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Investing in the Grid: When the Going Gets Tough, the Tough get… Creative

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.

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Sen. Tom Harkin and Renewable Energy Experts Discuss Clean Transmission in Des Moines

On Thursday, October 21, the National Clean Energy Transmission Initiative (NCETI) hosted its second major forum on clean energy transmission in Des Moines, Iowa. Co-hosted with the Iowa Environmental Council, ITC Holdings, Wind on the Wires, the American Wind Energy Association, Fresh Energy, and the Environmental Law and Policy Center, the forum brought together state and federal lawmakers, industry leaders, environmental and renewable energy advocates, and member of the public to learn more about how clean energy transmission can help revitalize the struggling Midwestern economy while simultaneously helping to protect the environment.

The forum convened experts from around the country to discuss expanding and modernizing the electrical grid, a necessity for linking remote renewable resources like wind from the Great Plains to the cities and towns where people live. Panelists discussed topics ranging from economic growth and revival, to environmental protection and conservation, to overcoming barriers to increased clean transmission.

Senator Tom Harkin opened the forum with a keynote address on the need to make Iowa a leader in renewable wind power, stating that it is both an economic and an environmental imperative to develop Iowa’s abundant wind resources. He emphasized that Iowans are developing a thriving wind turbine manufacturing industry, as well as a nation-leading wind power generation industry.

Roya Stanley, Director of the Iowa Office of Energy Independence, honed in on the economics of clean energy in her presentation. She discussed the main benefits to Iowans and Midwesterners from increased wind energy, which include increased savings from the use of local renewable energy sources and increased revenues from the exportation of wind power to neighboring states. To fully develop Midwestern wind, however, Stanley emphasized the need for additional energy infrastructure to give the green light to the estimated 300,000 MW of wind projects that are currently on hold nationwide because of a lack of transmission.

NCETI is planning a number of additional transmission forums across the country, so bookmark our events page and stay tuned for a forum near you.

Watch videos from the event below:


To view speakers’ PowerPoint presentations, please click on the links below.


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NCETI Plans Two Community Forums on Clean Transmission

Transmission Lines in the Midwest

The Energy Future Coalition, in cooperation with the National Clean Energy Transmission Initiative, is planning two clean energy transmission community forums this summer – one in Des Moines, Iowa and the other in Portland, Oregon.

Both events will be expert forums on the critical role of transmission in enabling the development of renewable energy resources such as wind, solar, and geothermal. Leading national and regional experts on renewable energy and transmission will discuss key issues in renewable transmission including planning, cost allocation, and siting, as well as the roles for local, state, regional, and federal actors. Participants include representatives from a broad range of organizations such as electric utilities, environmental interest groups, elected officials, businesses, and labor unions.

The first event will be held in Des Moines, Iowa, although the date is to be determined. This event is organized by The Energy Future Coalition in cooperation with the Iowa Environmental Council, ITC Holdings, Wind on the Wires, the American Wind Energy Association and Fresh Energy.

The second event will be held on July 14th in Portland, Oregon. The Energy Future Coalition, in cooperation with the Renewable Northwest Project, Climate Solutions and the Northwest Energy Coalition, is hosting

If you are interested in attending either event, please email Robin Troutman at rtroutman@energyfuturecoalition.org.

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Why is Federal Transmission Legislation Needed?

Transmission Lines in Palm Springs, California

Bill White is Senior Vice President at David Gardiner and Associates

Meeting steep carbon reduction goals will require profound and rapid changes in the ways we generate, distribute, and consume electricity. Energy efficiency, distributed generation, demand response, smart grid upgrades, and utility-scale renewable resources will all be needed at unprecedented levels.

Enormous amounts of high quality renewable resources are now trapped in remote regions without electric transmission service. Connecting these resources to population centers is potentially one of the cheapest ways to massively and rapidly reduce greenhouse gas emissions from the electric power sector. Unfortunately, the existing framework for planning, developing and financing transmission infrastructure was never designed to address a challenge of this scale, pace, and scope. Transmission planning authorities are too geographically fragmented and near-term focused to even consider – much less pay for and site – a reliable integrated transmission grid capable of delivering remote renewable resources to consumers.

Legislation establishing participatory and transparent electric transmission planning at a national scale has been introduced in the Senate to overcome this barrier to achieving national policy goals and maximizing broad societal value. The American Clean Energy Leadership Act (ACELA; S.1462), passed by the Senate Committee on Energy and Natural Resources in June of 2009, directs the Federal Energy Regulatory Commission (FERC) to oversee broad scale regional planning processes for new transmission lines. The broad regional plans would be produced through collaborative efforts of utilities, transmission planners and a wide array of stakeholders to ensure full consideration of alternatives, incorporate local knowledge, and ultimately produce more effective and confidence-inspiring plans.

Climate and energy policies alone – such as a carbon cap and a national renewable electricity standard – cannot be expected to promote an efficient and strong renewable energy industry if they are layered on top of a balkanized and dysfunctional transmission planning system. Such an approach is likely to perpetuate market barriers and force reliance on higher cost resources. An open and fair framework for planning, paying for, and siting essential clean energy infrastructure, such as the one proposed in S.1462, is a necessary part of the solution.