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.

transmission blue sky single

EPA Accelerates Progress toward a Clean Energy Grid

The EPA bid farewell to 2011 by permanently closing a long chapter in the history of our nation’s electric grid and opening a new one. The agency’s new rules restricting mercury and other toxic emissions will shutter some of our nation’s oldest, dirtiest, and wasteful coal and oil-fired power plants and move us toward a cleaner, safer and smarter electricity system.

The rules affecting these power plants were exempted from Clean Air Act rules enacted more than 40 years ago because policy makers expected them to shut down in the near future. Now ancient, many of these plants are still spewing pollution with devastating health and environmental impacts. Public health experts say that closing these plants will prevent up to 11,000 premature deaths, 4,700 heart attacks and 130,000 asthma attacks every year.

Obviously this is a major victory for public health and the environment, but it is also a quantum leap in the evolution of our electric grid. These antiquated power plants didn’t just influence the types of power we use, they actually dictated the way the current grid was built. In almost every case, these plants were built by traditional monopoly utilities that decided which plants to build and where to build them, and simply built whatever transmission was needed to connect them to the grid and deliver their power to customers. All of these costs were then passed on to ratepayers.

Shuttering these plants decades after ratepayers have fully paid for them is a big deal for their owners, who reap fat profits from keeping them online. Their alarmist claims about the risks of shutting them down, though not surprising, are baseless. Numerous studies have shown the EPA rules pose no threat to grid reliability or adequate power supplies. In fact, the rules accelerate the historic transformation of our electricity supply that is already under way. Retiring old coal plants paves the way for developing cleaner, cheaper domestic resources that can meet growing electric demand. Renewable electricity, our nation’s richest energy resource, can meet that demand if we build a grid that can tap into it.

The main obstacle to developing our virtually unlimited renewable energy resources is building the transmission to deliver them from the remote places where they are most cost-effective and abundant – the Great Plains, Southwest, and offshore – to population centers where they are needed. A close second last year to natural gas among new generation sources, renewable power is competitively priced, fast to build, and has a proven record of reliability. The EPA rules make the case for building transmission for renewable energy more compelling than ever. The rules should also allay concerns that new transmission lines would unintentionally give new life to old and dirty power plants because it ensures most of them will cease to exist.

The EPA’s announcement comes close on the heels of another landmark policy for our electricity system: FERC Order 1000. Issued in July, this rule gives grid planners new tools for working across arbitrary regional barriers that for decades have prevented interstate transmission lines that could get remote renewables to market from getting built. Order 1000 also requires planners to consider public policies, such as renewable energy standards and environmental regulations, when deciding what to build and where.

Taken together, these rules give regional planners the tools and information to work together and identify the best strategic investments to modernize our grid. A stronger, smarter and more efficient electric system that promotes competition is what we need to reduce rates, improve reliability, and develop the clean, domestic resources that can fuel our nation for the next 30 years and beyond.