The Rocky Mountain Clean Energy Transmission Summit is behind us and what an event it was! Headlined by an impressive host of public and private sector leaders, journalists, and other energy and transmission experts, over 100 attendees participated in our Denver summit.
Owing to a remarkable array of perspectives and experiences, conversations covered many issues, offering unique solutions to though problems.
But one message seemed to carry over the rest—a message that moderator and Senior Editor at High Country News wrote about later in his article, Transmission: the missing link in the renewables revolution.
In the critical context of climate change and renewable energy, the argument for transmission is as follows: in order to cut carbon to the level we must by 2050, we need 100,000 MW of renewable power. That necessitates at least 25,000 miles of new high voltage transmission. In other words, we need enough transmission to cross the country, going east-west, over 9 times. But those wires are not easy to put up. In fact regulators, nationally, regionally and locally can make putting up transmission a long and difficult process, despite being easier than it has been in years past as a result of FERC Order 1000.
On top of all that, to connect renewables—which often are located in rural areas—to urban centers you need to put up transmission, transmission must be built to cross those rural areas. Often, that means going through the wilderness. And that has turned many environmentalists, who would otherwise support the infrastructure that is needed for renewable power, against it.
And there are many other groups who have their own issues with new transmission.
So this is the task at hand: to find a way to address complex regulation and the concerns of all those affected by new transmission so that we can find a way to build the infrastructure needed to avoid the worst effects of climate change.
As one can see, this is exactly why getting stakeholders in the same room as experts who represent many backgrounds—from government to contractors to environmentalists—is critical to progress.
In that vein, we’d like to extend a massive thank you to our sponsors, speakers, moderators, and attendees who made the Denver event a great one.
We hope that you’ll be able to join us at our next event. Stay tuned.
Cross-posted from AOL Energy, published 11/13/12.
It’s All Connected – Regional Transmission Planning in the Southeast
by Bill White
More than two weeks have passed since Hurricane Sandy brought the Eastern Seaboard to a standstill. Although life is slowly returning to normal, Sandy joins a long series of painful reminders of how dependent 21st century America is on reliable electricity: it powers nearly every facet of our lives. The potential silver lining in the wake of Sandy’s devastation is the influx of interest in our outdated and inadequate transmission grid, highlighting long ignored issues from the benefits of buried transmission lines to the importance of an integrated, redundant, resilient grid – built to withstand even Sandy’s fury.
A robust and modern electric grid is also essential for taking advantage of America’s unmatched renewable energy resources. Wind and sunlight cannot be delivered to customers from their best sources – mostly remote areas and offshore – using railcars and pipelines like coal, oil, and gas; they need transmission lines. In the Southeast, where wind and solar are relatively scarce, transmission lines are critical for bringing cheap and abundant renewable resources from other regions. The Tennessee Valley Authority (TVA), which provides power to nearly all of Tennessee and other Southeastern areas, is now importing wind power from eight wind farms in the Midwest. Alabama Power, a subsidiary of Atlanta-based Southern Company, last year made one of the largest wind purchases ever from producers in Oklahoma.
Several changes under way promise to accelerate the nascent interregional “trade” in cheap renewable energy. Dozens of outdated and inefficient coal plants across the Southeast will be shutting down over the next several years as new air pollution rules take effect; businesses and consumers are demanding more clean energy; and vehicle electrification is growing rapidly, especially in the Southeast. Nearly three percent of electric vehicles sold in the United States this year were registered in Tennessee. Not coincidentally, almost all of these were Nissan Leafs – soon to be manufactured at a plant in Smyrna. But electric vehicles are only as green as the power plants that charge them, and in the Southeast today, coal generates about half of the electricity. How the region invests in transmission will largely determine whether the power from retiring coal plants will be replaced by renewable resources.
A new planning framework unveiled last year by the Federal Energy Regulatory Commission, Order 1000, asks utility transmission planners to work together to solve the transmission challenge across large regions by avoiding duplication and building only those upgrades needed to strengthen the grid, improve reliability, increase efficiency, and integrate large amounts of renewable energy.
Additionally, Swiss engineering firm ABB Group announced a technological breakthrough last week that could solve the problem of transmission losses over very long distances. ABB’s new circuit breaker for high-voltage DC lines – far more efficient than AC lines over long distances – will allow large amounts of renewable electricity to be delivered over thousands of miles, for instance, from Iowa to Tennessee.
Americans have always responded to crises by replacing what was lost with something better, stronger, and smarter: building an even stronger foundation for future growth and prosperity. Let’s not wait for the next Sandy to modernize our electric grid – our most important infrastructure investment for the future of the Southeast – and the nation.
Bill White is a Senior Vice President at David Gardiner & Associates, with more than fifteen years of managing public-private partnerships advancing action on energy and climate change.
This article originally appeared on ThirdWay.org on August 2, 2012.
The unexpected storms that knocked out power to millions in the Midwest and Mid-Atlantic earlier this month highlighted how fragile America’s electric grid is. But while front page photos of fallen trees and utility repair trucks capture people’s attention, there’s a much more grave and fundamental threat to our electric grid.
The U.S. grid system was born in the 1920s, and has seen few major upgrades since the 1960s. With America’s growing population and exploding demand—bigger houses, A/C units, TVs, iThings—we have serious congestion and inadequate capacity on our nation’s power lines. This has led to more frequent power outages, which cost the American economy well over $100 billion each year. The inefficiency of our old-fashioned grid also leads to enormous waste through “line loss.” In 2010, 6.6% of the electricity generated in the U.S. simply disappeared before it could reach consumers. That’s $25.7 billion worth of electrons, lost into thin air.
Investing in grid modernization would clearly save American consumers tremendous amounts of energy and money. So why aren’t we doing more of it?
One reason is that these projects are just plain difficult to carry out. Siting and constructing power lines usually requires a utility to go through environmental regulators and public utilities commissions for each state they cross, as well as federal regulators and local governments. These regulations are intended to provide important benefits or protections for ratepayers, communities, public safety, and the environment. But they rarely line up well with one another and are, at times, contradictory.
An equally complicated barrier to grid modernization is figuring out exactly who should pay for it. The power grid is owned and operated by about 500 individual utilities, some large, some small, some private, some public. And the grid is totally interconnected, so if one utility does work to improve its segment, the benefits often flow to utilities and consumers somewhere else. It’s the standard “freeloader” problem.
Despite these challenges, one particularly creative transmission project appears to be threading the regulatory needle—and could possibly serve as a model for other desperately needed grid improvements. If it receives final approval by state and federal agencies, the Champlain Hudson Power Express (CHPE) will connect up to 1,000 MW of wind and hydro power from Canada and upstate New York to energy-hungry New York City. This renewable energy, when added to the clean nuclear and natural gas plants that already power the city, will reduce congestion and other strains on the grid—improving service for families and businesses in this service area. In addition to creating 2,000 jobs in New York State, this project is expected to reduce acid rain pollutants by hundreds of tons and lower New York’s annual carbon dioxide emissions by 9%. And perhaps most importantly, CHPE will directly benefit consumers, saving ratepayers a whopping $600 million each year.
All of the costs of developing the CHPE will be paid by third-party investors who will be repaid by power generators that utilize the lines once the project is finished. This financing method avoids the stalemate that often results when utilities are left to cover costs and seek reimbursement through politically complicated rate increases. Knowing the “not in my backyard” resistance generated by giant transmission towers normally used for such projects, CHPE’s owners chose less-intrusive infrastructure to smooth its regulatory path. Their system will consist of two power lines roughly the diameter of coffee cans running 333 miles—mostly buried in Lake Champlain, the Hudson River, and along railroad tracks—using construction techniques that garnered the approval of local environmental organizations. So by planning ahead and collaborating with major stakeholders over a period of four years, CHPE’s investors have found a way to streamline compliance with multiple regulations, expedite permitting, and ultimately save money.
The U.S. needs to resolve the state and federal regulatory issues that make siting power lines and recovering the cost of grid investments prohibitively difficult. Our interconnected grid system can no longer be regulated as it was a century ago, when each utility operated its own power lines. To manage a regional system, we’re going to need regional coordination and authority that, in limited situations, supersedes that of the states. Until this type of legislative fix is made, let’s hope that CHPE and other equally creative projects are able to thread that needle.
Industry leaders have expressed a variety of opinions regarding the size of various clean energy projects that should drive development of this market. However, Seth Kaplan, VP for Policy and Climate Advocacy at the Conservation Law Foundation, asserts that we need to create both a vast network of distributed solar on millions of rooftops as well as smart development of large solar. Additionally a wide array of technologies will be needed to address global warming for all buildings types, sidewalks to allow safe travel on foot, shareable bicycles, renewable energy powered electric cars, trains that connect cities and neighborhoods, and intelligently sited wind farms and solar installations on and off-shore.
In addition to searching for new solutions, we need to recognize the ones that warrant phasing out such as old nuclear power plants that have safety issues and have proven to be expensive. Solar electric generation, on the other hand, holds a lot of potential as the price continues to descend at a steep rate: it creates many new opportunities to deploy solar electric generation on a variety of scales, including large – and sometimes extra large – scale solutions on land as well as small and medium scale solutions on rooftops.
To read the article, click here: http://www.clf.org/blog/clean-energy-climate-change/clean-energy-solutions-needed-small-medium-large-and-extra-large/
For Immediate Release
Thursday, October 13, 2011
Contact: Jennifer Mullin
WASHINGTON, D.C. – Americans for a Clean Energy Grid Senior Adviser, Bill White released the following statement today prior to a U.S. House Energy and Power Subcommittee hearing on electricity transmission and recent actions by the Federal Energy Regulatory Commission (FERC):
“It is encouraging that House lawmakers are taking a closer look at the numerous issues around transmission development today. Building transmission in this country has become an onerous and often overly contentious process that has kept the full scale deployment of clean energy at bay, and hurt consumers and businesses who deserve access to cheaper electricity and a more reliable grid.
“Two of the biggest challenges to building a more modern grid are planning and cost allocation, both of which were addressed in the new Federal Energy Regulatory Commission (FERC) rule – Order 1000. The modest changes made by Order 1000 build upon progress that regions throughout the country are already moving forward with, including recognizing the broad benefits of a robust grid, opening up access to competitive energy markets and tapping domestic resources that can lower electricity prices. These reforms reflect the natural progression of our electric grid toward a more strategically planned system that can accommodate the United States’ vast, underutilized domestic energy resources.
“Order 1000 gives deference to the regions to develop plans that fit their unique circumstances. It is not a one-size-fits-all approach. However, it is a game changer for a small number of incumbent utilities that benefit from the current, broken system that protects high cost generation and holds many ratepayers captive to artificially high electricity costs. These opponents of common-sense transmission reforms support Congressional action that will override inclusive regional agreements for building transmission and halt investment in our grid.
“Transmission is the backbone of free and competitive electric markets, and essential to giving businesses and consumers access to the best energy resources at the lowest prices. A strong, reliable and modern grid benefits everyone by allowing innovation and competition to drive down prices. We encourage lawmakers to support FERC’s efforts to strengthen this essential market infrastructure.”
Americans for a Clean Energy Grid (ACEG) is focused on expanding and modernizing the nation’s transmission system to meet America’s growing energy needs and unlock the potential of domestic resources and economic opportunity in every region of the country. ACEG supports smart state and federal policies that will improve the way the grid is developed, planned, and paid for. Policy reforms are the key to ensuring our nation has a more robust, reliable, and secure network that supports expansion of renewable energy, competitive power markets, energy efficiency, and lowers costs for consumers. ACEG is an initiative of the Energy Future Coalition (EFC) – a broad-based, non-partisan alliance that seeks to bridge the differences among business, labor, and environmental groups and identify energy policy options with broad political support.
Order 1000 Addresses Hurdles in Planning Processes and Cost Allocation
It takes a special person to fully understand all 620 pages of the Federal Energy Regulatory Commission’s new Order Number 1000, “Final Rule on Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities.” Most likely that special person is a very well-compensated lawyer. Regular people only need to understand that this is likely the most progressive clean energy action the federal government will take this year. Order 1000 will fundamentally improve the way new transmission lines are planned and paid for, resulting in thousands of miles of new lines that will bring renewable energy to your house.
First, a little background on why new transmission lines are important. Renewable energy companies face a challenge that’s universal to businesses that create a product: getting the product from the production site to the customer. Some businesses are able to address this challenge by locating their production site near existing transportation resources. A small factory, for example, can be placed next to a railroad spur or near a highway exit. Other businesses are constrained by location but are served by infrastructure that’s been built over the last century. Indeed, grain farmers in the Great Plains can access an extremely well-developed railroad system.
Renewable energy, though, is unique. You can only build wind farms where the wind blows and solar arrays where the sun shines, but this isn’t necessarily where transmission lines exist. So to power our country with renewable energy, we’ll need to build new transmission lines to get that power to market.
FERC’s new rule does two big things that will lead to new transmission lines: It strengthens regional planning processes and clarifies rules on who will pay for new lines—so-called “cost allocation.”
Cost allocation is complex but the fundamental issue is simple. If a new transmission line costs $1 billion, it would be prohibitively expensive if one person had to bear all of the costs. If 10 million people pay for the project, though, it becomes much more affordable. This is why broad cost allocation can make it easier to build important new lines.
Planning processes are similar. When a region develops a plan for building new transmission, it prioritizes lines that meet certain goals. FERC’s rule instructs planners to consider certain goals, which will change which lines are prioritized. Ultimately, Order 1000 will give more priority to lines that serve renewable energy and will make those lines more affordable.
The rule also includes a more technical third part about how to decide who gets to build and profit from new lines. This is important but outside the scope of this column.
The most interesting theme throughout the rule is that FERC has codified a new type of benefit from transmission: public policy benefits. That is, transmission lines that make it easier to achieve the goals of a public policy—say, a state renewable energy standard—have a clear public benefit that should be considered in planning and cost-allocation processes.
Before FERC issued Order Number 1000, planners only considered two benefits of new transmission. They looked at whether a new line would have a reliability benefit (it reduced outages by strengthening the grid) or an economic benefit (it led to reduced electric rates by increasing open competition in power markets). Planners’ chronic underestimation of the benefits of transmission held back urgently needed investments in the grid for decades. Adding public policy benefits to the two previously recognized benefits adds another reason why it’s important to build new lines that will help us move toward a clean energy future.
The new FERC rule will help build critical new transmission lines. Let’s consider how the rule impacts a specific project.
The Atlantic Wind Connection is an incredibly inventive new line proposed off the shore of the mid-Atlantic states. Think of this project as a power strip on the ocean floor 15 to 25 miles offshore, running approximately 300 miles from New Jersey to Virginia with connections to the mainland at several locations. Individual wind farms would then simply “plug in” to the strip rather than building their own cable to shore. FERC Chairman Jon Wellinghoff recently called AWC “one of the most interesting transmission projects I’ve ever seen walk through the door.”
The AWC will be expensive with a cost of more than $5 billion, which is not surprising for a project this ambitious. This project may not make sense if only the traditional economic and reliability benefits are considered because the sum of those benefits may not outweigh the costs. Indeed, PJM Interconnection—the transmission grid operator in the mid-Atlantic—would be challenged to justify the project based on these benefits alone.
But the public policy benefits of this project make it extremely desirable because the AWC line will enable states to cost-effectively meet renewable energy standards with offshore wind. So when economic, reliability, and public policy benefits are all considered, the AWC makes sense.
Projects like the AWC also will provide many benefits beyond those FERC now recognizes. Economic development benefits, for example, though a huge part of the clean energy economy, are still not recognized by FERC. If the AWC goes forward, the mid-Atlantic states will see new economic activity and jobs related to the offshore wind industry in construction and in design, engineering, and manufacturing.
While FERC wants planners to consider all beneficiaries for new transmission, Order 1000 is also about consumer protection. FERC’s rule protect customers in two ways: from “free riders” who receive benefits without paying for them and from paying for transmission from which they receive no benefits. By expanding which benefits can be considered, FERC is ensuring everyone who benefits from a transmission line will help pay for it. Overly narrow calculations of benefits used by transmission planners for decades have forced small groups of renewable energy developers and ratepayers to bear the full costs of transmission lines that benefit much larger groups of ratepayers who are asked to pay nothing. In many cases, this unbalanced cost allocation has prevented lines from being built. At the same time, FERC’s new rule clearly states that ratepayers receiving no benefits from a line cannot be forced to pay for it.
FERC’s careful attention to both problems—allowing people to benefit from lines without paying for them and forcing people to pay for lines from which they do not benefit—should satisfy concerns expressed by some in Congress during legislative debates that preceded FERC’s rulemaking. Sen. Bob Corker (R-TN) introduced legislation in 2009 that would have imposed a new and unprecedented test for allocating costs for building new transmission lines based on “measurable economic and reliability benefits.” The “measurable” standard goes in the opposite direction of FERC’s rule—further narrowing benefits that are already too narrow and likely choking off urgently needed transmission investments completely.
The transmission grid’s complex and dynamic nature makes such precise measurements impossible and would thus make Sen. Corker’s proposed standard unworkable and arbitrary. Most importantly, the legislation is unnecessary since FERC clearly listened to the supporters of the legislation and addressed their concerns in the final rule. Cost allocation will proceed on a regional basis, and costs will not be allocated to those who don’t receive benefits.
FERC’s new rule is a valuable contribution to the clean energy economy. Two years ago, CAP’s John Podesta, Kate Gordon, Bracken Hendricks, and Benjamin Goldstein laid out a framework for three things that will drive clean energy deployment: market demand, financing, and infrastructure. FERC Order Number 1000 addresses the infrastructure challenge by enabling the transmission lines that will make it possible to deliver renewable power to customers.
It’s time for the rest of the federal government to follow FERC’s lead. Most important, Congress needs to pass a clean energy standard, which would move the country toward generating 80 percent of our power from low-carbon sources. This would create the necessary market demand. At the same time, Congress can also meet the renewable energy industry’s unmet financing need by creating a Clean Energy Deployment Administration, which would provide a suite of financial products to help renewable energy projects attract capital.
FERC Order Number 1000, a clean energy standard, and a Clean Energy Deployment Administration don’t sound especially sexy. When taken together, though, these are the building blocks of the clean energy investment agenda. FERC has done its job in driving this agenda and now Congress needs to take the next step.
Richard W. Caperton is a Senior Policy Analyst at American Progress.
We strongly support FERC’s proposal to improve the way the electric power grid is developed, planned, and paid for. Americans need a robust, modern grid to lower electricity prices and open up access to abundant yet largely untapped domestic clean energy resources; FERC’s rule could be a big step toward achieving those goals.
FERC’s plan supports what is starting to happen in regions throughout the country – the evolution of our energy grid away from an old, outdated system. It allows for smarter, more efficient planning and construction of vital transmission lines that will bring cheaper electricity to American communities.
Particularly for the renewable energy industry – and the workers it represents – this update to FERC’s guidelines could be a game-changer. The U.S. has vast renewable energy potential, but we need the transmission lines to connect those sources to the cities and towns that use the electricity. Developing that clean electricity supply can provide desperately needed jobs and economic vitality to regions around the country.
More information on FERC Order No. 1000:
Reid Detchon is the Executive Director of the Energy Future Coalition and Americans for a Clean Energy Grid