The Clean Energy Revolution is Bigger Than You Think

Rooftop solar is without question the poster child of the clean energy revolution, with good reason: it’s visible, increasingly affordable, and growing explosively. Dubbed “power to the people” by leading environmental author and activist Bill McKibben, rooftop solar now symbolizes green commitment for the left and bootstrap self-reliance for the right. It would be hard to blame anyone for concluding that the shiny panels dotting communities everywhere were the principal drivers of America’s transition to clean energy.

Except that they’re not.

The truth is that the vast majority of America’s wind and solar electricity – more than 85 percent – comes from large scale facilities. Virtually all wind power comes from utility-scale installations in places so remote that they’re rarely seen by anyone who is not operating them. More than half of all solar panels in the U.S. are in vast arrays capable of powering tens of thousands of homes. Solar on residential rooftops is growing rapidly, but accounts for just 20 percent of total U.S. solar electric capacity, a proportion that will fall further as large scale installations grow.

Bigger is Cheaper

Economies of scale – the principle that the cost of making a unit of something falls as you produce more of them – applies to renewable energy just as it has to countless other products, from Henry Ford’s Model T’s to flat screen TVs. Large wind turbines produce energy for pennies on the dollar compared to small turbines suitable for commercial or residential settings. Taller towers reach stronger and more consistent winds at higher elevations, and longer blades capture more of the wind’s energy in each sweep. Despite using identical photovoltaic (PV) technology, large scale solar arrays generate electricity at less than half the cost of panels on a typical home (installed costs per watt dc: $1.38 for utility scale vs. $3.55 for residential[1]). Superior resource quality is a big driver of lower costs: utility-scale developers target very windy and sunny places far from where most people live. Large solar arrays save even more money by cutting unit installation costs and by ensuring that each panel sits at the optimal angle to the sun (not an option for most residential rooftops).

Bigger Networks Connect More Renewables – and Improve Their Performance

Moving power hundreds of miles from remote wind and solar facilities to customers is much more efficient than widely believed. In 2013, just 5% of the power generated on the U.S. grid was lost on wires[2], and most of that “line loss” occurred at the distribution level. Transmission is the smallest part of the average electric bill, only 9% compared with more than 65% for generation[3]. Generation cost savings from large scale wind and solar facilities are so large that they recoup the cost of transmission lines needed to connect them rapidly. Regional transmission investments in Texas, California, the Southwest Power Pool, and the Midcontinent Independent System Operator are delivering enormous amounts of large scale wind at net savings to customers. Benefits to electricity customers typically exceed costs by factors of 3 to 1 or more, and include reduced energy costs, congestion relief, improved reliability, reduced capacity costs, improved market liquidity and competition, and emissions reductions.

Robust regional transmission grids squeeze more kilowatts out of every wind and solar facility by finding demand whenever the wind is blowing or the sun is shining. When the grid is constrained, excess wind and solar generation are “curtailed,” i.e. wasted or dumped to avoid dangerously overloading the grid. Transmission expansions eliminate these losses, making wind and solar generators even more efficient and valuable. Texas wind curtailments plummeted from 17% in 2009 to 0.5% in 2014 – even as total wind generation nearly doubled – thanks primarily to well-planned transmission expansions and upgrades completed in 2013[4].

Big Solutions for a Huge Challenge

Small may be beautiful, but the global climate challenge is anything but small. The landmark agreement negotiated in Paris last year provided another stark reminder of its staggering magnitude. Avoiding catastrophic climate change impacts means reducing global carbon emissions 80 percent by 2050, with even steeper cuts in the electric sector. Big, cheap, and abundant wind and solar, enabled by expanded and upgraded regional transmission networks, are quietly leading the transition away from aging fossil power plants and toward an affordable, reliable, and universally accessible clean energy future. America has more than enough wind and solar to power everything – including transportation – dozens of times over. The key to capturing this potential is doubling down on the big solutions that are working better, cheaper, and faster than anything else.

[1] Solar Energy Industries Association, Solar Market Insight 2015 Q3, Executive Summary, December 9, 2015.

[2] U.S. Energy Information Administration (EIA), State Electricity Profiles, Table 10: Supply and Disposition of Electricity, July 10, 2015 update.

[3] U.S. EIA, Annual Energy Outlook 2015, Reference Case, Table 8: Electrical supply, disposition, prices, and emissions.

[4] Department of Energy, 2014 Wind Technologies Market Report, Ryan Wiser and Mark Bollinger, August, 2015.

Electricity towers and wind turbines

“Interconnected:” Transmission Networks Key to EPA Clean Power Plan Final Rule

If you had to choose one word to sum up EPA’s 1570-page Clean Power Plan (CPP) Final Rule, released on August 3rd, “interconnected” would be it.  According to EPA, the key to cutting the carbon footprint of America’s electric system by almost one third over the next 15 years is the nation’s interconnected high voltage transmission system. The final rule uses some form of the word “interconnected” more than 80 times – mostly in the first few hundred pages that explain the rationale for the overall approach of the regulation. EPA seems determined to remind us that despite recent growth in distributed generation and lots of talk about “going off the grid”, the “interconnectedness” of our grid is, in fact, indispensable to cutting carbon emissions in the fastest, most economical, and least disruptive possible manner. Why?

  • Transmission networks allow vast, but remote, wind and solar resources to be developed and delivered to customers reliably and at large scale and low cost.
  • The interconnected grid is infrastructure for markets that fosters competition and resource diversity over large regions – cutting prices and improving reliability.
  • States connected by transmission lines can work together to achieve their emissions targets much faster and at lower cost than they could by working alone.

To reap the full benefits of the interconnected grid, EPA strongly encourages states to cooperate on multi-state compliance strategies. Those benefits are very large, according to recent studies by three of the nation’s largest regional transmission organizations (RTOs) – which together provide electricity to 124 million people in 28 states.  “For a state-by-state compliance approach, the capital investment cost and energy production cost totaled about $3.3 billion per year. The total capital investment cost and energy production cost for a regional approach is about $2.4 billion,” said Lanny Nickell, Engineering Vice President for the Southwest Power Pool (SPP), “It is almost a 40% savings associated with complying on a regional basis.”[1] SPP’s July 27 State-by-State Compliance Assessment Report concludes that “state-by state compliance plans will be more costly and will present more uncertainty and complexities for SPP stakeholders,” and further that “a regional approach to compliance would be more cost effective and less disruptive than a state by-state approach and may provide mutually beneficial opportunities that are not available within state boundaries.”

Previous studies by the Midcontinent Independent System Operator (MISO) and PJM Interconnection reached remarkably similar conclusions. MISO’s November, 2014 Analysis of EPA’s Proposal to Reduce CO2 Emissions from Existing Units found that “regional compliance is approximately 40% less expensive: $55 billion (regional) vs $83 billion (sub-regional),” equivalent to savings of $3 billion per year during the compliance period. The PJM Interconnection’s March, 2015 Economic Analysis of the EPA Clean Power Plan Proposal concluded that “state-by-state compliance options, compared to regional compliance options, likely would result in higher compliance costs for most PJM states. This is because there are fewer low-cost options available within state boundaries than across the entire region.”

EPA’s CPP Final Rule embraces precisely the same reasoning as the RTO studies: “The final rule more realistically recognizes that emission reduction opportunities, like other aspects of the interconnected electricity system, are regional and are not constrained by state borders.”  In other words, regional compliance is cheaper and faster for the simple reason that working together gives states access to more inexpensive compliance options. Regional transmission makes this type of cooperation possible; regional markets enhance it further.

Interstate transmission networks are critical infrastructure for complying with the CPP’s 2022 and 2030 targets, but even more important for achieving the long term emissions cuts – 80 percent or more by 2050 – needed to avert catastrophic climate change impacts. Numerous recent studies show that it’s economically and technically feasible to power the U.S. electric system with 80 to 100 percent renewable resources, but only if transmission networks are expanded and upgraded to accommodate new resources. The mismatch between the timelines for building new and upgraded high voltage lines – 8 to 10 years or more – and the timelines for building utility scale renewable energy facilities – 1 to 2 years – has been well documented by ACEG and many others over the past several years. Building this infrastructure will take time, unprecedented cooperation among states and federal agencies, and perhaps even additional policy reforms. The CPP provides states with a framework and new incentives to start planning and building the interconnected clean energy grid we need sooner rather than later; policy makers, regulators, utilities, clean energy developers, ratepayers, and environmental advocates all have an interest in making sure that they use them.

[1] Trabish, Herman K. “How regional compliance can help states meet EPA emissions targets faster and cheaper.” Utility Dive. Industry Dive. August 19, 2015. Web. August 2015.

Steven Bohn, an engineer at SunEdison oversees SunEdison's testing facility at SolarTAC in Aurora, CO. SunEdison is an Original Founding Member of SolarTAC. SolarTAC is an integrated, world-class test facility where the solar industry will test, validate, and demonstrate near-market solar technologies.The Solar Technology Acceleration Center is an integrated, world-class test facility where the solar industry will test, validate, and demonstrate near-market and advanced solar technologies.  The SolarTAC mission is to increase the efficiency of solar energy products and rapidly deploy them to the commercial market.

Stanford Study: U.S. Can Move to 100% Renewable Energy MUCH Sooner Than You Think. Transmission Infrastructure is Critical.

Powering everything in America with renewable energy by 2050 – including transportation – is economically and technically feasible using existing and proven technologies, according to a new study by Mark Jacobson and colleagues at Stanford University.  As scientific evidence grows that avoiding catastrophic climate change impacts might actually require the U.S. and other countries around the world to transition to a 100% renewable energy system (or something very close to it), Jacobson’s study provides a much needed, practical, and high level vision of how the U.S. could achieve it.  Three findings of the study stand out:

  • More than 90 percent of renewable generating capacity is utility-scale – including a large majority of solar PV; virtually all generation is connected to the grid.
  • Transmission and non-battery storage balance the natural variability of wind and solar to provide 24/7/365 power to everyone, everywhere.
  • Electrifying everything, including transportation, together with energy efficiency, demand response, and distributed generation make are essential to the ultimate goal.

Bigger is Better and Cheaper

The welcome and highly visible recent explosion of rooftop solar sometimes obscures powerful economies of scale at work in renewable energy.  Utility scale photovoltaics (PV) produce power at half the cost of rooftop installations.  Wind power is only economical at large scales.  The overwhelming majority of solar and wind power produced in the U.S. today comes from grid-connected, large scale facilities owned by or under contract with utilities.

US renewables

Source: The Solutions Project 

Jacobson’s vision of the future is no different, with large scale renewables providing about 93 percent of the power: 50 percent wind (30.9% onshore; 19.1% offshore); 30.7% utility-scale (PV), 7.3% concentrated solar power (CSP) with storage, 7.2% rooftop PV, 1.25% geothermal power, 0.37% wave power, 0.14% tidal power, and 3.01% hydroelectric power.

Transmission and Non-Battery Storage Smooth Out Variability

How does Jacobson turn myriad variable renewable generators into smooth and reliable 24/7/365 power in all 50 states?  Transmission and storage – batteries not included.  Transmission lines slash natural variability by blending diverse wind and solar resources over large regions:

“. . . while the study bases each state’s installed capacity on the state’s annual demand, it allows interstate transmission of power as needed to ensure that supply and demand balance every hour in every state. We also roughly estimate the additional cost of transmission lines needed for this hourly balancing.”

More transmission, Jacobson notes, would make it even easier and cheaper to achieve 100% renewable energy, by allowing the best quality, least cost resources to serve more customers in more states:

“ . . . if we relax our assumption that each state’s capacity match its annual demand, and instead allow states with especially good solar or wind resources to have enough capacity to supply larger regions, then the average levelized cost of electricity will be lower than we estimate because of the higher average capacity factors in states with the best WWS resources.”

Storage and demand response take care of the remaining variability – but not batteries – which are exclusively reserved for their higher value use in transportation:

“Solutions to the grid integration problem are obtained by prioritizing storage for excess heat (in soil and water) and electricity (in ice, water, phase-change material tied to CSP, pumped hydro, and hydrogen); using hydroelectric only as a last resort; and using demand response to shave periods of excess demand over supply. No batteries (except in electric vehicles), biomass, nuclear power, or natural gas are needed.”

Small is Still Beautiful – and Essential

Despite outsized roles for utility scale renewables and transmission, energy efficiency, distributed generation, and smart technologies to enable demand response remain as large and essential elements of Jacobson’s vision.  Efficiency alone reduces projected 2050 electricity demand by 39.3% – even as every end use, including transportation, converts to electricity.  Power supplied by distributed rooftop solar explodes from a fraction of one percent today to more than 7 percent in 2050.  Demand response plays a critical role in balancing variability. Finally, Jacobson deploys a suite of flexible low-cost resources to maintain high power quality:

“Frequency regulation of the grid can be provided by ramping up/down hydroelectric, stored CSP or pumped hydro; ramping down other WWS generators and storing the electricity in heat, cold, or hydrogen instead of curtailing; and using demand response.”

And It’s All Free

A 100% renewable energy system is actually better than free – a lot better.  The study estimates that by 2050, converting the U.S. to 100% renewable energy would, compared to business-as-usual:

  • Save the average U.S. consumer $260 per year in total energy costs (including transportation);
  • Produce a net gain of 2 million, 40-year energy sector jobs (accounting for fossil fuel job losses);
  • Eliminate 46,000 to 62,000 premature deaths or $600 billion per year due to air pollution; and
  • Avoid $3.3 trillion in worldwide global warming costs due to U.S. emissions.

The future energy system for the U.S. and the world looks clearer every day – all electric, all renewable, and all running on robust and sophisticated continental grids.  No it’s time to start building it.

Wind_Generated_Transmission

The Clean Energy Case for Transmission Has Never Been Stronger

This article was written by Bill White and John Jimison and was originally published on Greentech Media.

In the two years since we outlined how smarter transmission policy could accelerate and reduce clean energy costs in America’s Power Plan, evidence continues to mount that robust high-voltage transmission networks are indispensable to a clean energy future.

Smart transmission planning has enabled most of the wind and solar now operating in the United States and has done so while generating large net economic benefits; one study estimated that co-optimizing generation and transmission planning could save an incredible $90 billion.

But transmission expansion isn’t happening fast enough. Scientists say avoiding catastrophic climate impacts requires slashing global carbon emissions 80 percent or more by 2050. While wind and sunlight can power our nation’s homes and businesses, they can’t be moved in pipelines or rail cars — electric transmission lines are essential, and inadequate transmission remains the principal barrier to potentially explosive renewable energy growth.

So how do we clear this hurdle to our clean energy future?

The Lone Star State shines

Texas provides the best example of how new transmission facilitates renewable energy development. The state’s 2005 Renewable Energy Program directed the Public Utilities Commission (PUC) to identify Competitive Renewable Energy Zones (CREZ), geographic areas where wind generation facilities would be constructed. In 2008, the PUC unveiled a plan to build 3,600 circuit miles of new and upgraded high-voltage lines to deliver 18,500 megawatts of wind energy to Texas consumers.

Completed in 2013, the CREZ lines had connected 14,098 megawatts of wind generating capacity by the end of 2014 — more than one-fifth of all U.S. wind power. Texas added 1,800 megawatts of wind in 2014 alone, more than the installed wind capacity in 39 states. By the end of 2016, Texas installed wind capacity will reach 21,200 megawatts — surpassing the CREZ target by almost 3,000 megawatts.

But wind isn’t the only beneficiary of CREZ transmission. Utility-scale solar photovoltaic facilities — not even part of the original plan — are rushing to connect to the CREZ lines. The Electric Reliability Council of Texas predicts 6,000 megawatts of solar PV generation will come on-line by 2017, catapulting Texas to second in the nation in solar capacity, behind only California.

The economics of Texas’ CREZ make this remarkable story even better. CREZ cost $6.8 billion, but the transmission lines and renewable energy they enable are saving ratepayers $1.7 billion a year in electricity production costs, creating more than $5 billion in economic development benefits and cutting electric-sector carbon emissions 16 percent.

Bottom line: CREZ transmission lines are rapidly paying for themselves and will deliver huge net economic and environmental benefits for decades.

Smart transmission planning benefits across America

Texas isn’t the only place where transmission lines are unlocking renewable resources. California’s Renewable Energy Transmission Initiative identified transmission projects needed to meet the state’s aggressive 33 percent by 2020 renewable energy standard. San Diego Gas & Electric’s Sunrise Powerlinkwas energized in 2012, and in just two years added more than 1,000 megawatts of renewable energy to the utility’s portfolio, increasing its renewable share from 12 percent to 30 percent.

The Midwest Independent System Operator approved seventeen 345-kV transmission lines across nine states at a cost of $5.2 billion to help cost-effectively meet regional renewable energy goals. MISO estimates the so-called “MVP” projects will enable 43 million megawatt-hours of wind energy, reduce carbon emissions between 9 million and 15 million tons per year, improve system reliability, and generate up to $49.6 billion in net economic benefits over the next 20 to 40 years.

Solving the transmission-renewables mismatch

Successes like these prove renewables can grow rapidly at low cost — if transmission is built to connect them. However, the seven- to 10-year lead times for planning and building transmission and one- to two-year lead times for building renewable generation continue to intimidate wind and solar development across the country, despite welcome policy reforms like FERC Order 1000. Developers can’t build large new wind or solar resources unless new transmission capacity needed to deliver their power to customers has been planned years in advance.

Lack of transmission infrastructure also prevents resource-rich states like New Mexico (11th in wind potential, 2nd in solar potential) from exporting huge amounts of high-quality, low-cost wind and solar. Senator Martin Heinrich (D-NM) recently introduced legislation to restore federal backstop authority to site transmission lines, noting similar federal authority has expedited siting of thousands of miles of natural gas pipelines in recent years. From the Dakotas to Arizona, wind and solar resources capable of powering everything in the country dozens of times over remain untapped due to insufficient transmission.

A 2014 update to NREL’s 2012 Renewable Electricity Futures Study found if today’s cost trends continue, an 80 percent renewable energy future is technically feasible and may cost no more than business as usual, not to mention the multi-trillion-dollar public health and environmental benefits. And the cheapest generation, by far, is utility-scale.

The transmission imperative is clear. Now let’s help every region of the country embrace what forward-looking regions have shown: if they take proactive steps to permit and finance transmission infrastructure, the low-cost renewable resources will come.

***

Bill White is president at Norton White Energy and Senior Advisor to Americans for a Clean Energy Grid (ACEG) and John Jimison is managing director of the Energy Future Coalition, which hosts the campaign for ACEG. Both are contributing authors to America’s Power Plan.

 

 

990286_45374245

Rooftop Solar is Great, But the Grid is the Real Key to Giving Everyone Clean Power

Bill McKibben (“Solar Power for Everyone,” June 29th) is right that cheap solar energy is hopeful news for the climate, but no one should conclude that it will render our integrated electric grid or the utilities that own and operate it obsolete.  Energy efficiency and rooftop solar are essential, but expanding the grid to tap remote but rich wind and solar resources is the fastest and cheapest way to remove carbon from electricity.

Nearly all of America’s solar and wind power is purchased today by utilities from large scale facilities connected to the grid, with good reason: utility-scale solar farms produce electricity at half the cost of small rooftop systems.  Wind economics are only compelling at large scale and with large groups of turbines, not as distributed resources.   Almost every household in America with solar panels – including the Borkowskis – still gets most of its electricity from large regional power grids.

Transmission networks are also much more efficient than batteries at smoothing out the natural variability of wind turbines and solar panels.  Grid engineers now blend wind and solar from sources scattered over thousands of square miles into steady and reliable power.  It turns out that the sun is shining or the wind blowing someplace almost every hour of every day – the key is having a network capable of collecting that energy and delivering to where it’s needed.

The ability of transmission to accelerate renewable energy deployment is a fact supported by a mountain of real world evidence, not speculation about future breakthroughs.  Texas built transmission to develop its immense wind resources and is now home to one fifth of the nation’s wind energy.  Large scale wind and solar facilities connected by California’s Renewable Energy Transmission Initiative are much more important than rooftop solar to achieving the state’s 33% by 2030 renewable energy target.  In both cases, transmission investments are paying for themselves quickly by delivering renewable energy to customers at net savings.  Mark Jacobson at Stanford University recently showed 100 percent renewable energy by 2050 to be technically and economically feasible in all 50 states; more than ninety percent of the energy he would have us call on is grid-connected wind, solar, and hydropower.

We share Mr. McKibben’s optimism that we can provide everyone, everywhere with affordable carbon free energy in time to avert a global climate catastrophe; but only if we use ALL of the resources at our disposal, especially the grid.

Transmission and Renewable Energy Industries, Environmental Groups, and Utilities join ACEG’s call to expand and modernize America’s high voltage transmission network to unlock clean energy.

The WIRES Group, the Natural Resources Defense Council, Berkshire Hathaway Energy, the American Wind Energy Association, and more than a dozen other companies, utilities, and advocacy organizations joined Americans for a Clean Energy Grid this month in calling for policy reforms to expand and modernize the nation’s high voltage electric transmission system.   Seventeen companies and organizations expressed their support for comments submitted this month by ACEG to the Department of Energy’s Quadrennial Energy Review.  ACEG’s comments made the strong case that a robust and modern high voltage transmission network is indispensable to fully developing America’s vast renewable energy resources and to make the grid more efficient, reliable, and secure.

  1. High voltage transmission expansions and upgrades deliver diverse benefits by making the grid more reliable, secure, and resilient, giving consumers broad access to diverse low cost, low carbon resources, and enabling efficient and competitive electricity markets.
  2. “Transmission first” policies are key to achieving rapid, large scale development of high quality and cost-effective renewable energy resources.
  3. Defining renewable energy zones, using information to anticipate and avoid resource conflicts, and engaging stakeholders can reduce the environmental impacts of essential transmission investments and expedite their approval.
  4. Optimizing operation of the transmission system delivers economic, reliability and environmental benefits at low additional cost.
  5. Updating market rules will remove barriers to the full utilization of the high voltage network.
  6. Transmission planners should fully consider all cost effective demand side and distributed resources (e.g. energy efficiency, distributed generation, demand response, storage, and distribution system upgrades) to ensure that transmission investments are efficient, coordinated and supported by customers.
  7. Inadequate high voltage transmission is already constraining renewable energy development and making it less efficient.
  8. The most critical interstate and interregional transmission investments are proceeding too slowly to meet national economic and environmental goals.

President Obama established the QER in January to:  “provide an integrated view of, and recommendations for, Federal energy policy in the context of economic, environmental, occupational, security, and health and safety priorities.”  The first QER report will focus on challenges facing the Nation’s energy infrastructures, and is expected to be available by end of the year.

Here’s the full list of supporters of ACEG’s QER comments as of October 23rd, 2014:

 

QERSigners

 

The five most important names in renewable energy that you’ve never heard of

Cross-posted from Grist.

our_outdated_grid

Five people will make a decision soon that will have an outsized impact on the future of renewable energy in America. I’m not talking about big shots like Obama, Koch, Boehner, Bloomberg, or Steyer. I’m talking about names many have never heard of:  Moeller, Norris, LaFleur, Clark, and Binz (if he is confirmed). These are the chief electricity officers of the United States of America — they are the commissioners of the Federal Energy Regulatory Commission (FERC).

You’ve probably heard this before: “Scientists agree that in order to avoid the worst consequences of climate change, we must generate 80 percent of our energy from renewable sources by 2050.”  No single entity will play as crucial a role as FERC in ensuring that the infrastructure exists to handle new renewable energy generation.

President Obama’s climate plan is a courageous step forward and deserves the widespread media coverage it has received. But only the acceleration of utility-scale renewable energy projects can take us where we need to go.

Modernizing our nation’s power system is a daunting task, but there are good reasons to be optimistic. America has enough wind and solar to power the entire country more than a dozen times over. And with the cost of wind and solar going down every day, rapid development of large-scale generation projects appears inevitable.

But if you place the map of regions with the best wind and solar energy on top of a map of our current transmission system, you won’t find too much overlap. Transmission is the key to unlocking America’s virtually unlimited renewable resources and delivering their energy to users.

Unlike our interstate highway system, which is funded by taxpayers, high-voltage transmission lines are built with private capital. Investors will put money into transmission projects as long as they generate returns that are attractive relative to similar types of investments. This is where FERC steps in. They set the return on equity (ROE) for transmission projects across the nation.

As you might imagine, the higher the ROE, the more incentive there is to build transmission. A company would never invest in our grid if the maximum ROE was 1 percent — meaning it would take 100 years to recoup the costs of a project. And if it was 100 percent, we would end up building much more transmission than we need and sticking consumers with the bill.

Recent history also tells us that the cost of inadequate transmission is steep. Electric customers are still paying billions of dollars per year for congestion, poor reliability, and overpriced power from dirty, outdated, and inefficient power plants — all of which are the direct result of three decades of underinvestment in transmission. Renewable energy was locked out of a strained and inadequate grid. In the mid-2000s, FERC recognized the chronic neglect of transmission investments as a major burden on ratepayers and a barrier to modernizing our electric system, and stepped in to raise transmission ROEs.

That decision helped spur a wave of new transmission investments that are reducing costs to consumers and expanding access to renewable energy. For example, the Midwest ISO has begun a new set of transmission lines called the MVP projects. The average consumer is seeing $23 in savings for every $11 spent on these new lines.

Why is transmission such a great deal for electric customers? It’s the smallest part of an electric bill — 11 percent on average — compared with 58 percent for generation and 31 percent for distribution. Transmission pays for itself quickly by relieving costly congestion, moving cheap and clean renewable power to customers, making the grid more reliable and secure, and putting old and inefficient power plants out of business. Simply put, transmission is essential infrastructure for competition, consumer choice, economic efficiency, and environmental protection.

Despite the well-documented value that transmission investments deliver to ratepayers and the environment, FERC has been hearing complaints recently that ROEs for transmission projects are too high, and that ratepayers need relief. These complaints are misguided, and their timing could not be worse. Never in our history has so much depended on expanding and modernizing our electric transmission system.

Our chief electricity officers may never get the ROE for transmission “just right”; the uncertainty of markets, interest rates, and the economy probably make that lofty goal impossible to achieve. But they can — and they must — ensure that ROEs remain at levels that ensure a steady and stable flow of private capital into urgently needed transmission investments. Failing to do so would stall renewable energy development and with it progress on reducing emissions, and would increase the cost of electricity for everyone.

The president’s climate plan is moving forward. State renewable energy standards are helping expedite that progress. The falling costs of wind and solar are driving growth. But none of that will matter if the infrastructure to deliver renewable energy to customers is not built.

Five FERC commissioners will make a little-noticed decision in the near future, one that will either keep us on the right track, or throw a major obstacle — one that we can ill-afford — on the road to achieving our nation’s renewable energy future and stabilizing our world’s climate.

Bill White manages Americans for a Clean Energy Grid for the Energy Future Coalition. During the Clinton administration, he served as senior advisor to EPA Administrator Carol Browner.

 

Electric power lines and transmission towers in Denver metro area

Call the CDC: Anti-Renewable Fever has the Wall Street Journal Opposing Competitive Markets

Anti-Renewable Fever has the Wall Street Journal Opposing Competitive Markets
by Bill White, February 19, 2013

It’s been a difficult flu season, but even the Centers for Disease Control (CDC) did not see this coming: an anti-renewable energy fever so severe that the editors of the Wall Street Journal (WSJ) are now opposing policies that would create more competitive electricity markets.

A recent diatribe from the fossil fuel-loving editorial board contained all the familiar symptoms: bellyaching about wind power “subsidies”; blurring of federal and state policies; and delirious attempts to make old arguments new. The WSJ’s editors are now so disoriented that they are denying the benefits of free and competitive electricity markets, and opposing efforts to expand them.

Let’s hope some healing facts will prevent this bug from spreading to healthy media outlets.

Transmission lines are the backbone of competitive electric markets, which save consumers and businesses billions of dollars every year. They’re also the smallest part of any customer’s electricity bill – about 7 percent on average. Generation – the cost of power plants and the fuel they use – accounts for about two thirds of the average bill, or almost ten times as much. Transmission is the only way to move power from the best renewable resources – the windiest and sunniest places – to where that electricity is needed. Delivering that cheap power into competitive electricity markets drives prices down for everyone.

The Journal ignored these basic market realities when they chose to dig into a complaint by Interstate Power & Light (IPL), a traditional monopoly utility, related to transmission costs.

Here are the facts:

• The transmission upgrades being contested by IPL, like all high-voltage transmission lines, are open to any electric power generator connected to the grid: coal, natural gas, wind, hydro, oil, or nuclear.

• Midwestern states are promoting transmission investments to allow local clean resources like wind to compete on an equal footing with outdated, inefficient, and dirty power plants owned by monopoly utilities.

• Wind is winning this increasingly fair fight in the marketplace: 42 percent of new electricity generating capacity installed in the U.S. in 2012 was wind, more than natural gas, and more than coal, nuclear, oil, and hydropower combined.

• Governors and state legislatures – not the Obama Administration – have enacted laws requiring more renewable energy on their electric systems. Thirty-seven states, nineteen of which with Republican Governors, have mandatory renewable portfolio standards (RPS) or voluntary goals. There is no federal RPS.

• Iowa got 20 percent of its electricity from wind in 2012 – the most of any state in the country – and has the lowest electricity prices of any state in the Midwest.

Transmission lines have broad bipartisan support across the country for good reason. Twelve states from Montana to Ohio recently approved a plan to share the costs of 17 critical transmission lines which will save ratepayers tens of billions of dollars in power costs by allowing cheap wind energy to displace power from inefficient, expensive, and dirty power plants. Michigan ratepayers, who today face the highest electricity prices in the region, will reap savings on their electric bills equivalent to two to three times the cost of these lines. That’s a welcome rebate made possible by a modern and efficient grid, competition, and cheap clean energy – not a stealth tax.

Fair and competitive markets are strong medicine for incumbent utilities pampered for decades on a steady diet of rich monopoly profits. Blocking the infrastructure needed to facilitate those markets – like cutting off the internet or closing roads – is not the path to long term economic success for the nation or lower prices for customers. We’re not sure what the CDC would recommend, but our advice to WSJ editorial board is simple: swallow the bitter pill of free market competition, and call us in the morning.