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Tackling the Renewable Energy Transmission Tiger - Is There Hope? Is There Help?

Building transmission to accommodate utility-scale renewable energy generation in the U.S. is seen as essential by much of the renewable energy industry. But can it be justified? Doing so will necessarily involve constructing some of the longest stretches of wire ever undertaken in this country. Much of the best wind and solar resource is located quite distant from the load. Ultimately, thousands of miles of huge power lines will have to be built. It is not illogical to ask whether investment in such massive infrastructure "costs too much and provides too little." It is also not illogical to answer "no," not if the value proposition is laid out appropriately and a well crafted policy and regulatory approach can be established that effectively addresses the issues.

Opponents to large remote installations in the renewable energy arena suggest that focusing on distributed renewable generation and minimizing utility-scale development is the right thing to do. There are, it is said, more than enough rooftops and open spaces near the load for solar to provide plenty of energy while offering many advantages over remote wind or solar plants. Besides, the damage large installations and transmission lines do to wildlife and the environment is unacceptable. Government policies should be focused on encouraging the de-centralized renewables approach.

Opponents of renewable energy in general argue that policies supporting its development are silly, if not criminal. In their view the renewable energy industry is, at best, a pipe dream of clueless hippies and leftists, and at worst, part of an elaborate scheme to defraud the public and run the fossil fuel and nuclear industries out of business. Their mantra is that government should not pick winners and losers, and should not impose mandates that boost resources unable to compete in the “free market.”  Further, a major justification for pursuing renewable energy, and hence building transmission, is global warming — a hoax fostered by a conspiracy to massively transfer wealth from the developed to the under developed world. And finally, it is wrong to saddle the public with the unnecessary cost supporting renewable energy since the “shale play” will provide enough inexpensive U.S. natural gas to last for over 100 years.

Against this backdrop of differing opposition, and in spite of current economic challenges, the utility-scale wind industry has continued to build projects. And the large-scale solar sector is poised to follow in wind’s footsteps. Realists know renewables are not going to dominate any time soon, but diversification is a necessity, infinite trumps finite, and cleanest trumps “cleaner.” We need as much renewable energy as we can get as soon as we can get it. And that means utility-scale and transmission. While we must pursue every reasonable application, no approach can deliver as much renewable energy in as short a timeframe.  While currently experiencing especially challenging times, renewable energy development will continue in this country and around the world. And policies in support will continue to be pursued.

Texas was confronted with issues relating to lack of transmission capability before much of the rest of the nation due to the size and pace of wind project development. In order to relieve resulting congestion on the grid, and to maximize development of its huge wind resource, it became apparent that extensive transmission infrastructure would have to be built to move power from west to east. The question was how to go about accomplishing that. Because of its unique circumstance wherein the largest portion of the state is served by an electric grid (the Electric Reliability Council of Texas - ERCOT) that is separate from the rest of the country and under limited Federal Energy Regulatory Commission (FERC) jurisdiction, it had to do so in relative isolation.

Daunting issues arose — transmission wouldn’t be built without certainty that there would be generation to serve, and wind projects would be held back pending the guarantee of adequate transmission; determining how much infrastructure was needed to facilitate what amount of generation and where each should be placed; what were the implications and impacts of lines crossing into portions of the state outside of ERCOT under FERC jurisdiction; how much should be invested; who should pay for what from point of interconnection forward; who would build the transmission; and how could the process be expedited?

After some three years of analysis and stakeholder input, the Texas Legislature passed the Competitive Renewable Energy Zones (CREZ) law in 2005 establishing procedures to address these and other related issues. Implementation is now under way with over $6 billion in transmission to be completed. As the process unfolded additional challenges have arisen such as NIMBY efforts, understanding the impacts of the new nodal pricing rules being implemented, balancing the grid with increasing variable resources online, and determining the role and ownership of electricity storage on the grid. Today the CREZ law is under attack by renewable energy opponents emboldened by the current polarized political atmosphere using many of the justifications mentioned earlier to try and halt the program.

Most of these same issues and challenges are confronting the renewable energy industry across the rest of the country but within a different regulatory climate with full FERC jurisdiction. FERC Chairman Jon Wellinghoff addressed that fact in a recent Texas Tribune interview:

I think Texas can learn from the rest of the country that the ability to have markets across borders is a very positive thing — and across regions — and I’d encourage Texas to look into how that can be facilitated and still potentially maintain their jurisdiction…I’m nothing but impressed with the transmission project that the Texas PUC put together for moving that west wind into the central and eastern parts of Texas. It seemed anyway to me an extremely efficient process as far as how the different developers were selected, and a very efficient process with respect to the siting and the entire development of it. [It was done] in a very expeditious manner and a manner that is probably unprecedented with respect to a transmission project of that size anywhere in the country.

Can and should the Texas approach be imprinted on the rest of the country, or is it unique to this state and the timeframe in which the policies were adopted? One thing is certain, no other region of the country has dealt with these issues to the extent we have in Texas. While the regulatory regime is different elsewhere, careful analysis of the Texas policy structure should be helpful. And ongoing observation of its implementation would be wise in these times of knee-jerk opposition and policy uncertainty.

Russel E. Smith, Executive Director of the Texas Renewable Energy Industries Association (TREIA) will be moderator for a session titled “Transmission Access and Lessons from ERCOT and the Pacific Norhwest” during the Renewable Energy World Conference (Feb. 14-16, 2012) in Long Beach, California. The session, scheduled for Wednesday, Feb. 15, from 1:30 to 3:00 p.m., features top experts in Texas’ CREZ law development and implementation, as well as key representation from FERC.

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