FOUNDED IN 1909, CLOVIS, N.M., SEEMS LIKE A
TYPICAL, rural, small town. With a population
of 32,667, the city is home to peanut and cotton
farms, and ranches focused on meat and dairy
production. Yet despite its outward appearance,
this small, sleepy community may soon become
an energy industry epicenter, one linking the
nation's autonomous energy grids and creating
a paradigm shift in how energy is produced and
distributed in the United States.
Tres Amigas is the company behind this potential
transformation. The company signed a 99-year
lease with the state of New Mexico and plans
to develop 22 square miles of land, or about
14,400 acres, into an energy superstation. The
startup wants to build a three-way AC/DC interconnection
that would link the Eastern Interconnection,
the Electric Reliability Council of Texas and
the Western Electricity Coordinating Council.
In plans viewed as bold or even brash, the station
will rely on cutting-edge technology to move
energy from grid to grid.
But the project faces a number of potential
technical, business and political hurdles. The
underlying technology is nascent and has never
been used at the scale that Tres Amigas has proposed.
Estimates are that it would take $500 million
to $1 billion in capital to meet the project's
goals, and where the money will come from and
how viable the firm's business model is are both
unclear. Last, established energy producers,
local governments and federal regulators could
block or even unhinge the project on a whim.
So while Tres Amigas's plans have great potential,
there are also significant doubts about whether
or not they will make their way from blueprints
to thriving business.
There are now nine U.S. connections among the
three grids. Seven link the Eastern Interconnection
and WECC grids and two connect ERCOT to the Eastern
Interconnection. No interconnection exists between
ERCOT and WECC. Most of the converter links carry
100-200 megawatts of electricity although the
largest supports 600 megawatts of power. The
total capacity of the nine connections is about
2 gigawatts.
Initially, Tres Amigas plans to carry up to
5 gigawatts of electricity, and it is being designed
to scale up to 30 gigawatts. To support the project,
the company plans to deploy three highvoltage
direct-current terminals. Each will have 5 gigawatts
of capacity and be stationed about two miles
apart in a triangleshaped loop. Once completed,
the interconnect has the potential to change
how energy is distributed, breaking down many
of the traditional barriers, so suppliers can
ship energy across the country rather than being
limited to immediate areas. Construction of the
lines is expected to begin in the fall and the
interconnect is slated to be fully operational
in 2014.
An endeavor of this size and scope has never
been undertaken: converter links generally limited
to hundreds of megawatts exchanged at distances
of hundreds of yards rather than miles. "Because
of the Tres Amigas project's size and scope,
there is significant risk involved in trying
to get all of the different technology elements
to work together," said Jay Holman, research
manager with IDC Energy Insights. The company
is working with American Superconductor, which
has invested $1.8 million for a minority stake
in Tres Amigas, to build the superconductors.
In addition, the bulk of the megawatts entering
the superstation are expected to be generated
from renewable energy sources whose production
can fluctuate dramatically. So the energy interconnect
must be able to handle numerous charge-discharge
cycles. Tres Amigas plans to use batteries to
provide short-term energy storage and to keep
the system balanced.
The colossal plan comes from a miniscule management
team. In fact, Tres Amigas is an appropriate
name for the company because it literally has
only three full-time employees. Their efforts
are being complemented by a virtual team of a
few dozen specialists who have taken on various
engineering and marketing tasks. To realize its
vision, the startup will need from $500 million
to $1 billion. Where that money will come from
is unclear as the company has been mute about
its financing to date as well as its future plans.
The developers of the fledgling energy superstation
do envision generating revenue in a couple of
ways. "We will be a toll taker and charge
every company that sends or receives energy over
our network," said David Stidham, Tres Amigas's
chief operating officer. In addition, the company
plans to offer storage capabilities to its customers
and service features designed to enhance grid
reliability and power quality.
The viability of the business plan revolves
around other companies' willingness to buy and
sell energy in broader geographic regions. "Certainly,
the renewable energy companies are interested
in Tres Amigas," said Michael Giberson a
research associate at the Center for Energy Commerce
at Texas Tech University. "They have been
hamstrung and largely unable to move power out
of their immediate area."
Established energy companies may not be as willing
to endorse the model. "We have seen push
back from the fossil fuel suppliers who think
that more use of renewable energy means less
use of their services," admitted Tres Amigas's
Stidham.
These companies have some powerful allies. In
the spring, governors of 10 states - including
New York, New Jersey, Massachusetts, and Virginia
- sent a letter to congressional leaders questioning
the idea of the new transmission superhighway.
Instead, they urged Congress to support their
own regional energy solutions.
There has also been resistance from the Texas
Public Utility Commission. "The Texas PUC
fears that energy flowing out of the state could
increase costs for local consumers," said
Texas Tech University's Giberson. Tres Amigas's
Stidham said the company is willing to move ahead
linking two rather than three grids if Texas
balks at the connections.
To date, Tres Amigas has circumvented potential
regulatory barriers. In March, the Federal Energy
Regulatory Commission granted Tres Amigas's request
for authorization to sell transmission services
at negotiated rates on its proposed supertransmission
station.
But the company will have to clear many regulatory
and business hurdles before its transmission
lines are built and energy starts to flow over
them. In the meantime, the sun beats down and
the dust blows over Clovis's open fields and
questions abound about the area's - and the nation's
- energy future.
