Cleaning the Transmission Process

Transmission limitations, in fact, are a major barrier to the growth of renewable energy. The process is meant to be inclusive and to elicit the views of all stakeholders. Regulators should strive for reasonable compromises. But if such deals cannot be reached, then they must seek to achieve the greatest good for the greatest number. Transmission planning requires it. And so does the federal law.

A recent U.S. Department of Energy study found that wind alone could provide 20 percent of U.S. electricity by 2030. To do so, though, significantly more investment in transmission is needed. Not only is there is competition among all types of generators to carry their electrons in the current lines but new lines are necessary to transport wind resources from the remote locations where they are most abundant.

"As renewable energy becomes more popular, the request to move these resources is growing," says John Bear, president of the Midwest Independent System Operator (ISO,) at the Edison Electric Institute's annual conference in Toronto. "There is not enough infrastructure" — a situation that denies utilities access to lower cost generation.

The Midwest ISO, in fact, has determined that adding 5,000 miles of new transmission to transport wind from the Dakotas to the New York City area would result in substantial savings for customers. While the generation and transmission costs would total $13 billion, the grid operator says that customers would save about $600 million annually. In the case of New England, a greater investment in transmission has paid off, enabling prices to fall in congested areas such as Southwest Connecticut.

But more needs to be done there and elsewhere around the nation. To supply 20 percent of the electric generation market by 2030, the Energy Department estimates that $60 billion in new wires would be necessary — something that the agency says would cut greenhouse gas emissions by 25 percent.

Tough Sell

The objective is to provide reliable, cost-effective and diverse energy resources to customers. Federal regulators have been given more authority to site projects. Now it's up to the Federal Energy Regulatory Commission and the North American Electric Reliability Corp. (NERC) that reports to it to carry out and enforce compulsory standards that could add greater certainties and bring innovative projects to the fore.

To succeed, federal regulators advise utilities to begin the process early — to meet with all constituents well in advance of filing the initial paperwork. It's about ensuring that the procedure is inclusive and transparent. They must understand the legitimate concerns of the stakeholders involved. It's about building relations with the business community, environmental groups, landowners, public officials and the press.

"You don't want neighbors to fear the project," says Jane Peverett, CEO of the BC Transmission Corp., at the Edison meeting. "The process must be fair and open. The people must have a say and have access to credible third parties."

In theory, utilities are supposed to have an easier time constructing new lines. The Energy Policy Act of 2005 sets out to give federal regulators the ability to override state regulators if key projects are unnecessarily delayed. It also allows them to provide some financial incentives to entice investors to spend capital on transmission projects, which have been considered risky because they can take years to come on line.

As a result, transmission investment has declined in real terms — adjusted for inflation — from 1975 to 1998. While there have been increases since 1998, FERC says that the level is still less than what was invested in 1975. Over the same time period, however, the demand for electricity has doubled. That's resulted in a significant decrease in transmission capacity, requiring new lines get built.

NERC is particularly concerned about Southern California, which depends on imported power that is transported across heavily burdened transmission lines. At the same time, the state has increased renewable energy initiatives and now requires the major utilities there to provide 20 percent of their power from green sources by 2010.

Those requirements and the current congestion are the reasons behind San Diego Gas & Electric's effort to build the Sunrise Powerlink transmission line. It's also the basis for Southern California Edison decision to spend $15.5 million on transmission and distribution, of which $2.1 billion will be dedicated to carrying renewable sources.

"The nation has tremendous renewable energy reserves, but the existing electric transmission system was not designed to tap these new kinds of generation," says Don Furman, senior vice president at Iberdrola Renewables. "The good news is that we have the opportunity to solve both problems at once, while strengthening our economy, the environment, and energy security."

Investing in infrastructure has always been a tough sell. Private entities have limited resources and the pay off is often too distant. But the transmission grid is aging and it needs to be updated and expanded so that it can meet the expected future demand for power. Doing so would give utilities the access they need to clean generation while also helping to increase the reliability of the grid.

Ken Silverstein is an award-winning journalist who is the editor-in-chief of Energy Central's publication, EnergyBiz Insider. With a background in economics and public policy, he has spent several years writing about the issues that touch the energy and financial sectors, and his work has been published in more than 100 periodicals.

Republished with permission from CyberTech, Inc. EnergyBiz Insider is published three days a week by Energy Central. For more information about Energy Central, or to subscribe to EnergyBiz Insider, other e-newsletters and EnergyBiz magazine, please go to http://www.energycentral.com/.