data 
resulting from better understanding and modeling of fundamental 
atmospheric conditions will ultimately result in better 
forecasts that will enable more reliable and cost-effective 
wind and solar integration in support of our national 
objectives.
    To make progress in this critical area on a time scale that 
supports our energy goals, both the government and the private 
sector have essential roles, and we are eager to support and 
actively participate in the advancement of this vital field.
    I appreciate the opportunity to testify this morning and I 
will be happy to take questions.
    [The prepared statement of Dr. Mooney follows:]
                   Prepared Statement of David Mooney
    Mr. Chairman, thank you for this opportunity to discuss important 
issues related to forecasting wind and solar resources, which are 
becoming increasingly vital to the nation's energy future. I am the 
director of the Electricity, Resource and Building Systems Integration 
Center at the National Renewable Energy Laboratory (NREL) in Golden, 
Colorado. NREL is the U.S. Department of Energy's primary laboratory 
for research and development of renewable energy and energy efficiency 
technologies. I am honored to be here, and to speak with you today.

Why is forecasting of renewables needed?

    In many cases, renewable power generation technologies have 
operating characteristics that are unique when compared to the 
conventional generation technologies that utilities are accustomed to 
operating. Principal among these is that the generation of wind and 
solar plants (that do not include storage) cannot be controlled and 
depend on resource conditions to determine their output. While there 
are many techniques available to address the variability and 
uncertainly of the resources such as fast-response conventional 
generators and demand response, high resolution resource forecasting is 
recognized as a critical tool in allowing for the economic and reliable 
integration of variable generators.
    Wind and solar renewable resources are inherently variable and 
uncertain--that is we cannot perfectly forecast what the weather will 
be like every hour of the day a day ahead. Because this adds to the 
inherent uncertainty in the load that utilities already manage, it can 
potentially become a significant issue for utility system operations at 
large wind and solar energy penetrations. In order to reliably and 
cost-effectively integrate large amounts of wind and solar power 
generation into the power system, accurate forecasts are critical. It 
is expected that the development of more accurate forecasts, for wind 
and solar power, at higher temporal and spatial resolution along with 
the adoption of those forecasts in utility operations will ensure that 
we can deploy wind and solar generation technologies in quantities that 
support our national goals of reduced greenhouse gas emissions and 
increased energy security.
    The development and adoption of renewable resource forecasts reduce 
the uncertainty of renewable power plant output and serve two critical 
functions:

        1)  Forecasts allow the power system to be operated more 
        reliably under high renewable generation deployment, and

        2)  Higher-resolution forecasts with enhanced accuracy 
        significantly reduce the cost of integrating large amounts of 
        renewable generation into the existing power system.

    With both wind and solar, uncertainty has a greater impact than 
variability. If wind or solar power is over-forecast, a utility will 
likely experience higher costs due to using unplanned quick response 
conventional generation and possibly higher spot-priced fuel. If wind 
or solar power is under forecast, the utility may have excess 
electricity and need to sell at depressed market rates, or in extreme 
situations curtail ``free fuel'' wind and solar.
    While today's state-of-the-art forecasts are proving to be very 
valuable in renewable generation adoption, there remains considerable 
room for improvement, and there are important roles in advancing this 
technology that both the public and private sectors can play.
    Currently as wind turbines extend to 250 feet and higher and 
utility scale solar power plants are being developed, forecasters are 
challenged to predict with needed precision the electrical output from 
wind and solar plants for each season, day, hour and fraction of an 
hour ahead.
    This challenge should be distinguished from another challenge, that 
of determining optimal sites for deploying turbines and solar plants to 
maximize production. Resource measurement and characterization is based 
on historic data and aids in locating plants to maximize their power 
output over time. Resource forecasting predicts resource availability 
in the future and aids in the integration and operation of the plants 
once they are constructed.

What is the state of the art of renewable resource forecasting today?

    Forecasts of suitable quality for adoption in utility operations 
have two main components. First is the prediction of wind speed or 
solar intensity at different times in the future, and second is the 
conversion of that data to power plant output. Historically, the 
government has played the biggest role in providing generalized weather 
forecasts from which wind speed and solar intensity forecasts can be 
estimated, while it has been industry's role to convert those wind 
speed and solar intensity forecasts into predicted power outputs that 
individual utilities or systems operators can utilize to plan the mix 
of their power plant dispatch needed to meet demand.
    The starting point for a state-of-the-art weather forecast today is 
provided by the National Weather Service (NWS), which is part of the 
National Oceanic and Atmospheric Administration (NOAA). These 
relatively coarse temporal and spatial resolution weather forecasts are 
produced using weather prediction models. These weather prediction 
models assimilate observations from ground and airborne instruments, as 
well as satellites for more accurate initialization of the weather 
models. Currently these weather prediction models and the observations 
they use are focused on weather prediction impacting life and property, 
but not necessarily on renewable power generation issues.
    Although not of ideal temporal or spatial resolution, the private 
sector uses these NWS forecasts for the initialization of their 
proprietary models to provide tailored power prediction forecasts for 
utility and systems operators. To assist the industry in providing more 
accurate power production forecasts, it is critical that observational 
networks and the resulting weather forecasts provided by the NWS be of 
higher quality and accuracy, and that they be aimed at the unique 
requirements of renewable energy prediction in addition to the current 
focus of weather prediction impacting life and property.
    Currently, for a single wind power plant, energy production 
forecast error varies from 10-15 percent for hour-ahead timescales, to 
25-30 percent for day-ahead timeframes. This forecasting error 
diminishes when multiple plants (and their associated forecasts) across 
an entire region are considered. The table below summarizes these 
state-of-the-art forecast errors for both energy forecasts and capacity 
forecasts.



    Improvements in the error level of forecasts would benefit 
utilities immensely. Xcel Energy, for example, has released analysis 
that shows every percentage point improvement in accuracy saves Xcel 
Energy $1.2 million through a reduction in required spinning reserves 
\1\.
---------------------------------------------------------------------------
    \1\ Keith Parks, ``Value to Real-Time Operations'', UWIG Spring 
Forecasting Workshop, Phoenix, AZ, Feb 18-19, 2009
---------------------------------------------------------------------------
    Additionally, NREL's Western Wind and Solar Integration Study \2\ 
(WWSIS) found that use of day-ahead wind and solar forecasts in 
operations, compared to not using a forecast at all, would save $5 
billion per year across the 14-state, two-Canadian-province Western 
Electricity Coordinating Council. This savings was at a 27% wind and 
solar penetration across the region. Further, the WWSIS showed that if 
the forecast were perfect, those savings would increase by 10% or about 
$500M/year.
---------------------------------------------------------------------------
    \2\ GE Energy. May 2010. Western Wind and Solar Integration Study, 
NREL Report No. SR-550-47434, www.nrel.gov/wind/systemsintegration/
pdfs/2010/wwsis-final-report.pdf
---------------------------------------------------------------------------
    Studies \3\ \4\ \5\ of the California Independent System Operator, 
the New York Independent System Operator and the Electricity 
Reliability Council of Texas systems also show significant costs 
savings when a forecast is used in power system operations and further 
incremental savings for a perfect forecast (i.e. a forecast with zero 
uncertainty).
---------------------------------------------------------------------------
    \3\ New York State Energy Research and Development Authority. March 
2005. ``The Effects of Integrating Wind Power on Transmission System 
Planning, Reliability, and Operations,'' www.nvserda.org/publications/
wind-integration-report.pdf
    \4\ California Energy Commission. July 2007. Intermittency Analysis 
Project Study. ``Appendix B--Impact of Intermittent Generation on 
Operation of California Power Grid,'' www.energy.ca.gov/
2007publications/CEC-500-2007-081/CEC-500-2007-081-APB.PDF
    \5\ GE Energy. March 2008. Attachment A: Analysis of Wind 
Generation Impact on ERCOT Ancillary Services Requirements. Prepared 
for Electric Reliability Council of Texas. Schenectady, NY: GE Energy. 
http://www.ercot.com/content/news/presentations/2008/
Wind-Generation
-Impact-on-Ancillary-Service
s---GE-Study.zip
---------------------------------------------------------------------------
    The table below shows the impact on costs savings for these three 
system operators when no wind forecast is used, compared to 
implementing a state-of-the-art and a perfect forecast.



    It should be noted that there is approximately 30 times more wind 
generation installed in the USA than solar energy generation, making 
the demands on wind forecasting more critical than those for solar 
forecasting. The state-of-the-art for forecasting is therefore more 
advanced for wind than it is for solar. Additionally, development in 
capabilities for forecasting wind and solar resources differs because 
of differences in how these resources behave and how we measure and 
model them.

How can solar and wind forecasts be improved?

    While wind and solar forecasts have been reasonably successful for 
small levels of deployment, it is becoming increasingly clear that 
higher accuracy levels need to be achieved to enable higher 
penetrations of renewable power generation on the grid.
    While forecast error averaged over a year and across a wide region 
may not be too large, specific hours throughout the year can have 
significant forecast error. In the Western Wind and Solar Integration 
Study, these extreme over or under forecasts could be up to half of the 
installed capacity. It is these extreme events that create difficulties 
for system operators in maintaining system reliability. Improved 
forecasting to reduce the severity and number of these extreme events 
would be very helpful.
    Among the most important reasons for wind forecast error is the 
lack of measurements in the Planetary Boundary Layer (PBL) as well as 
inherent uncertainties in modeling the atmospheric physics within the 
PBL. The resulting forecast uncertainty is also evident in the 
forecasting of ramp events--periods of rapid change in wind-farm 
production. Because ramp events drastically increase or decrease the 
wind energy available in a short span of time, an accurate ramp 
forecast is important for utility dispatchers who must address load 
balancing on a sub-hourly basis. The quantification of forecast errors 
for ramp events provides valuable information for improving wind 
forecast methods. This topic is not sufficiently understood or 
developed.
    The errors in solar forecasting are primarily the result of 
forecasting errors in how clouds form and dissipate at different layers 
in the atmosphere. This involves complex physical processes, and better 
understanding and representation of these processes will lead to better 
solar forecasting. Because solar forecasting is not a priority of 
weather forecasting models, research and more accurate implementation 
of these processes in the weather prediction models do not typically 
get priority. Short-term solar forecasting capabilities can most 
probably be done using geostationary satellite imagery, but that 
methodology is not yet fully developed.
    To improve forecasting of both wind and solar resources that will 
enable more accurate corresponding power production modeling, there is 
need for the public sector to provide more extensive measurements and 
improved weather models resulting in better resource forecasts for 
utilization by the sophisticated power production models used by the 
private sector. The provision of better resource forecast inputs will 
need simultaneous improvement on three fronts.
    First, there is a need to develop weather prediction models that 
are tailored to producing accurate forecasts of wind speeds and solar 
intensity. This involves improved understanding and representation of 
the atmospheric conditions that impact their variability. As an 
example, cloud formation and dissipation need to be better 
characterized to improve solar forecast. Similarly the understanding of 
the dynamics of the wind in the lower levels of the earth's atmosphere 
(the PBL) needs to be improved for better wind prediction.
    Second, there is a need to better observe the physical phenomena 
that are needed as inputs to the weather prediction models. Lack of 
proper observations to feed an improved prediction model will most 
likely result in a bottleneck to improved forecasts. Examples of 
observation tools and techniques needed are wind profiles from Light 
Detection and Ranging (LIDAR) and Sonic Detection and Ranging (SODAR) 
instruments. Also useful will be a significant increase in the number 
of sites where solar observations are taken by NOAA, which maintains 
only seven sites today.
    Third, there is a need to operate these models at higher temporal 
and spatial resolution using enhanced observations as inputs. Higher 
temporal resolution provides information about variability that is 
missed when model output is only available at 3 or 6 hourly intervals. 
Also higher spatial resolution results in the capture of small-scale 
physical processes and the impacts of terrain that are missed when the 
spatial grid is coarse.
    It should be noted that, even at today's lower resolutions, 
computers with high-end computational capabilities (teraflop range) are 
employed because of the computationally intensive nature of the model 
runs and the huge volume of observations from various sources they 
assimilate. To operate these models at higher resolutions over all of 
the U.S. would require the latest generation of supercomputers, which 
is another important capability and resource that is likely most 
appropriate for the government to provide.
    It is expected that renewables-focused, higher quality wind and 
solar forecasts that are also available at higher temporal and spatial 
resolutions will result in a better forecasts of power output. These 
renewables-tailored forecasts could be provided by the NWS and 
available to all forecasting industry members. This is potentially an 
important role for government to play in accelerating the deployment 
and integration of wind and solar power production technologies.

What are Potential Roles of the Private and Public Sectors?

    The synergistic relationship between the private and public sectors 
in forecasting of renewables is evident from how forecasting is 
currently done. Private sector entities provide tailored renewable 
forecasts to systems operators using inputs to their models from the 
public sector, while augmenting them with proprietary observations, 
mesoscale models, and statistical techniques.
    Specifically, NOAA currently provides wind speed and cloud cover 
(from which solar resources can be derived) forecast products by 
running their operational weather prediction models. Given the enormous 
cost of

        a)  Conducting fundamental research in the areas of atmospheric 
        physics, modeling, and observation;

        b)  Acquisition of observations over potentially thousands of 
        sites that are input to the models;

        c)  Assimilating the observations for model initialization, 
        and;

        d)  Running computationally intensive models at high 
        resolutions over vast geographic areas;

the public sector is best positioned to undertake these issues that are 
of common benefit to all private sector forecasting industry members. 
NREL and the U.S. DOE have historically played an important role as an 
interface between the weather data and the forecasting industry. NREL 
and DOE have researchers with the domain expertise to understand how 
(and which) weather conditions impact the renewable generation 
technologies. DOE and NREL work to help NOAA better understand which 
resource characteristics impact technology performance, as well as 
support the industry in understanding how resource characteristics 
impact technology output.
    Ultimately better, more renewable-tailored models run by NOAA will 
provide better initial conditions for the private sector to run their 
proprietary models for more time- and place-specific power-production 
forecast products. It is anticipated that these renewable-tailored, 
higher quality data resulting from better understanding and modeling of 
fundamental atmospheric conditions affecting wind and solar will 
ultimately result in better hour- and day-ahead power forecasts that 
will enable the integration of renewable generating technologies on a 
scale that will support our national objectives.
    Another key government role is the role that DOE and its 
subcontractors have previously played in translating the needs of 
utilities to the forecasting industry and vice versa. For example, 
forecasters and the meteorological community previously used mean 
absolute error or root mean square error as a metric for their work. 
However, as understanding has improved, utilities have decreased 
emphasis on the average forecast error and focus more on whether 
forecasts correctly capture ramps, which directly and significantly 
impact operations and reliability. Through DOE's work, state-of-the-art 
forecasting has evolved to try to more accurately capture ramp 
forecasting.

Summary

    High temporal and spatial wind and solar resource forecasting is 
critical for the deployment of large-scale renewable power generation 
technologies. High quality forecasting will enable integration of these 
technologies at lower costs, while maintaining the reliability of the 
power system.
    While state-of-the-art forecasting is already beneficial to wind 
integration, there is substantial room for valuable improvement in 
fundamental weather observations and models. Additionally, solar 
resource forecasting is in its infancy, and there are extensive 
requirements for the development of the fundamental science to improve 
the state-of-the-art for solar forecasting.
    To make progress in this critical area on a time-scale that 
supports national objectives, both the government and the private 
sector have vital roles.
    The government can improve fundamental weather forecasting 
techniques to include more accurate and timely forecasts tailored for 
wind and solar technologies. The government can provide the data 
required by industry power conversion models so that highly accurate 
power-production forecasts can be generated. More accurate power 
production forecasts will be crucial in maintaining the reliability of 
the power system and in improving the economics of wind solar power 
plants deployed at scale.
    Mr. Chairman, thank you again for this opportunity to share our 
perspective on this important topic. I will be happy to address any 
questions you may have.

                       Biography for David Mooney



    Dave is currently working at the National Renewable Energy 
Laboratory leading efforts to identify and address technical issues 
associated with the large-scale deployment and integration of renewable 
and efficiency technologies into the existing energy infrastructure. In 
this capacity, he leads 125 researchers conducting $65M in R&D 
annually. Dave is a 23-year veteran of the renewable energy industry.
    From 2007 to 2008 he was assigned by NREL to support the DOE's 
office of the Assistant Secretary for Efficiency and Renewables. On the 
assignment he conducted analysis of EERE's technology portfolio to 
quantify energy, environmental, and economic benefits and served as 
technical counsel to the Deputy Assistant Secretaries. Principal among 
his activities at DOE was the development of a technology-based 
analysis for quantifying greenhouse gas reduction potentials for the 
EERE technology portfolio, which were used in international climate 
negotiations.
    During his tenure at NREL Dave has worked as a physicist 
researching photovoltaic materials, as a project manager, and as 
Assistant to the Director implementing laboratory strategy.
    Dave has also worked as the director of business development for a 
U.S. PV company where he was responsible for launching manufacturing 
and systems businesses, business planning, and raising investment 
capital.

    Mr. Tonko. Thank you, Dr. Mooney.
    Dr. Storck, please.

       STATEMENTS OF PASCAL STORCK, VICE PRESIDENT, 3TIER

    Dr. Storck. Good morning, Chairman Tonko and the other 
Members of the Subcommittee. I appreciate the opportunity to be 
here today to testify on the issue of public and private roles 
and research needs in renewable energy forecasting.
    Electricity generation from renewable sources such as wind 
and solar comes with the disadvantage that the output is 
variable and fluctuates as the weather does. As renewable 
energy generation has come to supply an increasing amount of 
the electricity consumed in our country, it has become clear 
that forecasting renewable energy output hours and days in 
advance is key to the cost-effective integration of this 
variable energy source.
    The first point that I would like to make is that small- 
and medium-sized private businesses in the United States have 
assumed a leadership role in providing energy forecasting 
services. Our sector is vibrant, competitive and maturing and 
is creating high-paying technical jobs and exports. Our 
company, 3TIER, and our competitors routinely provide accurate 
forecasts of renewable energy output hours and days in advance 
to project owners, system operators, utility companies, and 
power marketers. Our company alone provides wind energy 
forecasts for over 12,000 megawatts of installed capacity 
representing over 100 individual projects and serving over 40 
unique clients. 3TIER employs a staff of 60 in the production 
and delivery of these forecasts and other services for the 
renewable energy industry. To seize the opportunity of the 
global market, we have established offices in India, Latin 
America, and the Pacific rim for the export of our energy 
forecasting services.
    As the renewable energy industry has grown, so has the 
experience level of the private sector in providing these 
forecasts. Our company was founded in 1999, and we have played 
an integral role in the improvement of forecast accuracy as we 
invest in our forecast systems to meet the demands of our 
clients. In fact, recent work overseen by NREL has demonstrated 
that the current state of the art technology provides 80 
percent of the value of a perfect forecast. In short, the 
private sector renewable energy forecasting community is strong 
and well positioned to meet the demands of our clients 
worldwide both today and into the future.
    The second point that I would like to make is that the 
government does have an important and fundamental role in 
supporting the private sector in our task of creating more 
accurate renewable energy forecasts. 3TIER and our competitors 
rely on accurate government weather forecasts as inputs to our 
more specialized energy forecast systems on both a regional and 
global scale. The government operates a reliable national 
network of routine surface and upper air weather observations. 
It also develops and operates sophisticated computer weather 
forecast models that ingest these data and produce weather 
forecasts. Improve the quality of these forecasts by improving 
the observational inputs, the models themselves, and the 
systems that create the forecasts, and the private sector will 
improve the quality of the renewable energy forecasts. 
Improving the accuracy of the Nation's fundamental weather 
forecasts is an enormous challenge. This charge falls squarely 
on the Department of Commerce where NOAA is uniquely positioned 
to accomplish these improvements through its Office of 
Atmospheric Research and other divisions. Doing so will not 
only improve the quality of renewable energy forecasts applied 
by the private sector, but will also aid the National Weather 
Service in its primary mission of protecting life and property. 
It will also provide benefits to transportation, agriculture 
and other economic sectors, ensuring that investments made here 
are not solely for the benefit of one industry.
    The last point that I would like to make is that the roles 
of the government and the private sector in renewable energy 
forecasting need to be clearly defined. Fundamental research 
and infrastructure investments are required to improve the 
Nation's weather forecasts, but these should not be confused 
with applied research and product development for specific 
industries and end users. The public sector can and should 
provide the best possible scientific foundation upon which the 
private sector can do what it does best: drive innovation and 
deliver services nimbly and competitively to our customers. 
Confusion in these roles blurs the line between business and 
government, creates a distorted marketplace, and ultimately 
increases the tax burden while squeezing out the very companies 
that are effectively serving these markets. To be clear, it is 
essential that the Federal agencies provide fundamental 
research, data collection, and accurate foundational weather 
forecasts without then inserting themselves into the 
marketplace as an alternative to the private sector, thereby 
undermining a vibrant industry of small businesses like ours. 
In these times of strong renewable energy industry growth and 
Federal stimulus program funding, there is an opportunity, if 
not an obligation, for the public sector to work aggressively 
toward complementing the private sector's capabilities. Working 
together will allow American companies to continue to lead the 
world's clean energy revolution, but for these companies to 
lead, we need to make sure that they don't find that their 
biggest competitor is their own government, both at home and 
abroad.
    Thank you for allowing me the opportunity to testify today 
and I look forward to any questions you may have.
    [The prepared statement of Dr. Storck follows:]
                  Prepared Statement of Pascal Storck
    Good Morning, Chairman Baird, Ranking Member Inglis and the rest of 
the committee. I appreciate the opportunity to be here today to testify 
on the issue of public and private roles and research needs in 
renewable energy forecasting.
    Electricity generation from renewable sources such as wind and 
solar comes with the disadvantage that the output is variable and 
fluctuates as the weather does. As renewable energy generation has come 
to supply an increasing amount of the electricity consumed in our 
country, with some regions (such as Texas/ERCOT) seeing 20% or more of 
hourly electricity demand satisfied solely by wind, the challenges of 
integrating this energy into our power system have been documented, 
studied and debated. One common theme that has emerged is that 
forecasting renewable energy output hours and days in advance is key to 
the cost-effective integration of this variable energy source.
    The central importance of renewable energy forecasting has led to 
the establishment and growth of a vibrant and competitive private 
sector to provide these forecasts. Our company, 3TIER, and our 
competitors routinely provide accurate forecasts of renewable energy 
output, hours and days in advance, to project owner/operators, system 
operators, utility companies, and power marketers. Our company alone 
provides wind energy forecasts for over 13,000 MW of installed capacity 
and employs 60 staff in the production and delivery of these forecasts 
and other services for the renewable energy industry. As the renewable 
energy industry has grown, so has the experience level of the private 
sector in providing these forecasts. Forecast accuracy has improved 
significantly over the past several years as we invest in our forecast 
systems to meet the demands of our clients. In fact, recent work 
overseen by our colleagues at NREL has demonstrated that the current 
state-of-the art provides 80% of the value of a perfect forecast. In 
short, the private sector renewable energy forecasting community is 
strong and well-positioned to meet the demands of our clients, both 
today and into the future.
    As I mentioned earlier, renewable energy output fluctuates as the 
weather does. This simple fact makes accurate weather forecasts a 
fundamental requirement of an accurate renewable energy forecast. 
3TIER, as well as our competitors, rely on government weather forecasts 
on both the regional and global scale as inputs to our energy forecast 
systems. These government issued forecasts in turn rely on global and 
local observational networks as well as computer models that have been 
developed, implemented, and refined by countless individuals spanning 
government operational forecasting centers, our research universities, 
our national labs, and the private sector as well. Herein lies the best 
opportunity for collaboration between the private sector, government 
and academia. Improve the quality of the weather forecasts, by 
improving the observational inputs, the models themselves, and the 
systems that create the forecasts, and we will improve the quality of 
the renewable energy forecasts that the private sector can provide. 
Improvement of the accuracy of the nation's fundamental weather 
forecasts is an enormous challenge and one that our Federal agencies 
are uniquely positioned to achieve. Doing so will not only improve the 
quality of renewable energy forecasts supplied by the private sector, 
but will benefit transportation, agriculture and the other sectors that 
are affected by the weather, ensuring that investments made are not 
solely for the benefit of one industry.
    In these times of strong renewable energy industry growth and 
Federal stimulus program funding, there is the opportunity--if not the 
obligation--for the public sector to work aggressively towards 
complementing the private sector's capabilities to provide the greatest 
benefits to the renewable energy industry's requirements for accurate 
energy forecasts. If this opportunity is not well planned and 
coordinated, there is the risk that federally-funded efforts could be 
redundant and in competition with services already provided by the 
private sector. Working together, we can ensure a robust and second-to-
none U.S.-based weather forecasting infrastructure as well as a 
competitive renewable energy forecasting industry that enables the 
realization of the nation's full renewable energy potential.
    Thank you for allowing me the opportunity to testify today and I 
look forward to any questions you may have.

Additional Material (see attached: Joint Statement on the Role of 
Government-Affiliated Renewable Energy Forecasting Activities Relative 
to the Private Sector, prepared by Bruce Bailey, Mark Ahlstrom and 
Pascal Storck on June 3, 2009)






                      Biography for Pascal Storck
    Pascal Storck serves as the Vice President of 3TIER and has been 
with the company since its beginning. During his tenure at 3TIER, Dr. 
Storck has played an integral role in the development and 
commercialization of all of the company's products and services. Dr. 
Storck is an internationally recognized expert on the topics of 
renewable energy forecasting and assessment and frequently presents at 
leading industry conferences. Dr. Storck received a bachelor degree in 
Civil and Environmental Engineering from Cornell University, a Masters 
in Civil Engineering through the University of Illinois-Urbana 
Champaign and a Ph.D. in Civil and Environmental Engineering through 
the University of Washington.

    Mr. Tonko. Thank you, Dr. Storck.
    Mr. Rosenblum, please.

      STATEMENTS OF GRANT ROSENBLUM, MANAGER OF RENEWABLE 
      INTEGRATION, CALIFORNIA INDEPENDENT SYSTEM OPERATOR

    Mr. Rosenblum. Thank you. Good morning, Congressman Tonko 
and Members of the Subcommittee. I appreciate the opportunity 
to discuss the important function entity forecasting will play 
in our ability to successfully integrate increasing levels of 
variable renewable resources into the power system.
    As a representative of a transmission system operator, my 
perspective is that of a consumer of forecasting services, and, 
in particular, one that has the responsibility for keeping the 
lights on for approximately 30 million Californians, and doing 
so in a manner as economically efficient as possible.
    To provide a brief but hopefully unnecessary context to my 
comments, a fundamental but not exclusive requirement for 
keeping lights on is maintaining a constant and precise balance 
between electric supply and demand. Wind and solar resources 
add to the operator's balancing challenge by increasing the 
system's aggregate volatility, given their inherent variability 
and output and uncertainty as to the timing and magnitude of 
the fluctuations. Accordingly, the central issue operators 
confront with additional renewable resources is whether 
sufficient backup resources can be committed and maneuvered up 
or down fast enough to compensate for changes in variable 
renewable resource output.
    While more flexible conventional resources such as pump 
storage, modern combustion turbines, and innovative 
technologies, including on- and offsite storage and demand 
response, will likely play a major role in managing renewable 
resource variability in the future, improvements in forecasting 
also offer potentially substantial and, importantly, more 
expeditious assistance in achieving continued grid reliability, 
market efficiency, and greenhouse gas reductions.
    Based on this perspective, the California ISO offers three 
conclusions and recommendations. First, forecasting 
improvements appear to significantly reduce resource 
requirements for integrating renewable resources. A preliminary 
ISO analysis of a 33 percent RPS scenario consistent with 
current California policy direction indicates that if we were 
able to cut by nearly one-half our current forecasting error 
rates of approximately 15 percent in the day ahead and ten 
percent in the hour ahead, we could reduce the quantity of 
capacity that must be available for dispatch in our real-time 
energy market by approximately 25 to 35 percent, or nearly 
2,000 megawatts. While the ISO has not completed its analysis 
of the potential cost savings on its system of this 
improvement, increases in forecasting accuracy will necessarily 
lead to more efficient and, therefore, less costly resource 
utilization.
    Second, improvements in forecasting appear to rest in 
significant part on improvements by the Federal Government in 
the quality and quantity of data provided to the electricity 
industry and its private sector forecast partners. In 
particular, it is the Federal Government improvement in the 
underlying physics-based atmospheric models that form the 
baseline input for most resource forecasters that should be 
focused upon. As part of a recent RFP for forecasting services 
by the ISO, the ISO observed a high degree of correlation among 
the forecast errors committed by the participating private 
forecast service providers. This suggests that those Federal 
agencies responsible for developing numerical weather 
prediction models should tune their efforts by focusing on 
areas with concentrations of high renewable resources. In 
addition, it should be noted that the Federal Energy Regulatory 
Commission should be commended and should continue its efforts 
to address many of the root causes of poor data quality 
received from the generating facilities themselves. This 
includes improvement in the rules and requirements regarding 
reporting of meteorological data, equipment outage, and other 
critical factors.
    Third, it should be emphasized that a transmission system 
operator must not only have accurate prediction of average 
production over a specified period, but it must also anticipate 
the speed, magnitude, and timing of changes over different 
operating periods. Therefore, forecasting improvement efforts 
must focus on increasing our ability to predict wind and solar 
ramp events and the underlying weather conditions that cause 
such events.
    Thank you for this opportunity to come before you, and I 
welcome questions. Thank you.
    [The prepared statement of Mr. Rosenblum follows:]
                 Prepared Statement of Grant Rosenblum
    Mr. Chairman and Members of the Subcommittee, it is an honor to be 
here and I appreciate the opportunity to discuss the critical function 
energy forecasting will play in successfully integrating to the power 
system increasing levels of variable renewable resources. This hearing 
seeks to examine the roles the Federal agencies and the private sector 
play, and should play, in providing renewable resource forecasting as 
well as to explore means to enhance the efficacy of forecasting 
research, development, and monitoring. I intend to touch upon these 
topics from the perspective of a consumer of forecasts, which through 
its status as an independent transmission system operator, is 
responsible for ``keeping the lights on'' for approximately 30 million 
Californians and for doing so in as economically efficient manner as 
possible.
    As I will elaborate further; my conclusions and recommendations 
are:

          Forecasting improvements are essential for 
        maintaining reliable grid operation and market efficiency if we 
        are to continue on a course of increasing reliance on renewable 
        generation

          For a transmission system operator, forecasting 
        improvement efforts should focus on increasing our ability to 
        predict ramp events or abnormal weather conditions

          Improving forecasting requires collaboration between 
        government and the private sector with the Federal Energy 
        Regulatory Commission, National Weather Service, and the 
        National Oceanographic and Atmospheric Administration, among 
        potentially others, assisting to enhance the quality and 
        quantity of data available to, and, in the case of electricity 
        generators, provided by, the private sector, which can perform 
        the specific forecasting services

                  FERC should continue its efforts to ensure adequate 
                meteorological, production and other data is provided 
                to those transmission operators that utilize a central 
                forecasting structure or that reasonable and 
                appropriate incentives exist for generation scheduling 
                entities to provide accurate forecasts in those regions 
                that may rely on decentralized forecasting.

                  Those Federal agencies responsible for developing 
                numerical weather prediction models should tune their 
                efforts to focus on relevant weather patterns for areas 
                with concentrations of renewable resources.

Brief Description of the California ISO

    The California ISO is a non-profit, public benefit corporation 
regulated as a public utility by the Federal Regulatory Energy 
Commission. As an independent system operator (ISO), the California ISO 
impartially manages the flow of electricity across 25,398 circuit miles 
of high-voltage transmission lines that make up the bulk of 
California's power grid. While utilities still own the transmission 
lines, the California ISO acts as a ``traffic controller,'' offering 
open access and maximizing the use of the transmission system and 
administering wholesale power markets. One of the most important 
responsibilities of any ISO is to maintain reliable bulk power system 
operations in real-time. We do this by, among other things, providing 
reliability services including outage coordination, generation 
scheduling, voltage management, ancillary services, and load 
forecasting. As noted, the California ISO, like other ISOs, coordinates 
competitive wholesale power markets in which energy providers submit 
supply offers and purchasers submit demand bids. A market clearing 
price balances supply and demand, selecting least-cost supplies until 
demand is met.

The Impact of Increasing Variable Energy Resources on Grid and Market 
                    Operations and the Benefits of Improved Forecasting

    Power system operation requires the constant balancing of supply 
and demand to comply with mandatory reliability standards. Accordingly, 
all power systems historically have been designed to manage a certain 
degree of demand volatility and supply unpredictability. The inherent 
variability and uncertainty of wind and solar generator output present 
challenges to grid operators by increasing the system's aggregate 
volatility. Variability refers to the fact that, in the absence of 
supplemental storage capability, the output from wind and solar 
resources changes according to fluctuations in its primary fuel source. 
Uncertainty refers to the greater unpredictability in the magnitude and 
timing of the production variations in comparison to more traditional 
generator technologies. In short, the central issue operators confront 
with additional renewable resources is ensuring there are sufficient 
other resources available for timely commitment that have the ability 
to be maneuvered up or down fast enough to compensate for the expected 
and actual changes in output from variable renewable resources.
    How a particular power system manages the increase in volatility 
due to renewable resources will depend on a myriad of factors, 
including the quantity of installed renewable capacity, the 
technological and geographic diversity of the renewable capacity, and 
the flexibility attributes of other available resources to call upon to 
alter their output. Despite potential differences, virtually all 
regions with an independent system operator administer a day-ahead 
market for energy and ancillary services and a reliability commitment 
process to ensure sufficient resources are available the next day to 
meet anticipated demand and satisfy other reliability criteria. Since 
all power systems are highly dynamic from moment to moment, the day-
ahead system set-up will necessarily require refinement as the 
operating time becomes closer. This refinement is accomplished, as a 
general matter, through the procurement of ``regulation'' ancillary 
services, short-term supply commitment and real-time market redispatch 
of energy every five minutes from committed resources through 
sophisticated optimization software.\1\ Thus, added variability and 
uncertainty from renewable resources generally results in:
---------------------------------------------------------------------------
    \1\ Regulation is generating capacity under automatic generation 
control that is dispatched on a four-second basis to continuously 
balance instantaneous deviations between supply and demand that occur 
within the five-minute periods between each economic dispatch of energy 
through the ISO's real-time market software applications. The market 
dispatch of energy is often referred to as ``load-following.'' It is 
the dispatch of energy in the real-time market to address longer-term 
imbalances that are not addressed by regulation.

          Less efficient unit commitment both in the day-ahead 
---------------------------------------------------------------------------
        and real-time periods

          Unanticipated and higher system ramps in the upwards 
        and downwards direction

          Increased load/renewable resource following 
        requirements

          Increased regulation requirements

          Increased frequency and magnitude of minimum 
        generation or over-generation events.

    Each of these impacts will likely impose costs on the system. 
Inaccurate unit commitment triggers additional costs because either an 
underestimate of the renewable output results in the unnecessary 
commitment of alternative resources or an overestimate of the renewable 
output requires the commitment of a faster starting, often less 
efficient, unit closer to real time. The increase in ramping and load 
following capabilities requires the system operator to have capacity 
available to convert the capacity to energy as needed to maintain the 
balance between supply and load. This may lead to the commitment or 
reservation of less efficient units than would otherwise be required to 
ensure the balance of more predictable and stable net load. In 
addition, load-following may require the dispatched resources to move 
from their most efficient operating point to a less efficient operating 
point.
    Reliability problems can also occur when an erroneous forecast 
either underestimates or overestimates the amount of load-following or 
regulation service that must be available. For example, in the case of 
an underestimate, if the system operator is required to commit 
additional capacity at minimum load to be ready to make up for a 
shortfall in supply due to an inaccurate prediction of expected 
renewable output, that commitment will increase the possibility of 
there being too much generation on the system during low load periods, 
when wind power tends to be produced at its highest level. The 
operational and market consequences of over-generation include, but are 
not limited to, acceleration in system frequency, violation of control 
performance standards established by NERC, and an increase in excess 
energy flows to neighboring balancing authority areas as inadvertent 
energy, which can cause control performance problems for the receiving 
balancing authority areas. In the case of an overestimate, insufficient 
load-following capacity can result in a need to convert resources 
reserved for contingencies to energy in order to satisfy load 
requirements or, at worst, an inability to serve load.
    Accurate forecasting will mitigate many of these potential 
inefficiencies of increased reliance on renewable resources. Better 
wind power forecasts in the day-ahead unit commitment process minimize 
the potential to over- or under-commit other generation resources to 
meet forecast load when renewable generation, which is generally not 
required to offer into the day-ahead market, shows up in the real-time. 
The real-time forecasts are, or will be, used to update short-term unit 
commitment decisions to ensure sufficient maneuverability or ramping 
capability exists to manage changes in renewable output as well as part 
of the real-time security-constrained economic dispatch program to 
ensure the most efficient resources are moved to provide the necessary 
system balancing.
    There have been several studies that I am aware of, but there are 
probably others that I am not aware of, that have attempted to quantify 
the benefits of more accurate forecasts. Links to a few studies are 
provided. An example of one effort was conducted by Richard Piwko of GE 
Energy. Using a production simulation program for the Texas system, GE 
Energy evaluated three levels of wind energy--5,000 MW, 10,000 MW and 
15,000 MW--and found there to be an annual savings of $20 million, $180 
million and $510 million, respectively, from moving from no forecast to 
a state of the art forecast. A similar result was reported as part of 
the Western Wind and Solar Integration Study prepared by GE Energy for 
the National Renewable Energy Laboratory.\2\
---------------------------------------------------------------------------
    \2\ ``Western Wind and Solar Integration Study'' (May 2010) at 
http://www.uwig.org/wwsis-final-report.pdf.
---------------------------------------------------------------------------
    The California ISO is conducting, but has not yet completed, its 
own quantification of the financial impact of improved forecasting on 
its system. However it has completed the first part of its analysis, 
which focused on the potential reduction in regulation and load 
following needs. The results are as follows:



    Consequently, while I cannot provide an estimate of the savings to 
the California market from improved forecasting accuracy, it is likely 
to be material based on the reduction in services that otherwise must 
be acquired by the California ISO to manage increased renewable 
resources. The California ISO would be happy to submit the results of 
its ongoing study efforts as they become available.

Transmission System Operators Need the Focus of Forecasting Science to 
                    Shift to Prediction of Significant ``Ramp Events''

    Until recently, renewable power production forecasting focused 
mainly on predicting the average power production for a series of 
upcoming time intervals. This focus reflects the need of market 
participants to minimize the potential economic impacts of energy 
imbalances over the corresponding time period. The quality of these 
forecasts is usually measured with metrics such as mean absolute error 
(MAE) or root mean square error (RMSE). Currently, this is the type of 
forecast produced by private forecasting service AWS Truepower, as the 
California ISO's centralized forecast provider, for use in California 
ISO market applications. For this type of forecast, the California ISO 
is observing an aggregate day ahead forecast error of less than 15%, 
calculated as the root mean square error (RMSE). This level of forecast 
error represents a substantial improvement over past California ISO 
experience with day-ahead forecasts. The aggregate hour-ahead forecast 
errors was reduced to less than 10% RMSE, which represents a 20% 
improvement in forecast accuracy over the CAISO's prior hour ahead 
forecast methodology. This forecast improvement was based on changes to 
the algorithm used to manipulate NWS forecasts, not an improvement to 
the base NWS forecast.
    As noted, these more deterministic forecasts were largely developed 
to meet the needs of market participants, not transmission system 
operators. Transmission system operators are more sensitive to the need 
for a forecast product that provides an advanced warning of situations 
with a high probability of a large change in wind or solar production 
over a relatively short period of time. Unexpected large wind or solar 
ramps can have a large impact on the transmission operators' ability to 
keep power systems within their operating range and avoid catastrophic 
events. Because small errors in forecasting the timing of a ramp event 
produce large power errors, approaches that focus only on minimizing 
power error over an hour are not appropriate for ramp forecasting.
    The severity of renewable resource ramping events is highly 
dependent on both the weather causing the ramp and geographic diversity 
of renewable resources within the ISO. For example, wind generators 
shut down when wind speeds exceed safe operating limits. As a result, a 
big storm front with high wind gusts can first result in a substantial 
spike in output, followed by the loss of hundreds of megawatts energy 
from wind generation over a short period of 10 to 20 minutes. Also, 
wind shear conditions at a wind facility may result in the units going 
from zero to full output within a few minutes when the wind shear 
condition changes and the wind hits the turbines instead of passing 
above the units. While solar power may not fluctuate as regularly as 
wind, most solar generation technologies will suffer significant 
variation in output due to transient cloud cover or other atmospheric 
conditions, such as ambient moisture or aerosols. The following 
provides a graphic example of the changes in solar production.



    Several ISOs, including California ISO, NYISO, and ERGOT, are 
pursuing the development of ramp prediction forecasts through 
relationships with private forecast service providers. The California 
ISO is working with AWS Truepower to implement a ramp forecast tool 
that includes both a probabilistic ramp rate forecast and a 
deterministic ramp event forecast with probabilistic confidence bounds. 
It is contemplated that when complete and tested, the probabilistic 
ramp rate forecast will be a primary driver of grid management 
decision-making, including incorporation into market systems. Given the 
nascent status of ramp forecasting, there is considerable opportunity 
for public/private collaboration in enhancing data inputs and 
methodologies, as I will discuss next. An example of a graphic 
representation of the proposed ramp tool for the California ISO is 
provided for your review in Table 4.



    This view gives a grid operator a graphical forecast page that 
displays a probabilistic ramp rate forecast. The ramp rate thresholds 
in MW, the time window over which the ramp rate is defined (15, 60 and 
180 minutes in the above example) and the number and composition of the 
regional aggregates is customized for the operator.

Regardless of the Nature of the Forecast, Improvements Hinge on 
                    Increased Quality and Quantity of Weather Data

    The California ISO obtains its forecasts through AWS Truepower and 
therefore is most familiar with its methods and needs. Other private 
forecasters may have a different set of methods, but all seem to agree 
on the need for high quality input data. Based on our knowledge of the 
process, the forecast service provider develops the forecast using
    ensemble forecasts techniques that rely on input from regional-
scale and global-scale numerical weather predictions models, 
statistical models and plant output models. For these prediction models 
to improve, more strategically located and high quality data inputs are 
necessary and for simplicity, I will focus on data from the renewable 
resources and the needs of numerical weather prediction models (NWP) 
that are largely within the purview of the NWS and NOAA.
    Data from the renewable facility is critical for statistical and 
plant output models. ISOs generally require renewable resources to 
provide a range of real-time meteorological data, such as wind speed/
direction, barometric pressure, humidity and ambient temperature as 
well as current MW output, along with physical data such as location 
and hub heights to forecast providers. FERC should be commended for 
facilitating the collection of such data and their continued 
investigation of data needs through its recent Notice of Inquiry.
    In general, the California ISO has observed data issues in three 
areas and has taken remedial action in each with FERC's support. 
Forecasts rely on high quality data made available in a timely manner 
to the forecast providers for use within their models. In 2008 and 
2009, the California ISO conducted a one year head to head forecast 
service provided competition. The central objective of the competition 
was to ensure the California ISO was receiving the most accurate 
forecast possible. During the competition there were several instances 
when data quality was an issue and forecast quality suffered as a 
result. Improving telemetry data and reliability from wind sites has 
been an ongoing focus of the California ISO to improve forecasting 
performance.
    In early 2008, AWS Truepower provided California ISO with data 
detailing the relationship between poor data quality from renewable 
resources and the degradation of energy forecast accuracy. The study 
showed forecast errors ranged between 11% to over 15% MAE due to data 
availability and data quality issues. Based on the finding of the 
report, California ISO engineers investigated the root cause of poor 
quality data. The California ISO found three basic causes for errant 
data. Those causes are:

          Unreported Outages

          Communications Failure

          Equipment Failure

    The CAISO recommended and has implemented the following:

          Outage/Availability Reporting--The Scheduling 
        Coordinator is responsible and must report all data anomalies 
        and outages to the CAISO. These anomalies include MW 
        availability and all telemetry problems with the site.

          Independent Power Supply--electrical interruption of 
        telemetry equipment causes errant data which must be eliminated 
        and therefore an independent power supply should be mandatory. 
        All telemetry equipment must have a backup power source that is 
        independent of the primary power source for the station (e.g., 
        station power, battery or solar panel). The backup power source 
        must provide power until primary power is restored.

          Data Redundancy--Receiving anemometer data from 
        multiple sites within the wind or solar park will add two 
        important components to the meteorological data streams. Those 
        components are redundancy of data from the site along with a 
        more representative collection of data from the site to develop 
        an energy forecast.

    Barriers to obtaining high quality data (i.e. more sensors per wind 
project or area and higher sampling frequency) are mostly driven by 
economics and relate to installation and maintenance of sensor 
equipment, but FERC has done a commendable job of weighing the benefits 
to system operation against the potential hardship for smaller 
renewable projects.
    NWS and NOAA provide the numerical weather prediction models that 
are currently used by forecast service providers, but tuned to 
providing temperature and rain forecasts for the entire United States. 
These models form the baseline inputs to the forecasters' wind and 
solar predictions. At the 2010 UWIG Wind Forecasting Workshop in 
Albuquerque, New Mexico, a representative from NOAA delivered a 
presentation outlining the need and a plan for NOAA to improve 
renewable energy forecasts. One of the most important points made was 
the need for ``interaction between NOAA, DOE, NREL, other government, 
energy industry [and] other private sectors.'' The California ISO 
firmly believes NOAA should follow up on the promise and is willing to 
be an active participant with NOAA and other balancing authorities. In 
this regard, the California ISO understands that much of the 
improvement is likely to come from strategically located three 
dimensional atmospheric sensors to cover the 'boundary layer'' or at or 
above wind turbine hub height, For California's Tehachapi wind area, 
initial guidance on observation targeting has been accomplished through 
work supported by the Department of Energy's Lawrence Livermore 
National Laboratory under the WindSENSE project. This work should come 
to completion. To the extent there is a sense that those areas 
utilizing the power in specific renewable regions should fund the 
infrastructure for better forecasting, the California ISO suggests that 
it may be appropriate for the FERC to establish mechanisms to require 
utilities to construct, and recover the costs of, any necessary 
observation equipment.
    Thank you. That concludes my testimony.

                     Biography for Grant Rosenblum
    Grant is the Manager for the California ISO's renewable resource 
integration efforts. The position was created in August 2008 to oversee 
a multi-disciplinary team of engineers and economists who have been 
directed to ensure the California ISO can integrate increasing levels 
of variable renewable generation in a manner consistent with market 
efficiency and grid reliability. This encompasses evaluating electric 
system infrastructure needs and necessary modifications to California 
ISO markets and operating practices.
    Prior to assuming the position of Manager, Renewables Integration, 
Grant spent four years as an attorney for the California ISO, 
addressing a broad range of regulatory matters, including generator 
interconnection, transmission planning and market reform. Grant came to 
the California ISO from the Electricity Oversight Board, where he 
represented the State in litigation before FERC on the enforceability 
of long-term power purchase agreements entered into during the height 
of the 2000-2001 energy crisis. Grant also has eight years of 
experience in private practice in the area of environmental and 
commercial litigation. He received his JD from University of 
California, Hastings College of the Law, and his undergraduate degree 
from Pomona College.

    Mr. Tonko. Thank you, Mr. Rosenblum.
    Dr. Michaels, please.

  STATEMENTS OF ROBERT MICHAELS, SENIOR FELLOW, INSTITUTE FOR 
                        ENERGY RESEARCH

    Dr. Michaels. Thank you. I am honored to be here.
    Given the recent record of economists and forecasting about 
everything, one might wonder why I am here. The answer is 
fairly straightforward. This is a committee on both science and 
technology. Science is about forecasting atmospheric motions, 
but the technology that matters for us is the technology of 
wind power, and they are interrelated in economic terms.
    Renewables now contribute approximately three and a half 
percent of the Nation's electrical energy. A few years ago, 
they were doing about two percent. Essentially, all of that 
growth in renewables has been due to the growth of wind power. 
If you are committed to renewables given the technologies that 
are on the horizon, you are committed to wind. Wind is going to 
be the dominant renewable probably for the foreseeable future. 
If so, then what this Committee must do as it evaluates the 
funding of this improved forecasting is to ask itself what is 
going to be the future role of wind. Is it going to be worth 
the public investment, given wind's track record and given 
wind's likely prospects? Wind now is a very special source of 
energy--essentially the only renewable that is really easy to 
build now--but it still lives on subsidies. It lives on 
renewable energy mandates. It lives on the production tax 
credits. We know that. We have got lots of statistical records 
of that. There may be rationales for some of these subsidies. 
In my testimony, I say I don't find them very convincing, but 
that is another story.
    The question that matters to us is that we are accumulating 
evidence on the viability of wind and we are accumulating a lot 
of practical questions about whether we should rethink its 
future or not. We know, for instance, that now states even with 
renewable mandates are having trouble building transmission, 
having trouble siting such plants. We are understanding now 
that the way they interact with the rest of the electrical 
system has very interesting consequences, sometimes adverse 
consequences for carbon emissions and emissions of criteria 
pollutants. We have a lot of evidence to still accumulate and a 
lot to learn. The practical questions are, then, how are you 
going to interface this? You must be in the process of making 
your decision today. You are implicitly saying something about 
the future desirability and the future evolution of wind power 
in this country. You have a tremendous number of developments 
taking place that are changing everything we know about the 
energy picture. You now have a revolution in the natural gas 
industry, which may well guarantee us clean, economical energy 
independence with it. If that is so, then again, we may rethink 
wind. There are questions mounting about climate policy and 
what exactly will happen if climate policy changes in either 
direction.
    So we have a set of questions which are really the kinds of 
questions economists ask. They are questions that, off a word 
from elementary economics, they are ``marginal questions.'' 
What is going to be the value of what you do? What will be the 
value of funding this work, supporting this work, given the 
current state of the wind industry and given its many possible 
futures? And when you make a decision here, you are implicitly 
saying something about what you believe the future of the wind 
industry is going to be. The question would be, what if all 
wind construction stopped today? What would you be doing? Would 
this be funding that was worth engaging in, or wouldn't it be? 
That is the question that this Committee must decide; I can't.
    What you are doing is a simultaneous determination of how 
to handle the forecasting models and support them and the 
future role of wind. That role is going to need, I think, to be 
rethought in light of the accumulating evidence. But in any 
case, it's critical that we think about it in connection with 
what is before this Committee today. Thank you.
    [The prepared statement of Dr. Michaels follows:]
                 Prepared Statement of Robert Michaels

I. Introduction

    My name is Robert J. Michaels. I am Professor of Economics at 
California State University, Fullerton and an independent consultant. I 
hold an A.B. Degree from the University of Chicago and a Ph.D. from the 
University of California, Los Angeles, both in economics. My past 
employment as an economist includes the Institute for Defense Analysis 
and affiliations with consulting firms. I am also Senior Fellow at the 
Institute for Energy Research and Adjunct Scholar at the Cato 
Institute. I attach a biography to this testimony. The findings and 
opinions I am presenting today are entirely mine, and they are not the 
official views of any of my professional or consulting affiliations.
    For over 20 years I have performed research on regulation and the 
emergence of markets in the electricity and gas industries. My findings 
have been presented in peer-reviewed journals, law reviews, and 
industry publications and meetings. I am Co-Editor of the peer-reviewed 
journal Contemporary Economic Policy, an official publication of 
Western Economic Association International with a circulation of 2,500. 
I am also author of Transactions and Strategies: Economics for 
Management (Cengage Learning, 2009), an applied text for MBA students 
and advanced undergraduates. My consulting clients have included state 
utility regulators, electric utilities, independent power producers and 
marketers, natural gas producers, large energy consumers, public 
interest groups and governments. My services have at times entailed 
expert testimony, which I have presented at the Federal Energy 
Regulatory Commission, public utility commissions in California, 
Illinois, Mississippi and Vermont, the California Energy Commission, 
and in two previous appearances before other House committees.

II. Background on renewables

A. Purpose of testimony

    The Committee today explores questions pertinent to the fuller 
integration of renewable generation into regional power grids. The 
achievement of important energy and environmental policy goals may 
require additional research within this Committee's jurisdiction to 
support new technologies and operating practices that may be necessary 
if grids are to operate efficiently and reliably. I intend that my 
testimony provide the Committee with guidance on factors that it should 
consider when evaluating the research that others are presenting today, 
and its relevance for future policy. The most important such research 
is contained in a study completed last month by General Electric Energy 
for the National Renewable Energy Laboratory (NREL).\1\ Its authors 
claim that new technologies and changed operating practices could 
enable some regions (in particular, the area covered by WestConnect, an 
association of transmission-owning utilities that cover parts of seven 
western states) to obtain as much as 35 percent of their power from 
wind (30 percent) and solar (5 percent) generators. Reliability 
considerations currently put considerably lower limits on the power 
that grid operators can safely obtain from such sources. Most of the 
witnesses on today's panel are probably strong supporters of increasing 
renewable resources and integrating them more strongly into existing 
grids. I hope that my testimony will bring some balance to the 
discussion, and perhaps strike a cautionary note. At the outset I wish 
to make clear that I do not object in principle to Federal support of 
research in this or other areas. There may well be cases in which such 
support is economically warranted. My testimony will instead put the 
recent rush toward renewables into perspective, and conclude that 
recent experience in the U.S. and elsewhere requires rethinking their 
role in our electrical future.
---------------------------------------------------------------------------
    \1\ GE Energy, Western Wind and Solar Integration Study, May 2010.

B. Generation: history and choices

    The desirability of integrating wind and solar resources on a large 
scale depends on both the costs of new infrastructure and the costs of 
the resources themselves. Those of renewables continue to disappoint 
the long-held expectations of their advocates. Instead of passing 
market tests that would indicate their worth, wind and solar continue 
to live on subsidies and state-level requirements that require 
utilities to procure increasing percentages of their power from 
renewables. In 2009, 44.6 percent of the nation's power was generated 
from coal, 23.2 percent from natural gas, 20.0 percent from nuclear, 
and 3.6 percent from renewables, generally defined as including biomass 
and waste conversion, geothermal, wind and solar sources.\2\ Until very 
recently, their percentage contribution to the nation's power supply 
was even less important. In 1990 they produced 2.0 percent of it, and 
2.2 percent in 2005, before beginning their recent growth to 3.6 
percent in 2009. The reasons for the change are important. In 1990, 95 
percent of renewable power came from biomass, waste burning and 
geothermal sources. These were viable power sources because, then as 
now, their unsubsidized costs made them competitive against fossil fuel 
generation in some markets. These resources had the added virtue of 
dispatchability--they could be run when they could lower the system's 
costs and left idle when they could not. Their fuel could be stored in 
anticipation of when their power would be most useful.
---------------------------------------------------------------------------
    \2\ All figures are from various documents of the U.S. Department 
of Energy's Energy Information Administration. A set of graphics and 
data are available upon request from the author.
---------------------------------------------------------------------------
    For the next 20 years, biomass, waste and geothermal power remained 
viable but their outputs did not grow. In 1992 they produced 70.5 
gigawatt hours (gwh or million kilowatt-hours) of power, and in 2009 
their output was about the same, 69.5 gwh. The growth of solar power 
has been surprisingly modest. In 1993 it produced 0.45 gwh, which by 
2009 had grown to 0.81 gwh (below the 2008 figure). This was 0.6 
percent of all renewable power in 2009, and one-fiftieth of one percent 
of all U.S. power. The growth in renewables since 2000 has been almost 
entirely in wind, to the point that by 2009 it accounted for over half 
of all renewable generation.
    Intermittent power is expensive power, and official expectations 
are that it will remain so. The accompanying figure shows the U.S. 
Energy Information Administration's projections of the levelized cost 
per megawatt-hour output of the most common electrical technologies. 
They apply to plants expected on-line in 2016, and are expressed in 
2008 dollars. The four most costly sources are, by rank, solar 
photovoltaic ($396/mwh), solar thermal ($256), offshore wind ($191) and 
onshore wind ($149). Compared with a conventional (not an advanced) 
combined-cycle gas plant ($83/mwh) the cheapest intermittent source is 
80 percent more expensive. Nor are intermittent resources necessarily 
good investments if a carbon tax or cap-and-trade system is on the 
horizon. Adding carbon capture and sequestration (CCS) technology 
(whose cost is still quite uncertain but is likely to fall) to a 
combined cycle gas plant still leaves it 32 percent less expensive per 
mwh than the cheapest wind plant. At prices for carbon predicted by 
many models, the wind plant still loses. Note also that biomass and 
geothermal are expected to remain competitive with gas on a cost basis.
    Subsidies explain investment in wind generation. Although the 20 
percent production tax credit on wind energy is now (probably) 
permanent, earlier in this decade it was on-again off-again. In 2000 
(off) 67 MW of wind capacity were built, rising to 1,697 MW in 2001 
(on). Between 2002 (off) and 2003 (on) the figures are 446 and 1,687 
MW; and between 2004 (off) and 2005 (on) they are 389 and 2431 MW.\3\ 
Many other factors influence investment, but total investment in years 
with the tax credit was 544 percent greater than in years without it. 
There is no evidence that the costs of wind turbines have fallen 
sufficiently since 2005 to invalidate this relationship. The American 
Wind Energy Association (AWEA) is aware of the importance of subsidies. 
As recently as last week (June 8) it explained a recent upswing in 
installations of small wind turbines as due to the 2009 American 
Recovery and Reinvestment Act (ARRA), which expanded the Federal 
Investment Tax Credit (ITC) for small wind turbines to 30 percent.
---------------------------------------------------------------------------
    \3\ U.S. Department of Energy, Energy Efficiency and Renewable 
Energy (DOE/EERE), GPRA07 Wind Technologies Program Documentation 
(2007), App. E at E-6. http://www1.eere.energy.gov/ba/pdfs/
39684-app-E.pdf

         ``The ITC was perhaps the most important factor in last year's 
        growth . . . [it] helped consumers purchase small wind systems 
        during a recession when other financing mechanisms were hardest 
        to obtain. The enactment of the ITC [was] the industry's top 
        priority . . .'' \4\
---------------------------------------------------------------------------
    \4\ AWEA Small Wind Turbine Global Market Study, Year Ending 2009, 
4. http://www.awea.org/smallwind/pdf/
2010-AWEA-Small-Wind-Turbine
-Global-Market-
Study.pdf

    The issue of subsidies is a sensitive one, with problems that hinge 
on what a subsidy is, etc. About the most comprehensive study of U.S. 
energy subsidies is a 2007 document by the U.S. Energy Information 
Administration. The document is unique in that its authors took the 
pains to examine how they applied to fuel actually used to produce 
electricity, which is the issue before this Committee. Thus a subsidy 
to the oil and gas industry, for example from some particular tax rule, 
is only relevant to the extent that it affects the oil and gas used to 
generate electricity. Specializing to fuels used in electricity, the 
attached graph presents the basics. Per megawatt-hour of power it 
produces, wind receives a subsidy of $23.37 and solar receives a dollar 
more. Wind gets 53 times more funds per mwh than coal, and 93 times 
more than gas and oil.
    Note that these facts do not by themselves say much about the 
desirability of these transfers. Since renewables are a relatively 
newer industry than fuels, there might be an economic rationale for 
subsidies that fund basic research in them that if successful could 
render them truly competitive. A subsidy that simply discounted prices 
to purchasers of renewables or reduces their taxes would be harder to 
rationalize. According to the Energy Information Administration, ``tax 
expenditures'' (i.e. reductions) to the coal industry (including those 
for coal not used to produce power) were $264 million in 2007, while 
R&D subsidies (possibly necessary if we are to have ``clean coal'') 
were $522 million.\5\ Tax expenditures for renewables were $724 
million, primarily the production tax credit for wind, while the R&D 
that might make them truly competitive was only $108 million.
---------------------------------------------------------------------------
    \5\ Federal Financial Interventions and Subsidies in Energy Markets 
2007 (2008), 105. http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/
subsidy08.pdf

III. U.S. renewables, present and future

    As the U.S. and other nations accumulate experience with wind 
generation, its virtues and its shortcomings are becoming evident. 
Small amounts of wind power are easily integrated into existing grids 
because a sudden calm is operationally no different from a small 
outage. Wind, however, blows the most when it is not needed, and 
increasing grid sizes and wind resource concentrations will not 
completely resolve the basic problems of intermittency. In 2006, 
California had 2,323 MW of wind capacity and was operating under record 
loads in early summer. Wind's average on-peak contribution (scattered 
over the diverse northern and southern climates) was 256 MW.\6\ For 
system planning purposes, ERCOT, the Texas grid operator, currently 
sets a wind turbine's ``effective capacity'' at 8.7 percent of its 
nominal amount.\7\ The costs of more wind will include that of 
transmission that links it with consuming areas, which will usually 
operate at only a fraction of its capacity. When it is fully loaded, 
however, however, markets supplied by wind behave oddly. Texas' wind 
capacity is mostly far from load centers, and its power is priced by 
market bidding. As they compete for access to the constrained 
transmission lines, prices are bid to lower levels. In Texas, however, 
those prices are quite frequently becoming negative, 14 percent of all 
hours in 2008.\8\ This growing problem is indicative of both a need for 
transmission and strong evidence on the effects of subsidies. Wind 
generators will pay to put power into the grid because subsidies are 
high enough that they retain a small profit after making that payment.
---------------------------------------------------------------------------
    \6\ Robert J. Michaels, ``Run of the Mill, or Maybe Not,'' New 
Power Executive, July 28, 2006, 2. The calculation used unpublished 
operating data from the California Independent System Operator.
    \7\ Lawrence Risman and Joan Ward, ``Winds of Change Freshen 
Resource Adequacy,'' Public Utilities Fortnightly, May 2007, 14-18 at 
18; and ERCOT, Transmission Issues Associated with Renewable Energy in 
Texas, Informal White Paper for the Texas Legislature, Mar. 28, 2005 at 
7. http://www.ercot.com/news/presentations/2006/
RenewablesTransmissi.pdf
    \8\ Peter Hartley, Some Preliminary Comments on Wind Generation in 
ERCOT, presentation graphics, Rice University, n.d. http://
www.rice.edu/energy/research/carbonsolutions/
Hartley%20Presentation%20Aug09Workshop-SECURE.pdf
---------------------------------------------------------------------------
    Some might view negative prices in Texas as curiosities, or as an 
embarrassing consequence of an otherwise desirable subsidy system. 
Newer research has found that increasing the scale of wind operations 
sometimes produces a strikingly perverse outcome. Gas marketer Bentek 
Energy examined a seeming paradox in Texas and Colorado: Large 
increases in wind power production were responsible for decreases in 
the output of coal-burning generators, but emission of pollutants from 
those plants had had actually increased, and CO2 emissions 
were unchanged.\9\ Operating data showed how wind's variability meant 
that coal units had to make many quick output adjustments, and that 
those adjustments were responsible for the added pollution. Bentek's 
controversial conclusion was that the total load in the area could have 
been produced with lower total emissions had the wind units never 
existed.
---------------------------------------------------------------------------
    \9\ Bentek Energy, How Less Became More: Wind, Power and Unintended 
Consequences in the Colorado Energy Market (April 10, 2010).
---------------------------------------------------------------------------
    Another possible problem for wind's expansion stems from the 
country's dual regulatory system for power. State regulators have the 
lion's share of authority over permits for and siting of generation and 
transmission that move power between states. An increasing number of 
them are unwilling or politically unable to ensure that construction of 
renewable generation and transmission will take place. Local 
intervenors who formerly blocked the construction of conventional 
generation and transmission are becoming adept at doing the same for 
renewables. Utilities in a growing number of states are becoming unable 
to comply with their own ``renewable portfolio standard'' (RPS) 
requirements. Once lauded for its progressive policies, California now 
exemplifies how to obstruct them. A 2002 law required its large 
utilities to obtain 20 percent of their energy from renewables by 2010. 
All of its utilities are currently out of compliance, and now expect to 
meet the standard by 2014 or later. In 2008, California got a smaller 
percentage of its power from renewables than it did in 2001. Other 
states are encountering similar problems, and these will become more 
stringent as compliance levels increase.\10\ Through all of the 
questions about renewable investment, the U.S. Department of Energy's 
National Energy Modeling System has demonstrated that for at least the 
next several decades the preponderance of new generation will continue 
to be in fossil-fuel plants.\11\
---------------------------------------------------------------------------
    \10\ Massachusetts utilities have largely complied with their 
state's RPS by obtaining generation credits from biomass plants in 
Maine (which has no RPS), and difficulties in siting the Cape Wind 
project have become national news. Many other states have maintained 
compliance in the same way. Maryland's utilities have done so with 
small hydro projects in Pennsylvania, but the start of that state's RPS 
will eliminate this alternative. Arizona is 25 percent compliant with 
its RPS, Nevada 35 percent, and similar records are appearing 
elsewhere.
    \11\ See any recent volume of the Energy Information 
Administration's Annual Energy Outlook. I and others have criticized 
the model elsewhere, but the text is a consensus finding that does not 
depend on details of its assumptions.

---------------------------------------------------------------------------
IV. Operations and economics

A. Operational realities

    Any possible increase in U.S. commitment to wind power should be 
viewed in light of recent European experience, and it should be viewed 
in both economic and political terms. Denmark's vaunted ability to 
obtain 20 percent of its electricity from wind helps make its power 
costs the highest in Europe, and they can use only about half of that 
output. The country can maintain its mix of power sources only thanks 
to geography. It owns a small part of a large, centrally dispatched 
grid that covers Scandinavia, whose power sources are mostly 
hydroelectric and nuclear, and whose systems always have capacity to 
handle imports from or exports to Denmark, whose wind facilities are a 
minor part of the regional total. Denmark is relevant here not only for 
its economics, but for the underlying politics. The WestConnect region 
is only a fraction of a considerably larger grid that covers the 
western U.S. The bulk of the nation's hydroelectric capacity is in the 
Pacific Northwest, and is equivalent to approximately 22 nuclear 
powerplants. The ability to redirect some of this power out of that 
region appears to be of great importance if NREL's plan is to be 
feasible. As practical politics, the Pacific Northwest has long fought 
tenaciously to keep as much cheap hydropower as possible for its own 
use, and governments in that region appear unlikely to cede control 
over it to facilitate NREL's scenario.

B. Economic realities

    America's economic performance over the past two years gives little 
encouragement to those who believe that government spending can 
generate substantial and sustained increases in employment. But even if 
one believes in the efficacy of a stimulus package renewables are 
probably a poor choice for the creation of job slots. Most jobs in that 
industry are in the production and construction of durable equipment 
and installations, with relatively few long-term operating positions. 
Wind advocates and critics have produced many studies on the stimulus 
approach, but there is a fundamental flaw in one of the most widely-
used models that favor job creation. As an example of a critical study, 
a recent one from Spain purports to show that governmental support for 
renewables actually destroys jobs rather than creating them, because 
renewables have surprisingly high capital requirements per worker. If 
so, investing elsewhere will create more employment slots, although not 
necessarily better-paying ones.\12\ For uncertain reasons, NREL 
subsequently took the initiative in critiquing this study, documenting 
how its ``JEDI'' computer model showed that that pro-renewables 
policies in fact created new employment.\13\ Calzada's study is open to 
criticism, but ironically NREL's model cannot possibly be the tool to 
make those critiques. NREL admits that JEDI is constructed in a way 
that renders job destruction mathematically impossible, i.e. it 
preordains a pro-renewables finding of job creation regardless of the 
data being analyzed.
---------------------------------------------------------------------------
    \12\ Gabriel Calzada Alvarez, Study of the Effects on Employment of 
Public Aid to Renewable Energy Sources, Universidad Rey Juan Carlos, 
March 2009. Calzada's non-peer reviewed study concluded that since 2000 
each ``green job'' created in Spain cost =571,000, with subsidies of 
over =1 million for each wind industry job.
    \13\ Eric Lantz and Suzanne Tegen, NREL Response to the Report 
Study of the Effects on Employment of Public Aid to Renewable Energy 
Sources from King Juan Carlos University (Spain), White Paper NREL/TP-
6A2-46261 (Aug. 2009).

V. Summary and Conclusions

    The value of funding the changes that the Committee is considering 
depends critically on an assumption that requires far more thorough 
examination than it has thus far received--that wind power will be an 
economic choice for the nation's electrical future. Almost all of the 
evidence points in the opposite direction. There are two types of 
renewable resources: ones like biomass, waste and geothermal generators 
that have long occupied a small niche in markets where they have long 
stood on their own. The other resources, primarily wind, have yet to 
pass market tests and instead thrive because of subsidies and 
regulatory requirements that utilities purchase their output. Official 
data show clearly that the costs of electricity from wind and solar 
units are well above those of every fossil fuel, and are expected to 
remain high. We have seen wind's sensitivity to subsidies in the 
pattern of investments with and without its production tax credit, and 
in the statements of its trade association about the importance of 
those subsidies. Further, claims that all energy sources are subsidized 
can be quite misleading. Looking at fuel actually consumed in power 
production, a megawatt-hour of wind power receives 90 times the subsidy 
of one produced from natural gas. Most of wind's subsidy takes the form 
of tax breaks for producers rather than direct allocations of funds for 
research.
    Other problems are still matters for research, but as they arise 
they suggest that government think twice before it continues to rush 
electricity into heavier dependence on wind power. Wind's useful 
contributions to capacity are weather dependent, and wind often 
produces the least when it is the most needed. Integrating wind into 
regional markets will require substantial transmission investments, and 
preliminary results of work on wind power's actual impact on fossil 
fuel emissions are not encouraging. Regional political factors and 
electrical geography may further render some planned operational 
changes difficult or impossible to implement. Finally, as an engine of 
``job creation,'' wind power is probably a poor choice.
    It is always hazardous for a non-expert (or for that matter an 
expert) to predict policy trends. Unfortunately, this Committee will 
have little choice but to do so when considering the GE/NREL study. 
Public opinion is in flux, but absent national carbon control and/or 
renewables requirements, the value of implementing its recommendations 
will fall precipitously. Markets are also changing in ways that bring 
up further questions. Over the past few years wind power has grown 
strongly, largely fueled by subsidies and regulatory requirements. Over 
that same period a revolution in fossil fuels has taken place, but 
without such subsidies or regulations. The technologies to access 
natural gas in shales, tight sands and coal seams have come of age. 
They can now reach hitherto unimagined volumes located all around the 
Nation at current prices, and with what most agree are minor 
environmental impacts. The nation's gas reserves are massively 
increasing, and the history of oil and other minerals strongly suggests 
that early estimates of reserves will turn out to have been far too 
low.\14\ America can probably look forward to literally centuries of 
its own clean, safe, competitively produced, and truly secure fuel. 
Looking forward also means looking backward. Abundant gas means less 
need for power from coal and uranium, and from uneconomic renewables as 
well. Gas-fired generation is cost-effective, fuel-efficient, 
environmentally acceptable almost everywhere, and already an integral 
part of almost every utility's power supply. The future belongs to the 
efficient, and it is time to abandon the mistaken belief that 
efficiency and renewable are synonyms.
---------------------------------------------------------------------------
    \14\ Proved U.S. gas reserves rose from 4.74 trillion cubic meters 
in 1999 to 6.93 million in 2008. BP Statistical Review of World Energy, 
June 2010, 22.
---------------------------------------------------------------------------
    I thank the Committee for the opportunity to present these views, 
and welcome any questions or comments.

                     Biography for Robert Michaels
    Robert J. Michaels is Professor of Economics at California State 
University, Fullerton and an independent consultant to the electricity 
and natural gas industries. He holds an A.B. from the University of 
Chicago and a Ph.D. from the University of California, Los Angeles, 
both in economics. His past positions include Staff Economist at the 
Institute for Defense Analyses and affiliate of various consulting 
firms. He is Senior advisor to the Institute for Energy Research and 
Adjunct Scholar at the Cato Institute.
    His research on regulation and competition in electricity and gas 
has appeared in peer-reviewed journals, law reviews, and industry 
publications. He is also CoEditor of the peer-reviewed journal 
Contemporary Economic Policy. He has advised state regulatory agencies, 
electric utilities, independent power producers and marketers, 
consumers and producers of natural gas, public interest groups, and 
governments on aspects of regulation and competition. He has provided 
expert testimony at, among other venues, the Federal Energy Regulatory 
Commission, the California Public Utilities Commission, the Illinois 
Commerce Commission, the Vermont Public Service Board, and in two prior 
appearances before committees of the U.S. House of Representatives.

                               Discussion

    Chairman Baird. Thank you, Dr. Michaels. I thank all the 
witnesses. I am glad to be able to join the hearing at this 
point. I will recognize myself for five minutes.
    Ms. Woolsey. Mr. Chairman, could I ask a favor of you?
    Chairman Baird. Of course.
    Ms. Woolsey. We are the Energy and Environment 
Subcommittee. Can we save some energy by turning down the air 
conditioning in this room? It is freezing.
    Chairman Baird. If we can't, I will loan you my jacket, but 
I agree with you----
    Ms. Woolsey. Well, no, I mean----
    Chairman Baird. No, I agree with you entirely. Let us have 
staff try to work on it.
    Mr. Hall. I am about to burn up.
    Ms. Woolsey. That is your problem.
    Chairman Baird. Wait. There is a solution. May I borrow 
your jacket? Then I will give it to her.
    Ms. Woolsey. That is not the point. The point is, we are 
wasting energy.
    Chairman Baird. I agree with you. Thanks, Ms. Woolsey. I 
appreciate your observation. I share that. We cool this place 
down to outrageous levels.

                       Potential Economic Savings

    So, in the Pacific Northwest, we have a great deal of 
potential hydropower. We are putting in an awful lot of wind, 
and one of the things that people at Bonneville, and I know 
some of you have testified about this issue in general, talked 
about was the challenge of integrating the grid, and I know 
that has been much of your testimony. If I missed it, forgive 
me. What are the estimated savings if we can more precisely 
tell a concentrated solar plant or a wind farm to expect this 
amount of wind, which should lead to X amount of output? In our 
region, that might mean you have to put less energy through the 
turbine or lower the--you know, or you could maybe use your 
baseline somewhere else, et cetera? How much do we save if we 
can make better predictions of this?
    Dr. Mooney. Mr. Chairman, we have recently completed a 
study called the Western Wind and Solar Integration study, the 
National Renewable Energy Laboratory, that is, and we showed as 
one example, and there are a number of studies that I cite in 
my written testimony that give specific quantifications of 
those savings, but, just as an example, in the Western Wind and 
Solar Integration Study, we compared for 27 percent wind and 
solar penetration in the 14-state western interconnection 
region. We compared operating that system with no forecasting 
compared to state-of-the-art forecasting, and then compared 
that to perfect forecasting. Going from no forecasting to 
state-of-the-art forecasting, there was a savings of 
approximately $5 billion annually, which is about 14 percent of 
the total operations cost. The savings going from state-of-the-
art to perfect is somewhat incremental, an additional roughly 
ten percent savings, but still a significant sum of money of 
about $500 million.
    Chairman Baird. That is a tremendous amount, and it would 
seem that it also allows your baseload to maybe be channeled 
into different other possible uses. Especially as you get smart 
grids up, and maybe certain industries with high demands, they 
would run their high-demand operations during periods of 
abundance on the renewable side to take advantage of excess 
baseload.
    Any others wishing to comment on that? Mr. Rosenblum.
    Mr. Rosenblum. Yes, I would. Thank you, Mr. Chairman. We 
are currently engaged in a 33 percent RPS analysis within the 
California ISO. The first part of our study has tried to 
quantify what the benefits would be for different portfolios of 
renewable resources, and part of the sensitivities that we ran 
were what happens if we were able to reduce the level of error 
that we are currently experiencing with wind. We extrapolated 
for solar to the experience in Germany, which has much more 
solar PV penetration than we do, and reduced those 
approximately in half. What we found was that, under those 
scenarios, we would essentially reduce the amount of capacity 
that we would need in a real-time environment by approximately 
2,000 megawatts or more in the spring and summer months, and 
that equates to the commitment of multiple combined cycle 
turbines. So we think that we would see a significant--we 
haven't translated that to dollars, and we are doing so--but we 
think that will translate to significant operational and cost 
savings to consumers.

         Potential Burdens on Energy Resources and Transmission

    Chairman Baird. Now, this issue of more precise predicting, 
you know, I grew up in farm country, and I remember if it was 
time to bring in the hay, gosh, you would watch to the hour 
whether the rain forecast was coming, because if it was going 
to rain you couldn't bring in the hay, and if it was going to 
rain, we would work round the clock to get it in and get it 
into the barn before it got wet, if we could. So now we are 
applying the same kind of fairly precise microforecasting but 
to the energy sector.
    Ms. Simler, in your discussion, you state in your written 
testimony that existing operational practices or market rules 
have the effect of imposing unnecessary costs or burdens on 
both variable energy resources and transmission. Can you 
elaborate on that a little bit?
    Ms. Simler. I can try. We don't have any quantitative 
studies. We rely on studies that others have done. But the idea 
there is similar to what was--what you have heard so far. It is 
that, if we can have better forecasting that would allow better 
forecasting for better predictions, you would free up other 
resources to provide energy. You wouldn't have to have as many 
resources committed for reserves.
    Chairman Baird. I appreciate that, and I may be drilling 
down too much, and we can get to it later if we want because I 
am almost out of time. But you mentioned specifically market 
rules. Are there market rules that particularly come to mind 
that may be somehow in conflict with the issues we are 
discussing here?
    Ms. Simler. That is part of what the Notice of Inquiry was 
supposed to do was to explore what the market rules--if there 
are market rules, and if there are, then the Commission can 
take action to remedy them.
    Chairman Baird. I see. So you are not saying you have an 
answer to that; you are trying to say this is a question we 
need to ask.
    Ms. Simler. Right.
    Chairman Baird. Okay. Good.
    With that, I recognize my friend Mr. Hall.

                    Allocating Costs for Renewables

    Mr. Hall. Thank you. I may touch a little in your question, 
Mr. Chairman, from Dr. Michaels, but first I want to ask Ms. 
Simler: your testimony noted the need for baseload electricity 
suppliers to back up renewables when the wind doesn't blow or 
the sun doesn't shine or you don't have some of the benefits 
that you would expect and anticipate, and by the way, I read 
the other day where some of the women out in west Texas were 
objecting to T. Boone Pickens' towers because it was blowing 
their hair. I don't know how serious that is, but something 
happened to it. Some of them think it is cold when the weather 
and temperature is normal, you know. I am picking a fight I 
can't possibly win.
    But, obviously, the unpredictable nature of weather 
presents some kind of a burden and adds cost to the baseload 
supplier support, and these costs are going to increase as we 
add more renewables to the grid. I guess my question is, how 
significant are these costs? I think you have touched on it, 
and will FERC make that determination as to who ought to pay 
for them and could you give us some kind of an idea as to the 
responses to your Notice of Inquiry about this issue?
    Ms. Simler. Yes. To the extent that variable resources 
impose additional costs on the grid due to having to have other 
generations standing ready to provide reserves, and, as I said, 
that generation standing ready to provide reserves can be 
reduced with better forecasting. But to the extent that that 
occurs, customers will have to pay a portion, a share of that. 
At the end of the day, customers pay. And the Federal Energy 
Regulatory Commission, to the extent that those are part of the 
wholesale rates, would decide which customers pay.
    Mr. Hall. Well, let me ask Dr. Michaels, you referenced DOE 
electricity cost data in your testimony and noted that 
renewables are significantly more expensive than conventional 
sources on a levelized basis. I guess, Dr. Michaels, my 
question would be, do you expect this to change the future as 
more renewables are added to the electricity mix as a result 
maybe of subsidies or mandates or some other unknown or 
undetected aid? Are subsidies driving technology advances, and, 
in the current economic environment, how much is too much to 
provide in subsidies or renewables?
    Dr. Michaels. I think the way to look at it is, if that is 
so, what is the form that the subsidies are taking? Because, 
for wind in particular, the subsidies are in the form of 
production tax credit, basically just a cash flow in the 
industry. It is not a subsidy for research. Wind is 
progressing. Wind has progressed, but at this point, we know 
that the rate of productivity increase is slowing down, and 
that is somewhat taking place all over the world. It is an 
international industry. There is still improvement, but it is a 
much slower improvement than before. Beyond that, I can't 
extrapolate.
    Mr. Hall. Any others want to make any suggestion along that 
line?

             Wind Power Impacts on Pollutants and Emissions

    I will ask Dr. Michaels. You note in your testimony that in 
Texas and Colorado, it has been found that large increases in 
wind power production resulted in increases in pollutant 
emissions and unchanged CO2 emissions because the 
baseload electricity required to support the wind power 
operations forced coal generators to make unusually quick 
adjustments that increased pollution. Has this problem been 
studied more in depth to determine its significance, if any, 
and its impact?
    Dr. Michaels. At this point, this is the only study that is 
outstanding and it is a study that came as a fairly complete 
surprise to the entire industry. It may well be that Texas and 
Colorado have some degree of uniqueness, because they are more 
dependent on cycling coal units than many other parts of the 
country, so how it generalizes is not clear and whether its 
quantitative importance will be the same again we don't know. I 
am putting it forward as another question that you should think 
of, though, if you are intending to encourage the further 
development of wind.
    Mr. Hall. I am just going to ask how much, or are such 
quick adjustments necessary?
    Dr. Michaels. They have to--these are the people who are 
the experts in it but the basic answer is, its because wind is 
intermittent. For small problems, it is no different from the 
outage of an ordinary electrical generator.
    Mr. Hall. I think my time is up. Thank you.
    Chairman Baird. Thank you, Mr. Hall.
    Ms. Woolsey.

         Roles for the Federal Government and Private Industry

    Ms. Woolsey. Thank you, Mr. Chairman.
    Who would ever have anticipated that the NOAA Weather 
Service would become part of our daily news and entertainment 
cycle in the United States of America? I mean, I have a friend 
who would rather watch the weather station than any of the 
other television stations, and we also know that people follow 
storms like a sporting event. I mean, this is really something 
that we have accomplished through NOAA--knowing ahead of time 
what could be coming. Sometimes it doesn't come, but 
forecasting is really something. There is an economic benefit 
to the media for bringing viewers and readers because of NOAA's 
product, I mean, so what a service that is. But we want to 
improve on this. That is what we are talking about today. So we 
want to meet the President's goals, many of us, and we want to 
save the $5 billion a year--at least--that has been reported. 
So, I mean, why aren't we already doing this, and what do we 
really need to do? That is my question. I mean, each one of you 
has said we can, we must, you know, and we should. What will be 
the Federal Government's role? What will be private industry's 
role?
    Dr. Storck, you talked on that, so let us hear from the 
others. You did get to that slightly, but I want to know what 
you think our role is and what private industry's role is. Do 
you have a thought on that, Ms. Simler?
    Ms. Simler. I will let others speak to that.
    Ms. Woolsey. Okay. Thank you.
    Dr. MacDonald?
    Dr. MacDonald. Thank you. NOAA is always trying to improve 
its weather forecasts, and most people do recognize they have 
gotten a lot better, and I appreciate your comments about--I 
actually do have friends whose favorite channel is The Weather 
Channel. That is because I am in weather.
    Ms. Woolsey. Well, they need to get a life.
    Dr. MacDonald. We are improving our forecasts. They partly 
improved because we understand the weather better and because, 
as computers get faster, our models get better. But there are 
some unusual things about renewables. For example, you really 
care about the winds, you know, fairly high above the ground, 
about 300 feet is where the power is. We used to kind of say 
partly cloudy, but partly cloudy is not good enough when you 
can have clouds sort of go over an entire city and change the 
amount of photovoltaic energy available. So what we want to do 
is improve our networks and improve our models really going 
specifically after those things needed for renewable energy. We 
need a way to do that. It is at a higher resolution and it is 
observing using things like we have--things like SODARs--that 
actually can measure the winds 100 meters above the ground. So 
we have some great ideas to go after it and we are going to 
keep working on it.
    Ms. Woolsey. So, okay, you have the ideas. Do you have the 
technology and do you have the equipment, or are we depending 
on private industry to provide this?
    Dr. MacDonald. Well, I see us as depending on private 
industry for some of the new technology. I mentioned some of 
these new wind measuring tools. It is going to require, I 
think, some investments to improve our systems, but, in any 
case, we are going to be working on it because improved weather 
helps everything. It helps aviation. It helps renewable energy. 
But there are some specific things for renewable energy that we 
really do need.

                               Wind Power

    Ms. Woolsey. Dr. Michaels, you hate wind. Poor wind. But 
isn't wind just part of the solution? I mean, it is not the 
whole thing.
    Dr. Michaels. The Nation is undergoing yet another energy 
transition of the same sort that it has made in the past from 
wood to coal to oil to electricity, and it may well be a 
transition that has a greater role for wind. I do not hate any 
particular source of energy, and I also do not hate efficiency. 
But it is important to think about what wind's role really is 
because some facts are coming to light, and its role in the 
system is, I think, in need of a little more rethinking. That 
is my major point.

                        More on Private Industry

    Ms. Woolsey. Dr. Storck, what do you think will be private 
industry's role in this? We just have 10 seconds.
    Dr. Storck. Private industry's role is fairly clear, as I 
see. Private industry relies on the forecasts that NOAA 
creates. We take those forecasts, forecasts of the weather, and 
we make them very specific and relevant to a wind farm. 
Regardless of how many computers and scientists NOAA employs, 
it can never get into the details of every particular wind farm 
in the United States. And, remember, we export our technologies 
globally, as well. So we need NOAA to produce better weather 
forecasts and we can take it from there.
    Ms. Woolsey. Thank you, Mr. Chairman.
    Chairman Baird. Thank you, Ms. Woolsey.
    I wouldn't expect the panelists to be aware of this, but 
the gentleman now about to ask questions is probably the 
leading authority in the Congress on some of this because he is 
virtually off the grid, if not entirely off the grid, and has 
been doing renewable energy in his home walking the talk for 
many, many years. So with that, I am pleased to recognize Dr. 
Bartlett.

          Storage and the Limited Availability of Fossil Fuels

    Mr. Bartlett. Thank you very much. You know, in thinking 
about these alternative energies, we need to think about them 
in a different context. The context in which we ordinarily 
consider them is the present context where about half of our 
electricity comes from coal, and if you are comparing these 
renewables with fossil fuels, they aren't going to look very 
good because the quantity and quality of energy in fossil fuels 
is just unsurpassed. Where else can you find that quantity and 
quality of energy?
    The general statement is that we have 250 years of coal at 
current use rates. Be careful with that phrase ``current use 
rates'', because an increase of just two percent doubles in 35 
years, gets four times bigger in 70 years, eight times bigger 
in 105 years, 16 times bigger in 140 years. I hope we will 
still be here as a country 140 years from now. The National 
Academy of Sciences says that we probably have 100 years of 
coal at current use rates, but even if we have the 250 years 
and you increase its use only two percent, and we will increase 
its use more than that as we have to turn to coal for gas and 
liquids, but even if you increase it only two percent, the 250 
years now drops to 85 years. That is the power of compound 
interest, which Albert Einstein says was the most powerful 
force in the universe, and now if you take some of the energy 
from that coal to produce a gas or a liquid, now it shrinks to 
50 years, and there is an inevitability that few people 
understand, and that is that you will share it with the world 
out of necessity because if we are getting oil from coal, then 
the Saudi oil goes to somebody else, so in reality, you have no 
choice but to share it with the world. What that means is that 
50 years now shrinks to 12.5 years. So if you make two 
assumptions, one is that the use of coal will increase just two 
percent, and the other is, the inevitability that you will 
share it with the world, we have 12.5 years of coal left.
    So the context in which we need to be thinking about these 
alternative energies is a world in which we do not have the 
abundance of fossil fuels that we have today. Then they start 
to look a whole lot different, don't they? But we have huge 
problems with the intermittent production of energy by wind and 
by sun, and so we need hugely increased focus today on storage, 
do we not? Because you can get all the energy that you need 
from solar, you can get all the energy you need from wind but, 
boy, is it sporadic. And we have grossly inadequate ways of 
storing it today. Where are we in this balance between looking 
at the renewables and looking at ways of storing the energy? 
Because don't you think that the utility of these renewables in 
the future will be largely dependent on our ability to quickly 
store and release the energy we get from them?
    Dr. Storck. Congressman Bartlett, can I first address that? 
I think one of the first things before we engage wholly in the 
idea of storage, which I do think is important, is we need to 
look at other market structure improvements such as larger 
geographic areas in which we transact energy because I think 
that may be a more a direct way to increase the flexibility of 
resources that we utilize to balance the variability----
    Mr. Bartlett. You really can't----
    Dr. Storck. --that you were talking about.
    Mr. Bartlett. --stretch this stuff too far, can you? Unlike 
oil, you put a gallon in here and a thousand miles away a 
gallon comes out. You put electrons in a wire at this end, and 
a thousand miles away nothing may come out as a result of line 
loss. Aren't there some limitations to equalizing, to 
normalizing the production if you just include the whole 
country?
    Dr. Storck. Well, I would say that is something we need to 
study, but one of the things that we have observed is that the 
broader the geographic area that you can use to balance, there 
probably are benefits and we need to look at transmission 
associated with that. You are correct.
    Dr. Mooney. Congressman Bartlett, I think you raise a very 
important point, and just as wind or any single technology is 
not the solution, in addition to forecasting there are many 
things that we can do to address the variability of wind and 
solar generating plants. Storage, I think, is certainly one, 
and will likely be a part of the solution. As was discussed 
here earlier, there are market structures that could be changed 
to make integration easier. There are operational techniques 
that can be implemented, for example, looking at wider 
geographic areas for integrating renewable generating 
technologies, and that is on top of potential efficiency and 
demand response technologies and techniques. So there is a 
whole portfolio if we look at this as an entire system that 
will help to address that variability.
    Mr. Bartlett. Thank you. I yield back.
    Chairman Baird. Thank you, Dr. Bartlett.
    Dr. Ehlers.

                    More on the Need for Renewables

    Mr. Ehlers. Thank you, Mr. Chairman, and I apologize for 
the delay in being here. I have two committee meetings going on 
simultaneously.
    On the storage issue, of course Michigan, my state, has 
more experience than most with the pump storage facility that 
consumers power put in, and which has worked remarkably well 
outside of killing a lot of fish initially, but they have 
managed to put up a net that is good enough to keep the fish 
from getting in and it has worked rather well. Every night the 
otherwise idle plants are sending electricity up there and 
pumping water, I think, about 200 feet up the hill into a lake 
and during the day let it flow down. The same turbines turn the 
other way and produce electricity. Unfortunately, that is a 
geographic scarcity to have a situation like that, but 
nevertheless, they have proved it works and so that can be a 
model, and I worry. Mr. Bartlett and I are much in the same 
vein on this issue. We very much support the renewable industry 
in whatever form it manages to survive. That is a very good 
direction to go, but that is only part of it. I really don't 
like that term ``renewable'' because it is not renewable. I 
mean, sunlight is always there, but it is not really renewable. 
Not much we can do about it.
    But, at any rate, all those alternative forms of energy--
which I think, is probably a better way of saying it--are 
essential for us. We have to use them, we have to develop them, 
we have to make them work well, and here, as in so many cases 
including automobiles, the biggest stumbling block is having a 
good method of storage, and particularly in homes. My fond 
dream is that eventually every home in America will have solar 
shingles at not much greater cost than ordinary shingles. That 
makes solar power very economically feasible. But again, where 
do you store it? Buying batteries can be expensive and erratic, 
but nevertheless, that appears to be the best thing at this 
point, and I would be delighted if someone can develop really 
good batteries or better methods of storage than we are used to 
having.
    So that is not a question, Mr. Chairman. It is more an 
editorial, but I really appreciate what you are doing and what 
you are working on. It is absolutely essential, I think. As the 
spill in the gulf is pointing out, we have problems with every 
source of energy, and energy by its very nature creates some of 
its own problems because you need ways of containing it, 
preserving it, shipping it and so forth. So thank you for what 
you are doing, and I yield back at this point.
    Chairman Baird. Thank you, Dr. Ehlers.
    Mr. Rohrabacher.

                           Power Plant Siting

    Mr. Rohrabacher. Thank you very much, Mr. Chairman, and as 
a preface to what I am about to say is that of course again for 
the record state that I think that the global warming CO2 
theory is nonsense and those of us who have found ourselves in 
combat on this, quote, global warming issue realize that there 
is more to the energy argument and the energy issue than simply 
trying to say that we are not going to put more CO2 
in the air, which I might add as we all know, over the Earth's 
history there has been many times more CO2 in the 
air at wonderful times in the world's history.
    But beside that, back to energy, and that is, those of us 
who have that disagreement don't disagree that we need to be 
developing our energy resources to the maximum degree so that 
America can benefit both economically and in terms of our 
national security. With that, I have been very active in 
supporting various alternative energy sources rather than just 
oil and gas, and I happen to have bought on to the theory that 
we should be moving towards electrifying America, that we 
should be looking at electric energy as a source of 
transportation, et cetera.
    With that said, I have also been dismayed that quite often 
those people who are supposedly dedicated for the global 
warming theory or whatever motivates them to producing clean 
electricity that in California at least they seem to be putting 
up roadblocks, and I think this is true in other places as 
well, to actually putting in place solar energy installations, 
and I have a bill, H.R. 964, which would facilitate the 
development and the building of solar installations in the 
desert, and what apparently we have now is 205 or at least over 
200 applications at the Bureau of Land Management that have 
been sitting there for years for people who would like to build 
solar plants in the middle of the desert but can't get the 
Bureau of Land Management to give them a permit to build. Now, 
something is wrong there. Something is wrong with that equation 
and I would like to ask the panel, what is going on here? I 
mean, are we committed to it to the point that lizards and 
insects and their habitat is more important than developing the 
energy or can we say that yes, developing electric solar power 
in the desert is worth eliminating the habitat for a small 
number of insects and lizards, who can then scurry someplace 
else, I might add. So I would like to ask the panel that. What 
about siting of solar plants and other alternative plants, I 
might add?
    Dr. Michaels. The issue of siting these plants is being 
very interesting in California for a lot more reasons than just 
that. Among other things, even if they get sited, nobody is 
going to be able to build transmission to them. The question--
--
    Mr. Rohrabacher. I will have to tell you that I am 
personally involved with several sitings that the transmission 
lines go right through and it is right there, so I would like 
to say that yes, that is true. We don't have any electric lines 
or any way to get it onto the grid in many of these but in many 
of them they do have access to the grid and access to 
transmission lines. Go ahead. Sorry.
    Dr. Michaels. But if this is the case, this is the question 
that has always had to be looked at. We have only relatively 
recently in our history become aware that much of what we do 
does have consequences for the environment. The real question 
is always a rule of reason. How do you value the environmental 
amenities, the value of species biodiversity against the value 
of the power? Is there in fact an easier way to get it, a 
cheaper way to get it, a cleaner way to get it? Those are the 
questions about the relationship of markets and regulation. The 
question of how the solar units are getting built, how they are 
being financed, are they getting some sort of subsidies, tax 
breaks, questions like those. You have got to look at all those 
aspects of them. It may well be that these are intrinsically 
uneconomic and you wouldn't want them in the desert were it not 
for certain special treatment that they get.
    Mr. Rosenblum. As a transmission planning entity, we do see 
that there is a definite chicken-and-the-egg problem in 
California. Do we build the transmission and have them come to 
it, or do we wait for siting to take its course and then build 
the transmission out there? We are trying to be proactive, but 
also take into consideration the environmental limitations that 
are occurring. So it is a difficult process, as you point out.
    Mr. Rohrabacher. Would any of you be supportive of 
legislation that said on its very face building a solar plant 
is positive towards the environment and thus they should be--
their grant process with BLM should be facilitated? Would 
anyone support that on the panel? Okay. Thank you.
    Chairman Baird. Shall we let the record show that there was 
no----
    Mr. Rohrabacher. Show there was no great response to that 
question.

                   Information Gathering and Sharing

    Chairman Baird. I don't know if we want a lengthy second 
round, but there is a topic that I don't think has been 
addressed and I just want to raise it with my colleagues' 
indulgence. It has to do with, Dr. Storck, your model is a 
private entity providing forecasting or predicting--I am not 
sure of the proper term--information for the purpose of 
renewable energy entities, I think predominantly wind, as I 
understand it. Two main questions come to mind. One, we have 
heard a little bit about the economic benefits that could be 
achieved if we had more precise forecasting. I want to learn 
what we need to do to get that achieved, what has to be added 
to the system or done better from what we already do. But 
secondly, this interface, you know. There are some really 
bright folks out there doing little iPhone apps for free, but 
they need public access to information, and the question I 
would have is, do we really need a Federal investment in 
certain information-gathering infrastructure that then becomes 
open source so that then private entities can use it? What do 
we need to do to make this better and how do the private 
enterprises work with government agencies?
    Dr. Storck. Thank you. I will start with that question. 
First, to capture the value of renewable energy forecasts, you 
do need a stem that can allow you to extract that value. You 
need a market. Continuing with your analogy of sort of making 
hay, if I tell you that it is going to rain in another hour and 
you know that perfectly, what you really need is someone to 
help you make hay. You don't need to know that it is going to 
rain within the next hour. That is just a piece of information. 
So it is what you do with the information. So markets and 
systems allow renewable energy to be moved from one location to 
the next and they allow that value to be captured. In the NREL 
study that was referred to, the fundamental assumption with 
looking at the value of forecasts is that markets behaved 
rationally and that you were able to move power from one area 
to the next. It didn't consider things like $100 per megawatt 
hour in balance penalty. That would be what I would call an 
irrational market.
    Secondly, to your issue of observations and open source, it 
is a very important point. To really predict wind energy on an 
hour-ahead basis, we need more than just a weather forecast. We 
need access to those observations that ring the wind farms and 
perhaps that our clients at the wind farms have installed 
themselves. So providing these observations that NOAA might put 
in and not just feeding those observations into their 
supercomputing models but making those observations available 
to the renewable energy industry and not just wind. We heard 
the last two Congressmen talk about solar. We need to think 
beyond just wind here because once we do get to your vision of 
shingles as PV panels, we are going to be having a hearing 
about solar forecasting and cloud tracking. Thank you.
    Chairman Baird. Dr. MacDonald?
    Dr. MacDonald. Chairman Baird, I think NOAA and the private 
commercial sector have really grown in our ability to work 
together. There was a report called the Fair Weather report 
done back in 2003. NOAA worked on policies, and I agree with 
Dr. Storck that NOAA should put out the best possible forecasts 
but the private commercial sector can work with the very 
specific needs of something like the renewable energy industry 
to tailor the forecasts that they need, so I think there is an 
excellent cooperation and it says that, as we improve NOAA's 
observing networks and NOAA's computing and forecasting, we 
improve everything. We improve aviation. We improve public 
forecasts like the blizzard forecasts this winter. So it is 
something where I liked your words ``open source.'' We operate, 
we sort of get the best forecast, make it available. And the 
better our forecasts get, the more companies like Dr. Storck's 
company make money.
    Chairman Baird. Let me ask a slightly different variation 
of that. So forecast is some degree distant from raw data. Is 
the raw data open source as well?
    Dr. MacDonald. It is, right. We make it all available, and 
nowadays on the Internet, it is quite easy. There is one 
distinction on that, and that is, sometimes there are 
proprietary data. For example, one wind farm and one company 
may say, I don't want my neighboring one to have it, and we 
have proposed that NOAA be kind of the honest broker, where we 
would get the data and have it, but we would use it to improve 
the forecast.

      Potential Savings Versus Instrumentation and Data Gathering 
                                 Costs

    Chairman Baird. The other question then would be, and I 
don't know that we have time to answer it here, but we have 
heard estimates in the billions of dollars of savings through 
increased productivity and efficiency. I am wondering what the 
cost would be to realize those billions of dollars in terms of 
new instrumentation, available data.
    Dr. Storck, you allude to a few new subsets of information-
gathering technologies and if there are others who want to 
speak to that?
    Dr. Storck. Real quick. The billions of dollars of savings 
is what is realized with the current state-of-the-art forecasts 
that are available to the industry today. That is a very 
important point to make. We have come a long way and we already 
provide tremendous value to the industry. The incremental 
improvements on a day-ahead forecast time horizon, which is 
what the NREL study looked at, was another $500 million for the 
wind energy industry. That is significant money, but I wouldn't 
spend $500 million just to get there.
    Chairman Baird. Okay. So you feel with existing 
technologies and data used more effectively, we can already 
realize substantial savings, and that is your business model?
    Dr. Storck. Yes, and the fundamental question we have in 
integration is forecasting wind energy changes in the next hour 
to next five minutes. and that is going to require thinking a 
little bit outside the box of just supercomputers and weather 
forecast models and really getting into the details of more 
advanced weather observation systems. The question becomes who 
pays for that. Is that the owner/operator of the wind farm or 
is that the taxpayer?
    Chairman Baird. I will give my colleagues, if there any 
colleague dying for a second round? Dr. Bartlett.

             Adapting Energy Demand to Intermittent Sources

    Mr. Bartlett. Of course, an alternative to storage is 
simply to try to match an intermittent production of 
electricity with an intermittent use of electricity, and there 
are many uses that we have for electricity that could be 
inherently intermittent. When your air conditioner comes on, 
whether it was five minutes ago or five minutes from now, it 
makes little difference in how cool your house is going to be, 
and there are many manufacturing processes where you simply 
could stockpile some material when you had energy available and 
use it when the energy is not available. Of course, there are 
always going to be some inefficiencies in doing that but there 
are also inefficiencies in storing it if you have a constant 
load and an intermittent production.
    To what extent are we investing in these kinds of studies 
so that we can create a more flexible load to match an 
intermittent production?
    Dr. Michaels. You already have the growth of an industry 
which essentially makes--what they call the product 
themselves--is virtual power plants. There are companies like 
one called EnerNOC, which essentially signs up people and tells 
them that they are going to control their loads in exchange for 
certain rewards in order to help the power system cope with its 
operating problems. So these industries already exist and they 
apparently are able to make a profit off it and the question is 
possibly how to grow them.
    Ms. Simler. I would like to comment on that, if I may. The 
Federal Energy Regulatory Commission has due to Congress this 
month, I think by June 19th, a national action plan on demand 
response, and Dr. Michaels just referred to with EnerNOC, they 
are providers of demand response and demand response can 
complement the variability of wind energy resources. So FERC 
last June did a study on the assessment of the potential of 
demand response in the country and, like I said, the report 
should be going to Congress on the action plan which talks 
about support for states and others about how to achieve the 
potential identified in that assessment. Thank you.
    Mr. Bartlett. Yes, sir.
    Dr. Storck. Yes, and also just recently DOE has made 
hundreds of millions of dollars of funding available for what 
is called smart grid demonstration projects. We are a member of 
one of those projects in the Pacific Northwest, and the idea is 
to look at demand response and basically information services 
that support the electric grid to match supply, particularly 
from renewables, and in the Pacific Northwest, we have got a 
lot of wind and it is all in one spot. So when the wind is 
blowing, we really want something on the power system to 
consume that resource, and these are large-scale, five-year-
duration demonstration projects that are currently getting 
underway, so there is a lot of interest there, and funding.
    Mr. Rosenblum. The ISO has recently submitted to FERC a 
modification to its ancillary service market requirements to 
try to facilitate the participation of demand in those markets.
    Mr. Bartlett. As a small example of what one might do, if 
you have a well-insulated hot water tank in your home and you 
are heating it electrically, it will make little difference 
when you heat that water. It could all be heated at two a.m. in 
the morning, for instance, and last you for the whole day if it 
were large enough and well enough insulated. So there are 
enormous opportunities out there for varying the load, and I 
suspect that that may be simpler and cheaper than storage in 
many cases, and I am glad that we are pursuing this with some 
vigor apparently. Thank you all very much for your answers and 
yield back.
    Chairman Baird. Dr. Bartlett, I think that is an excellent 
line of questioning. One of the issues we discovered in the 
Northwest and I think elsewhere is for communities, when you 
try to look at conservation, there is a risk that they lose 
their access to load. When they start using less, then they are 
entitled to less in the future. So one of the issues we have to 
deal with with FERC and other management entities is to make 
sure that demand management doesn't cost you guaranteed access, 
because that is a disincentive that is built in to some of our 
current agreements.
    Ms. Woolsey.

                       Potential for Job Creation

    Ms. Woolsey. Thank you, Mr. Chairman.
    Dr. Mooney, we talked about saving money and increasing 
energy. We haven't talked about renewable energy creating and 
investing in more jobs in this country. Has your lab taken that 
on as one of your measurements?
    Dr. Mooney. We do have a group at the Laboratory that is 
called the Strategic Energy Analysis Center. That center has a 
focus, among other things, of looking at the economic and job 
impacts of various renewable energy and efficiency deployment 
scenarios. So we do that, and I am happy to get you additional 
information on what we do there. But----
    Ms. Woolsey. Mostly I would like to know what they have 
concluded.
    Dr. Mooney. Well, generally, I will say without being able 
to quote specific numbers is that there is an economic benefit, 
job creation benefit, to renewable energy and energy efficiency 
development, manufacturing and deployment in the United States.
    Ms. Woolsey. And would anybody else like to comment on 
that?
    Dr. Michaels. Yes.
    Ms. Woolsey. Dr. Michaels.
    Dr. Michaels. The record is decidedly mixed on whether 
there really is such. There have been studies in the United 
States, studies abroad. The problem that you have in the United 
States in particular is the type of computer modeling that they 
engage in. There was a study in Spain. It is a controversial 
study but they found out that renewable energy was actually a 
destroyer of jobs because it had such high capital requirements 
per worker relative to other potential sources of stimulus. The 
NREL did a study to refute this study, and they used the 
standard model, and in the process it came out, NREL's model 
created jobs. NREL's model mathematically must create jobs. It 
has to give them the answer that they want. In other words, I 
don't think that much of this has really been studied to the 
degree that it should, so I am concerned about that.
    Ms. Woolsey. Would anybody else like to respond to that? I 
mean, do you buy this that going into the new energy-saving 
technologies in this country, we are not going to have more 
jobs?
    Dr. Storck. Well, I could offer a small example. Renewable 
energy has created 60 very high-paying jobs in Seattle, and a 
lot of the people that we employ are atmospheric scientists and 
they remark to me, you know, it sure is nice to have an 
alternative to go to other than to work at NOAA. No offense to 
NOAA. Because, without the private sector having a role, that 
was their option. It was either academia or it was to go work 
for the government, and now they can roll up their sleeves and 
they can do something useful supporting renewable energy in 
this country. We are just one country. Multiply that by all the 
companies that are out there and, yes, renewable energy creates 
jobs.
    Ms. Woolsey. Thank you, Mr. Chairman.
    Chairman Baird. Dr. Ehlers, do you have any additional 
comments?
    Mr. Ehlers. Not at this time, Mr. Chairman.
    Chairman Baird. Dr. Mooney, my staff tells me it looks like 
you wanted to respond to that last one, and with that, then we 
will finish up.
    Dr. Mooney. I just wanted to offer to the Subcommittee that 
I am happy to make available to the Subcommittee our response 
to the Spanish jobs report, and I will make that available to 
you if you would like.
    Ms. Woolsey. Thank you very much.
    Dr. Mooney. Our intention, though, let me just conclude by 
saying, our intention in any type of study like that is to 
objectively look at the issues and provide honest information 
as best as we can determine it. We don't set out in those 
studies with a predetermined agenda.
    Ms. Woolsey. So Mr. Chairman, would it be appropriate at 
this time to ask when we receive it to have that information 
entered into the record?
    Chairman Baird. I think it certainly would, and Dr. Mooney, 
we would welcome that, especially if you have a response to the 
assertions of Dr. Michaels, and Dr. Michaels, feel free to add 
your explanation for the assertion that the NREL model 
produces--you know, is guaranteed to appear that it produces 
jobs, so we would be happy to look at both of those analyses.
    Dr. Michaels. The Institute for Energy Research has 
authored a study about the Spanish study and the NREL response 
to it, and we will be happy to give it you.\1\
---------------------------------------------------------------------------
    \1\ Dr. Mooney and Dr. Michaels submitted supplemental testimony 
regarding modeling procedures at the National Renewable Energy Lab 
(NREL). See Appendix.
---------------------------------------------------------------------------
    Chairman Baird. We would appreciate that.

                                Closing

    Before we bring the hearing to a close, I want to thank our 
panel of witnesses for testifying before the Committee today, 
and I thank my colleagues for very important and informative 
questions as well. The record will remain open for 2 weeks for 
additional statements from the members and for answers such as 
we have just discussed to any of the follow-up questions the 
Committee may ask the witnesses.
    With that, the witnesses are excused with our gratitude, 
and the hearing stands adjourned.
    [Whereupon, at 11:27 a.m., the Subcommittee was adjourned.]
                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by Ms. Jamie Simler, Director, Office of Energy Policy and 
        Innovation, Federal Energy Regulatory Commission

Question submitted by Representative Ralph M. Hall

Q1.  Dr. Michaels noted in his testimony that, in Texas and Colorado, 
it has been found that large increases in wind power production 
resulted in increases in pollutant emissions, and unchanged CO2 
emissions, because the baseload electricity required to support the 
wind power operations forced coal generators to make unusually quick 
adjustments that increased pollution.

     Please provide FERC's reaction to this concern. Given that 
integration of renewables onto the grid is a top priority for FERC, 
will the Commission be examining this issue in further detail to 
determine its significance and consider potential policy changes 
related to it?

A1. As I explained in my testimony, with respect to electricity, the 
Commission regulates transmission and sales for resale of electric 
energy in interstate commerce to assure the rates, terms and conditions 
of transmission service and wholesale power transactions are just and 
reasonable and not unduly discriminatory or preferential. In the study 
noted by Dr. Michaels, there were claims of increased pollutant 
emissions resulting from the practice of cycling coal fired generation 
in lieu of reducing wind power generation. The Commission does not have 
the statutory authority to address power plant emissions and has not 
sponsored such a study.
    The Commission's economic regulatory focus with respect to the 
integration of renewable resources centers on the variability of these 
resources, and how that variability is addressed by the rates, terms 
and conditions of transmission service and wholesale energy markets. 
The Commission seeks to ensure that all power supplies have comparable 
access to the grid.
    As I mentioned in my prepared testimony, the Commission is 
currently engaged in an effort to examine the extent to which barriers 
may exist that impede the reliable and efficient integration of 
variable energy resources into the electric grid, and whether reforms 
are needed to eliminate those barriers. Several areas of this inquiry 
are focused on electric utilities' ability to deal with the variability 
and intermittency of wind power production. These include information 
and data exchanges between wind generators and interconnected 
transmission operators, wind power production forecasts, and unit 
commitment procedures. Reforms in these practices should enhance the 
ability of the electric power system to efficiently integrate wind 
power resources. For instance, the Commission noted in the Integrating 
Variable Energy Resources Notice of Inquiry that improvements in 
transmission scheduling procedures may offer the potential for greater 
efficiency in dispatching all energy resources if the degree of 
variability can be reduced, better anticipated, and/or planned for more 
precisely.
                   Answers to Post-Hearing Questions
Responses by Dr. Alexander MacDonald, Deputy Assistant Administrator, 
        Laboratories and Cooperative Institutes, Office of Oceanic and 
        Atmospheric Research, National Oceanic and Atmospheric 
        Administration

Question submitted by Representative Ralph M. Hall

Q1.  In his testimony, NREL noted that the Department of Energy 
(through NREL) acts as a sort of ``middleman'' in supporting renewable-
related weather forecasting. Specifically, the testimony states that 
DOE serves ``as an interface'' between NOAA and the forecasting 
industry.Does NOAA need an ``interface'' to communicate effectively 
with the forecasting industry? What is the unique value added by this 
``interface'' step, and does NOAA need it to communicate effectively 
with the forecasting industry? If so, would NOAA be capable of carrying 
out this activity if directed to do so?

A1. NOAA has been working directly with the weather forecasting 
industry since the industry began in the middle of the 20th century. 
NOAA communicates directly with the private forecasting industry to 
understand their requirements and provide observations; weather, water, 
and climate forecasts; and other forecast information that is used to 
respond to the renewable energy community's needs. NOAA also provides 
historical climate information (e.g., long-term yearly averages of 
climate variables such as solar radiation, wind speed, etc.) that is 
used for siting new renewable energy facilities.
    When working with private weather forecast providers to respond to 
the information needs of specific sectors--e.g., renewable energy, 
emergency management, agriculture, and aviation--relevant Federal 
agencies such as the Departments of Energy (DOE), Homeland Security, 
and Agriculture and the Federal Aviation Administration are key 
partners and play an important role in bringing their knowledge and 
experience to the discussion. In the renewable energy arena, DOE and 
NOAA have formed a productive collaborative relationship to identify 
strategic efforts that NOAA could undertake to improve its products to 
better address industry needs. NOAA is working directly with the 
renewable energy community, as well as in collaboration with DOE, to 
understand the needs and to develop programs and capabilities to 
provide the needed information for the renewable energy industry.
    NOAA does not, however, provide specific forecasts for any private 
companies or industries--but all can use NOAA's information as a 
starting point to produce more tailored, higher resolution, and 
industry-specific forecasts. In working with the private weather 
forecasting industry, NOAA follows its Policy on Partnerships in the 
Provision of Environmental Information (http://www.noaa.gov/
partnershippolicy/). Adherence to this policy enables a healthy and 
productive public-private enterprise relationship. The NOAA policy was 
developed in response to the Fair Weather Report: Effective Partnership 
in Weather and Climate Services (National Research Council of the 
National Academies of Science, National Academies Press, 2003), which 
examined the roles of the private sector, the academic community, and 
the Federal sector in the provision of weather and climate services.
    NOAA believes public sector prediction models and observation 
networks can be improved to meet the needs of the renewable energy 
industry. As the information and forecasts provided by NOAA continue to 
improve, forecasts developed by private industry will also improve. The 
renewable energy industry is growing rapidly, and its needs and 
requirements continue to be developed and refined.
                   Answers to Post-Hearing Questions
Responses by Dr. David Mooney, Director, Electricity, Resources, and 
        Building System Integration Center, National Renewable Energy 
        Laboratory

Questions submitted by Representative Ralph M. Hall

Q1.  3Tier appended to its hearing testimony a statement expressing 
``concerns over the emergence of ``new'' government wind forecasting 
research and product development that replicates what commercial 
providers have been doing operationally for years.'' NREL activities 
appear to be at least partially at issue with respect to this concern, 
please provide NREL's response and reaction to the 3Tier, et al 
statement. What steps does NREL take to ensure its activities do not 
interfere with those of the commercial sector?

A1. Commercial wind power forecast providers rely on government agency 
weather forecasts and public weather data to develop their specific 
operational products, so there is an inherent Federal role. The issue 
raised in the appended statement, a letter dated 6-6-09, points to a 
concern regarding public funded research that contains elements of 
applied, operational wind power forecasting. NREL is committed to 
participating in the advancement of forecasting in order to most cost 
effectively integrate wind generation in the nation's electric systems. 
The DOE Wind Program funds our activities in this area, as well as the 
efforts of other Federal labs and industry led collaborations. NREL has 
played a positive role in resolving differences by facilitating 
exchange of information and ensuring any research results funded by DOE 
are publicly available and can benefit future private sector commercial 
endeavors. As discussed in the response to question 2, the Utility Wind 
Integration Group (UWIG) has been key in this coordination.
    NREL fully agrees with the three priorities outlined in the 6-3-09 
statement: Enhancing Publicly-Available Weather Data Networks, Research 
into Problem Flow Regimes, and Improvements in NWP models. The DOE Wind 
Program has recognized the research issues as well, and recently issued 
a competitive funding opportunity titled ``Enhancing Short Term Wind 
Energy Forecasting for Improved Utility Operations'', funding 
opportunity announcement number DE-FOA-0000343. This opportunity is 
specifically targeted at fostering collaboration with the National 
Oceanic and Atmospheric Administration (NOAA), the private forecasting 
industry, and utility grid operators. DOE has increased its 
interactions with NOAA, and supports expansion of the NOAA mission to 
include weather driven renewable energy issues, including forecasting.
    NREL believes these recent efforts are fully in line with private 
sector priorities and the private sector's views on appropriate roles 
based on collaborations with the American Meteorological Society, UWIG, 
NOAA, the National Center for Atmospheric Research (NCAR), the Office 
of the Federal Coordinator for Meteorological Services, and others. 
This work, and likely related future collaborations, will advance 
understanding of wind forecasting, enhancing the commercial sector's 
products, and ultimately benefiting the public by facilitating 
integration of renewable power generation into electric systems.

Q2.  You note in your testimony that the Department of Energy, through 
your laboratory, acts as a sort of ``middleman'' in supporting 
renewable-related weather forecasting. Specifically, you state that DOE 
serves ``as an interface'' between NOAA and the forecasting industry, 
and that DOE plays a role in ``translating the needs of utilities to 
the forecasting industry and vice versa.''

     Please describe in further detail what these interface and 
translational activities entail and why they are necessary, What is the 
unique value added by DOE/NREL that cannot be fulfilled directly by 
NOAA and the forecasting industry, or by utilities and the forecasting 
industry?

A2. DOE/NREL has played, and continues to play a critical role in 
bringing relevant forecasting stakeholders together to help them 
understand the technical issues associated with renewable resource 
forecasting, translating this information into power plant output, and 
the potential of renewable plant generation.
    The main forum for this interaction is led by the Utility Wind 
Integration Group (UWIG) and UWIG's partnership with DOE/NREL. Twice 
yearly, UWIG meetings bring utilities and the forecasting industry 
together to discuss forecasting needs and develop deeper understanding 
of how forecasting products should be tailored. For example, DOE/NREL/
UWIG sponsored a workshop in 2008 (http://www.uwig.org/Update/
uwigupdateMarch08.htm) to bring the government meteorology research 
community together with the forecasting industry to discuss how 
existing weather models could be improved to address wind and solar 
power forecasting. In June of 2010, UWIG sponsored a workshop (http://
www.uwig.org/abpwindforework.html) that brought together the utilities 
and wind data modelers to discuss needs and applications for wind 
datasets as inputs for integration studies. Feedback from the utility, 
forecasting, and research community at these forums has been 
tremendously positive, with participants learning a great deal about 
the needs and capabilities and limitations of the other sectors.
    The figure below illustrates the roles of the parties and the 
overlapping nature of their interests. DOE/NREL and UWIG foster open 
discussions on the data needs, differing forecast product needs, and 
the value of forecast improvement . This facilitation role and DOE 
funding of related collaboration as described in the answer to Question 
#1 are critical for continued wind power deployment and economic 
integration into the nations electric system.
    As wind/solar penetrations increase, operational integration 
challenges become greater. Continued forecasting improvement through 
public and private collaborative efforts along with DOE/NREL's role in 
identifying and addressing cross sector issues will remain important.



Q3.  Dr. Michaels noted in his testimony that, in Texas and Colorado, 
it has been found that large increases in wind power production 
resulted in increases in pollutant emissions, and unchanged CO2 
emissions, because the baseload electricity required to support the 
wind power operations forced coal generators to make unusually quick 
adjustments that increased pollution.

     Please provide NREL's reaction to this concern. Has the issue been 
studied in sufficient depth to provide an understanding of its 
significance and impact? If not, given NREL's expertise and the Obama 
Administration's emphasis on reducing CO2 emissions and 
other pollutants, will NREL examining be this issue in further detail?

A3. DOE/NREL sponsored, and other wind integration studies examine in 
detail the needed electric system reserves and part-load operations of 
conventional generators in response to the variability and uncertainty 
of wind and solar power resources. The BENTEK study referenced was (to 
our knowledge) not publicly reviewed, and we believe it comes to 
erroneous conclusions regarding overall emissions rates. Xcel, the 
primary utility provider in Colorado, agrees that the report is in 
error. Reference Denver Post Letter to the Editor, May 28, 2010, 
reprinted below.
    DOE/NREL are committed to fully evaluating the impact of wind on 
utility system operations, including impacts on emissions. Ongoing and 
future work will continue to address emissions, system wear and tear, 
and generator cycling issues.


                   Answers to Post-Hearing Questions
Responses by Dr. Pascal Storck, Vice President, 3TIER

Question submitted by Representative Ralph M. Hall

Q1.  You appended to your testimony a joint statement by 3Tier and two 
of its competitors that expresses ``concerns over the emergence of 
``new'' government wind forecasting research and product development 
that replicates what commercial providers have been doing operationally 
for years.''

     Please elaborate on this concern. What potentially duplicative 
product or service is the Federal Government providing, and through 
what agency or entity? Has 3Tier communicated this concern to the 
agency or agencies in question, and if so where does the issue stand? 
Please provide any specific recommendations you have regarding how best 
to address this concern.

A1. The U.S. Government, through its agencies, such as NOAA, and its 
national laboratories, such as NREL, has become increasingly active in 
the area of information services in support of renewable energies. Over 
the past several years, as the renewable energy market has developed, 
the importance of information to characterize wind and solar 
fluctuations has become clear. Since weather is the driving fuel of a 
wind or solar project, understanding how it varies in time (i.e. from 
day to day) and how it varies over space (i.e. where is it windiest in 
a particular county), is key to building the most productive projects 
and then operating them efficiently. To fill this requirement for 
information, small and medium sized businesses, such as 3TIER, AWS 
Truewind and Windlogics (all signatories to our joint statement) have 
provided these services over the past several years. Our fear, which is 
beginning to be realized, is that the U.S. government now sees the 
opportunity to provide these information services in support of those 
that are producing tangible products in the renewable energy space. Put 
most simply, when the government talks of accelerating renewable energy 
for domestic and export use--it very often means supporting those that 
are producing the wind turbines and the solar panels at the expense of 
those providing information or data services.
    A perfect example of this in action is NREL (the National Renewable 
Energy Lab) creating a solar dataset to accelerate renewable energy in 
India. 3TIER already offers this product, but the U.S. government, in 
its interest to accelerate the development of renewables in India and 
the market for U.S. products (solar panels) there, wants to make this 
information freely available. While this may accelerate development in 
India, it hurts companies like 3TIER that provide these information 
based products. Most recently our CEO was on a trade mission to China, 
hosted by the Department of Commerce, and one of the active areas of 
discussion was the potential creation of renewable energy (wind and 
solar) datasets by our government (most likely NREL) to accelerate 
efforts. To be fair to NREL, it subcontracts out the creation of this 
data to the private sector (companies like 3TIER), but our point is 
that this simply puts industry into a role of supporting government 
efforts. The better model is one in which the users of the information 
come to companies like 3TIER directly to purchase that information, 
thereby putting the burden of payment on those that benefit, while 
creating an actual industry to serve this growing market.
    Another example of this work is in wind energy forecasting, where 
NREL, together with a division of NOAA, the Research Applications Lab 
(RAL) have teamed together to create a wind energy forecasting system 
for a utility (Xcel Energy). As was discussed in our letter, the 
private sector is well positioned to provide these services, but the 
government (or certain individuals in these agencies) see an 
opportunity to provide a very valuable product to the renewable energy 
industry. What they often forget is that in doing so, they are 
displacing the efforts of the private sector.
    We have communicated our concerns to NOAA and NREL. While the 
agencies say all the right things about public/private partnerships, I 
don't see them changing their behavior. Renewable energies are being 
actively promoted by the current administration, and the labs and 
agencies, especially with the funding of the Department of Energy, see 
the current interest as an opportunity to provide relevant products and 
services (such as solar maps for India and forecasting systems for 
Xcel). As was stated in my testimony, these agencies should be 
encouraged to focus on the big challenges, like providing better 
weather forecasts for the entire country, and then leave the private 
sector to provide specific services for specific clients in specific 
industries.
                              Appendix 2:

                              ----------                              


                   Additional Material for the Record




   NREL Response to the Report Study of the Effects on Employment of 
Public Aid to Renewable Energy Sources from King Juan Carlos University 
                                (Spain)


















Supplemental Testimony of Dr. Robert Michaels, Senior Fellow, Institute 
                for Energy Research, dated June 28, 2010

I. Introduction

    My name is Robert J. Michaels. I am Professor of Economics at 
California State University, Fullerton and Senior Fellow at the 
Institute for Energy Research. Other biographical data appear in the 
direct testimony I presented at the Committee's June 16th hearing. Near 
the conclusion of that hearing, Dr. David Mooney of the National 
Renewable Energy Laboratory (NREL) responded to a question on job 
creation by investments in renewable power. He stated that NREL staff 
had produced research purporting to show that investment in renewables 
indeed created employment opportunities.\1\ I responded that I was 
aware of other studies, in particular one from Spain, purporting to 
show that renewables were responsible for the destruction of jobs, 
because building them entailed very high capital costs per worker. Dr. 
Mooney responded that NREL researchers had refuted that report. I 
responded that NREL's computer model of job creation was at best an 
inappropriate research tool. Regardless of the data used to run it, the 
model's mathematical structure guaranteed that the only possible 
outcome was job creation. It was then agreed that Dr. Mooney would give 
the committee a copy of NREL's response to the Spanish study, and that 
I would provide support for my assertions about the inappropriateness 
of NREL's model. This testimony responds to that request.
---------------------------------------------------------------------------
    \1\ The discussion can be found at approximately 1 hour, 25 minutes 
into the session video.
---------------------------------------------------------------------------
    This testimony makes and documents three basic points:

        1.  No matter what numerical data is input into NREL's model, 
        the only result it can possibly produce is that renewables 
        result in job creation. With job creation its only possible 
        finding, the model is valueless for evaluating any claims about 
        either job creation or job destruction. NREL is well aware of 
        this weakness, but continues using this model despite the 
        availability of less-flawed alternatives.

        2.  NREL's claim that its method is ``traditional'' is 
        insupportable, and its model is in no sense a typical tool for 
        analyzing job creation. Its primary author was not an 
        economist, and the model has no foundation in the peer-reviewed 
        economics literature. Its structure and findings have also not 
        been presented in refereed economics journals, despite abundant 
        opportunities for NREL staff to present them to the economics 
        profession.

        3.  Despite its use in analyzing numerous renewable projects, 
        NREL has produced no publicly available studies that compare 
        its predictions of job creation with the actual outcomes of 
        those projects. There are good reasons to expect that the 
        model's predictions will in fact be far off the mark.

    This testimony does not address the study brought up at the hearing 
whose authors found job destruction resulting from renewable 
investments in Spain.\2\ The Committee specifically requested backing 
for my claim that NREL's method of calculating job creation is 
fundamentally flawed, and these flaws exist independently of whatever 
other research might exist. NREL's critique of the Spanish study is 
primarily devoted to comparisons between its research methods and 
NREL's, and in particular it provides no figures that might usefully be 
compared with the Spanish study's numerical estimates of job 
destruction.\3\ To my knowledge, neither of the two studies has been 
subjected to the type of peer review process normally required for 
publication in professional economics journals.\4\
---------------------------------------------------------------------------
    \2\ Gabriel Calzada Alvarez et al, Study of the Effects on 
Employment of Public Aid to Renewable Energy Sources, Universidad Rey 
Juan Carlos, March 2009. http://www.juandemariana.org/pdf/090327-
employment-public-aid-renewable.pdf The Committee did not ask me for 
any evaluation of that study.
    \3\ Eric Lantz and Suzanne Tegen, ``NREL Response to the Report 
Study of the Effects on Employment of Public Aid to Renewable Energy 
Sources from King Juan Carlos University (Spain),'' White Paper TP-6A2-
46261 (Aug. 2009), 4. (subsequently cited as Lantz and Tegen)
    \4\ I am familiar with this process, both as author of peer-
reviewed articles and as Co-Editor of Contemporary Economic Policy, a 
peer-reviewed official publication of Western Economic Association 
International.

II. The structure of NREL's model guarantees that its only possible 
                    finding will be job creation.

    NREL's ``JEDI'' (Job and Economic Development Impact) model is an 
``input-output'' system. At a conceptual level, it can illustrate 
interdependencies of production in various sectors of the economy and 
their possible effects on employment and incomes. As implemented in 
JEDI, consider a planned renewable project. The builders must purchase 
construction materials and services. The funds flow to workers on the 
project (a ``direct'' effect) and ultimately to those employed by 
suppliers of materials (an ``indirect'' effect). The increased demand 
for building materials may require that suppliers expand and hire more 
workers, and quite possibly those who supply the suppliers may also 
need to do so. The various workers spend their new incomes on consumer 
goods and services, which may also expand those industries. The 
cumulative effect is that of a ``multiplier'' in which spending to 
build the renewable leads to expansions of output and employment in 
numerous other industries. Summing all of the induced changes yields a 
figure for job creation.
    The only possible outcome of this model is job creation. Both the 
initial expenditure on the renewable and all subsequent rounds of 
respending can only increase demand for construction materials, 
consumer goods, and workers in all of these industries. There is 
nothing in the model that could conceivably decrease employment or 
output in other sectors of the economy. Any project considered by JEDI, 
no matter how efficient or inefficient as a source of electricity, will 
show a positive effect on employment. That increase may be large or 
small, but we can be certain that it will not be negative.\5\
---------------------------------------------------------------------------
    \5\ Note that the effects on employment will be largely transitory. 
After they are finished the construction workers (and workers in 
supplier industries) will receive no more income from it and will be 
unable to budget for higher spending. There will, of course, be some 
workers who obtain long-term employment operating and maintaining the 
plant.
---------------------------------------------------------------------------
    JEDI's plausibility depends heavily on unrealistic assumptions. If 
these assumptions are untrue, the picture becomes far more complex and 
ambiguous. Begin by asking where the workers come from. Unless there is 
a large pool of long-term unemployed people with just the right skills 
and experience, the new workers (in both construction and in supplier 
industries) must largely be attracted from other jobs. The net effect 
on employment may still be positive, but only in exceptional 
circumstances (not yet shown to hold for renewables) will a large 
percentage of the employees be taken out of long-term unemployment and 
jobs truly be ``created.'' Again, NREL has admitted so much, saying 
that JEDI ``does not account for potential constraints on labor and 
money [i.e. capital] supplies.'' Further, it ``assumes there are 
adequate local resources and production and service capabilities to 
meet the level of local demand identified in the modeling 
assumptions.'' \6\ It is not enough to have the right numbers and types 
of workers in the area--to actually create jobs on a net basis they 
must also be long-term unemployed.
---------------------------------------------------------------------------
    \6\ NREL, The Jobs and Economic Development Model (JEDI), About 
JEDI and Frequently Asked Questions (FAQ), July 2008, unpaginated. 
http://www.nrel.gov/analvsis/jedi/pdfs/
jedi-manual-0708.pdf
---------------------------------------------------------------------------
    Authors of studies using JEDI acknowledge that it ``offers a gross 
analysis rather than a net analysis; that is, the model does not 
account for the net impacts associated with alternate spending of 
project funds.'' \7\ A ``gross analysis'' is one that disregards the 
fundamental economic concept of opportunity cost. JEDI treats the 
renewable like a proverbial ``free lunch,'' a gain to the economy for 
which nothing need be sacrificed.\8\ Many other effects might reduce 
job creation or possibly turn it into destruction. JEDI's creators have 
noted that ``the JEDI model does not factor in costs to consumers,'' 
which can be important because higher energy bills mean fewer 
employment slots in other industries where consumers do not spend. They 
also note that ``[f]luctuations in different technologies (e.g., 
natural gas prices) may make construction of a new power plant price 
prohibitive,'' i.e. that the cost of increasing employment (assuming 
that it happens) may be too high to warrant construction of the 
renewable.\9\
---------------------------------------------------------------------------
    \7\ Sandra Reategui et al, ``Generating Economic Development from a 
Wind Power Project in Spanish Fork Canyon, Utah: A Case Study and 
Analysis of State-Level Economic Impacts,'' Utah State University, DOE/
GO-102009-2760, App. B. http://www.windpoweringamerica.gov/pdfs/
economic-development/2009/
ut-spanish-fork.pdf
    \8\ There are variants of JEDI used for (e.g.) comparisons between 
investments in coal-burning generators and wind turbines. Reports based 
on them often turn opportunity cost reasoning on its head. Thus we see 
claims that a wind unit is to be preferred because it requires more 
workers to build and operate than a similarly sized coal unit. By that 
reasoning, some other technology that required still more workers than 
the wind unit would be even better. In reality, the extra workers are 
an increased cost and not a benefit--employing them here means 
sacrificing more of the economy's alternative outputs than necessary. 
Eric Lantz and Suzanne Tegen, Variables Affecting Economic Development 
from Wind Energy, NREL Conference Paper, NREL/CP-500-43506 (June 2008).
    \9\ Both statements are from Suzanne Tegen et al, Jedi II: Jobs And 
Economic Development Impacts from Coal, Natural Gas, And Wind Power, 
Poster Presentation at 2006 Windpower Conference, Pittsburgh. http://
www.windpoweringamerica.gov/pdfs/wpa/
poster-2006-jedi.pdf
---------------------------------------------------------------------------
    JEDI's creators recognize that the net effect of increased 
renewable investments on employment is ambiguous. On occasion they have 
cited the works of others who use more complex models capable of 
forecasting both job creation and job destruction. Such models can 
incorporate factors that include responsiveness to higher power prices, 
reductions in employment in conventional power, and the ``crowding 
out'' of other capital spending by increased investment in renewables. 
Sometimes such models produce negative effects on employment in the 
long run.\10\ NREL's researchers are thus aware that other models that 
capture important complexities are available (or they could surely 
create their own). For unknown reasons, they instead persist in using a 
model that can produce only the single result of job creation from 
renewables.
---------------------------------------------------------------------------
    \10\ Lantz and Tegen (at 4-5) in fact cite such studies and results 
from Europe, but do not discuss the importance of their consequences 
for their own JEDI findings.

III. NREL's model is neither ``traditional'' nor mainstream, and claims 
                    of its professional credibility are without 
                    foundation.

    Despite JEDI's unrealistic structure, Lantz and Tegen have claimed 
that it uses ``traditional methods.'' Specifically, those methods 
applied in jobs and economic impacts analyses ``rely on input-output 
models to estimate job creation or loss.'' \11\ By this standard, JEDI 
is hardly a traditional model--instead of estimating ``job creation or 
loss'' it can only produce estimates of creation. Perhaps the most 
convincing evidence that JEDI is far from the mainstream is its near-
total absence from the peer-reviewed economics literature. One would 
expect researchers who believe JEDI is scientifically useful to publish 
its results in academic journals, where its structure and findings 
could be evaluated by a wider readership than is enjoyed by NREL 
reports.
---------------------------------------------------------------------------
    \11\ Lantz and Tegen, 4. They supply no references or citations.
---------------------------------------------------------------------------
    JEDI itself was not created by a professional economist, but by an 
independent consultant who holds a Master's degree in Community and 
Regional Planning and whose biography includes no peer-reviewed 
articles in economics journals.\12\ I have found no other NREL employee 
associated with JEDI who has published applied research based on that 
model in peer-reviewed economics journals.\13\ Further, renewables are 
not economically unique. If JEDI's structure is indeed useful, one 
would expect to see variants of it used to analyze other governmental 
policies and private investment projects. Models structured like JEDI 
might be particularly valuable for evaluating the consequences of the 
numerous stimulus programs that have been enacted during the current 
recession, but I am not aware of any such studies that have used them.
---------------------------------------------------------------------------
    \12\ NREL contracted with Marshall Goldberg of MRG Associates to 
construct the model. See Goldberg et al, ``Job and Economic Development 
Impact (JEDI) Model: A User-Friendly Tool to Calculate Economic Impacts 
from Wind Projects,'' (Preprint, 2004), 2. Goldberg's 2005 biography is 
at http://puc.sd.gov/commission/dockets/electric/2005/el05-022/
goldbergexhibita.pdf. Of NREL people associated with the model that I 
have been able to check, none has any published works in peer-reviewed 
economics journals. These checks were made using the standard databases 
JSTOR and Econ Lit. I have not been able to check citations in the more 
specialized energy literature.
    \13\ I acknowledge in advance that this search may not have been 
complete. It was made using the standard databases JSTOR and Econ Lit. 
A new version of JEDI, known as JEDI !!, retains the same basic 
structure as the original. See Suzanne Tegen, Marshall Goldberg and 
Michael Milligan, ``JEDI II'' at http://www.nrel.gov/docs/fy06osti/
39908.pdf

IV. There are no publicly available reports comparing JEDI's 
                    predictions with actual project performance.

    NREL is right in saying that models like JEDI can at best be 
approximations that are far from comprehensive. One JEDI-based report 
puts readers on notice that JEDI ``is not intended to be a precise 
forecasting tool. Rather it provides a reasonable profile of how 
investment in a wind project may affect a given economy.'' \14\ 
Unfortunately, that statement gives no guidance regarding 
reasonableness. How could one possibly determine which profiles are 
``reasonable'' without making comparisons between JEDI's predictions 
and post-project reality? More subtly, what is a ``given'' economy? A 
substantial number of JEDI-based studies appear to have been performed 
for localities to forecast local tax revenues and employment.\15\ This 
is an odd allocation of effort by a Federal laboratory--the fact that a 
project generates local employment and tax revenue carries no 
implications that such benefits will expand to a wider region or to the 
entire nation.
---------------------------------------------------------------------------
    \14\ Rategui et al, Op. Cit. 25.
    \15\ This has other interesting consequences. In some cases the 
authors of such studies treat it as a virtue that the immediate area of 
the project gains most of the benefits. An economist should immediately 
note the consequences--if the area in which I can trade is small, I 
will not be able to trade on terms as advantageous as if it is large. 
Among those who will suffer are distant suppliers who are foreclosed 
from competing for my business, and ratepayers in the area who will pay 
more for their plant than they had to.
---------------------------------------------------------------------------
    The issue of localized benefits becomes particularly important if a 
substantial fraction of project-related jobs will in fact be filled by 
persons who are already otherwise employed. NREL could perform a 
genuine service and possibly increase public confidence in its 
activities by looking at the actual origins of people who fill new job 
slots associated with renewables projects. Such a question requires no 
complex modeling at all. Just identify the newly created positions, 
interview the people filling them, and find out whether they came from 
other employments, and where those employments may have been. The more 
of them came from employment elsewhere, the fewer the jobs the project 
actually created.\16\ Funding such studies would be a minor fiscal 
burden, and they could easily be integrated with other NREL research 
programs. Other governmental modeling efforts are under continuous 
scrutiny for the accuracy of their predictions. For example, elsewhere 
in the Department of Energy those responsible for the National Energy 
Modeling System (NEMS) produce the Energy Information Administration's 
Annual Energy Outlook forecast. With that forecast come annual 
retrospective reviews of its predictions that will be used to help 
improve the future predictive powers of NEMS.\17\ Surely one can 
envision such retrospective studies that might sharpen the logic and 
improve the forecasting abilities of JEDI.
---------------------------------------------------------------------------
    \16\ There can be further problems for researchers, but they are 
probably of second-order importance relative to the basic calculation. 
For example, It is possible that the jobs formerly held by newly-hired 
renewables workers would have vanished soon after they quit, leaving 
them long-term unemployed were it not for the renewables. Estimating 
the numerical importance of phenomena like these will be an additional 
task for those making the comparisons.
    \17\ See, for example, EIA, Annual Energy Outlook Retrospective 
Review: Evaluation of Projections in Past Editions (1982-2009) DOE-EIA-
0640 (2009), Mar. 2010. http://www.eia.doe.gov/oiaf/analysispaper/
retrospective/retrospective-review.html

V. Conclusions

    NREL's models of job creation by renewables are inadequate in 
virtually every dimension. As a bare minimum, any such model should be 
able to forecast both increases and decreases in employment depending 
on the data input to it. JEDI, however, can only generate increases in 
employment. For unclear reasons its authors chose not to acknowledge 
the fact that the only truly new jobs created by renewables will be 
held by those who were not employed elsewhere prior to starting them. 
Implicitly, for truly new jobs to match JEDI's ``gross'' figures, there 
must be massive numbers of long-term unemployed persons with just the 
right types of skills. This picture hardly corresponds with the 
realities of unemployment, even in today's recessionary economy. JEDI 
is a singular model that is far from the mainstream of economics, whose 
authors have for unknown reasons apparently chosen not to present it in 
peer-reviewed economics journals. It remains open to potential 
improvements that could make it both more trustworthy and applicable to 
analysis of projects other than renewable powerplants. Doing so, 
however, would require that its predictions be tested against reality 
and its structure modified as necessary to minimize the variance 
between them. In its current form, however, JEDI can only mislead and 
produce a far-too-optimistic picture of the real consequences of 
investment in renewables.
The Institute for Energy Research: The NREL's Flawed White Paper on the 
                        Spanish Green Jobs Study









                                   
