Virginia, United States [RenewableEnergyWorld.com] Renegades, some may call them, but people have lived off-grid for decades by relying exclusively on solar panels for electricity. Disconnected from their local utility, they have no central back-up and no reliability. Most solar electric users are less extreme. They remain connected to the utility and use a combination of solar and grid power.
Now, a Maine, US energy company has proposed a third and unique kind of relationship between solar energy system owners and the conventional electric grid. It is neither on-grid nor off-grid; instead solar energy becomes the grid.
GridSolar has taken the unusual step of proposing a solar photovoltaic project not as generation, but as transmission. The company has asked state regulators to approve 800 MW of solar capacity as an alternative to a US $1.5 billion high-voltage transmission line the local utility, Central Maine Power, wants to build. Describing itself as a smart grid alternative, GridSolar appears to be the first solar project in the US designed specifically to meet transmission needs.
But solar is not the only non-traditional approach to transmission springing up as the US grapples with how to expand and modernize its 340,000 km of high voltage lines into a national transmission superhighway. Like GridSolar, many of these innovations are offered under the umbrella of ‘smart grid’, a broad term often used to describe bringing digital technology, the grid and distributed technologies together. This effort has become so large that its market could rival in scope the development of the internet, according to technology giant Cisco.
In addition to spurring technological innovation, the transmission overhaul is driving the power industry to develop fresh ideas about how to finance and regulate high voltage transmission lines, in an effort to make them less costly and easier to site.
Transmission Effort Receives Low Grade
Transmission is the topic of the day in the US because the grid system is ageing, out of date and incapable of supporting the nation’s renewable energy goals. The American Society of Engineers estimates that it will need $1.5 trillion in new investment by 2030.
Lack of transmission is the biggest barrier to the US target of making wind power produce 20% of power supply by 2030, according to the US Department of Energy. And the nation is not doing so well in overcoming that barrier. In fact, the American Wind Energy Association (AWEA) gave the effort a low grade, C minus, in its July 2009 ‘20% Wind Report Card’. Indeed, the report found ‘very little progress on reforming policies for planning, paying for, and permitting transmission.’ While a few regions ‘have made very modest progress’, others are moving in the wrong direction.
Meanwhile, less wind is coming online. The US reported 8500 MW of wind installations in 2008, but expects to add only 5000 MW in 2009. The economy is largely to blame, but lack of transmission is stalling projects too, according to AWEA. The lines are necessary because areas ideal for wind tend to be remote from population centres.
‘Wind farm installations were very strong in 2008, and remain somewhat strong in 2009 compared to historical levels, especially in light of the difficult environment facing the US economy. However, if installation rates do not revert quickly to back to 2008 levels, the US could fall behind the trajectory to its goal in the early part of the next decade’, the report card concludes.
Wind isn’t the only renewable energy resource that needs better transmission. Seven states in the Southwest could generate 6800 GW of solar energy, according to the Solar Energy Industries Association. The push is on to build large-scale concentrated solar power in the deserts of these states. But transmission lines from the deserts to cities have reached capacity, according to testimony made before Congress by Rhone Resch, Solar Energy Industries Association (SEIA) president and chief executive officer.
What’s holding up the transmission superhighway? Firstly, widespread disagreement exists on how to pay for the undertaking. Further, Americans are notorious for not wanting lines built in their backyards and dispute exists over just how much the federal government should step in and tell locals what to do.
Building Giraffe Farms
President Barack Obama wants to make renewable energy contribute 25% of US electric supply by 2025, while the US currently gets around 3% of its power from non-hydroelectric renewables. Richard Silkman, GridSolar’s co-founder posits: ‘If we need renewables and we need transmission, why not make them one and the same?’ His series of 2.5-MW solar installations would be built in lieu of what would be one of the largest transmission projects yet to be constructed in Maine.
Since Central Maine Power’s line would largely address peak demand, GridSolar’s option is better and cheaper at about $4500/kW installed, according to Silkman, a long-time energy consultant and founding partner in the project together with Mark Isaacson, a developer of hydroelectric and wind projects. On days when the sun isn’t shining, and the state needs peak power, batteries or small, fossil-fuelled distributed generators would act as backup.
Solar can be added in stages where needed, as peak load grows, preventing an over-build of capacity, a likely outcome should Maine go forward with the transmission line, Silkman says. After all, by 2017, Maine will need the utility’s transmission network for reliability only 850 hours of the year — less than 10% of all hours, Silkman calculates. With solar, it would be easy to avoid overbuilding, since panels can be installed incrementally when and if required. Transmission, however, is built to serve future peak demand, before its known if the demand will materialize.
As if defining solar as transmission is not unusual enough, GridSolar pushed its out-of-the-box thinking even further. Since utilities are the typical US builders of transmission, GridSolar decided to become a utility, or at least try. The company applied to Maine regulators for a certificate that would allow GridSolar to operate as a utility and earn a guaranteed rate of return on its capital investment; an assurance likely to hold appeal to investors.
‘We thought that was the cleanest, clearest way to proceed. We are blazing new ground here. This is not something people are doing on a daily basis around the country. We needed to secure financing. Our feeling was that if it was as cleanly structured as possible — and looks just like a utility — financing would be easy,’ Silkman says. The Portland Press Herald reports that a decision isn’t expected until next year.
Under GridSolar’s design, solar energy produces a dynamic similar to load shedding. ‘By meeting increased loadings with distributed generation in the same region, power flows over the bulk power system remain unchanged — just as if no additional load was placed on the grid. And, with no additional obligations placed on the bulk power system, the power system will continue to meet North American Electric Reliability Corporation (NERC) reliability standards, thereby mitigating the need for massive investments in that system. In this sense, distributed solar generation represents a substitute for investments in transmission’, the company wrote in a May 2009 filing to the Maine Public Utilities Commission (PUC).
Solar is the only generation source uniquely suited to meet transmission needs he argues, noting that thermal generation works best when built on a large scale and connected to distribution networks; combustion turbines might work on a small scale, but are noisy and polluting and therefore are not suitable close to load centres; wind turbines typically need remote locations and do not lend themselves to serving peak load; and fuel cells could work, but are expensive.
Furthermore, while GridSolar’s concept is novel, it appears to hold public appeal. A poll commissioned by GridSolar of 500 Maine residents in April found nearly two to one approval for using solar panels for reliability rather than transmission lines.
But not everyone thinks the idea is workable. Central Maine Power, NextEra Energy (previously FPL Energy) and Independent Energy Producers of Maine (IEPM) all have filed opposition to GridSolar’s application to become a utility and define solar as transmission.
‘With apologies to Gertrude Stein, the simple response to GridSolar’s petition is this: generation is generation is generation is generation’, said Central Maine Power, which is owned by a subsidiary of Iberdrola.
Distributed generation cannot be transmission ‘without beggaring the laws of logic and physics … the mere fact that generation can under some circumstances perform a similar ‘reliability function’ as transmission does not extinguish the distinctions between them’, the utility went on to say in a briefing before the Maine PUC. If GridSolar is allowed to become a utility, and it receives a guaranteed rate of return, it will create an unfair playing field for other generation projects with similar system impacts, which ‘must stand or fall based on their own economics’, Central Maine Power adds.
NextEra Energy and IEPM make a similar argument to the commission: ‘GridSolar seeks to have its cake and eat it too by obtaining treatment as a transmission and distribution utility while retaining the benefits of a generation facility.’
The project’s problems don’t stop there. The way the New England region pays for transmission leaves little room for a solar-as-transmission option. ISO New England, the regional grid operator, socializes costs among the six New England states for transmission lines that provide reliability. States with the highest load pay the most. Maine is a rural, sparsely populated state with little electric load. Thus, it would end up paying very little for the Central Maine Power line – about 8%, according to Silkman’s calculations.
GridSolar has yet to apply for similar treatment, but learned during informal talks with the grid operator that it’s unlikely to qualify for New England-wide socialization of its costs. ‘To them the world is black and white. You are either transmission or you are generation’, Silkman says. Thus, the transmission line enjoys a financial incentive, not available to the solar project. It will be difficult for state decision-makers to turn down the transmission project, he says, given that 92% of its cost will be paid by other states, while Maine will get the jobs.
‘If every school district in Maine could have a giraffe farm with someone else paying 92% of its costs, every school district in Maine would have a giraffe farm. Nobody would have any incentive to say no’, he says, adding: ‘This is the world we have created with this transmission/generation dichotomy.’
Knowing his idea will not be an easy sell at the state level, Silkman says he may eventually turn to the Federal Energy Regulatory Commission for a ruling. For now, he is spreading his message in various public venues around New England. ‘We’re seeing an enormous amount of interest. People are fascinated by the concept because it is bringing this whole smart grid notion to them in a way that makes economic and physical sense’, he says.
While it remains to be seen whether the US Northeast will accept solar as transmission, the region is clearly primed for transmission alternatives. Its leaders have expressed concern that a national transmission superhighway may foist Midwestern wind upon the region, bumping aside the Northeast’s own prospects of renewable energy development.
Indeed, eleven East Coast governors, most from the Northeast, sent a letter in May to Congressional leaders to ‘express our concern about the significant risks posed that we believe could jeopardize our states’ efforts to develop wind resources and inject federal jurisdiction into an area traditionally handled by states and regions.’
The governors object to paying for a national transmission highway that delivers power from the Great Plains to the East Coast. The East Coast has wealthy renewable resources of its own, particularly offshore wind, they argue. ‘The waters adjacent to the East Coast hold potential for developing some of the most robust wind energy resources in the world — enough wind potential to meet total US electricity demand, as Interior Secretary Ken Salazar has recently pointed out’, the letter says. The governors called for a transmission network of their own, a backbone to interconnect offshore wind to population centres on the East Coast.
So far, however, the region has been slow to develop either wind farms or transmission of its own to accommodate renewable energy. In fact, the Northeast accounts for the lowest amount of the 292 GW of wind power planned in the nation’s organized markets — about 14 GW or 5%, according to a report by Ryan Wiser and Mark Bolinger of the Lawrence Berkeley National Laboratory: ‘2008 Wind Technologies Market Report’, issued in July 2009 by the Department of Energy. The delay has been caused, in part, by internal dispute among the New England states about how to pay for transmission.
Typically the states within ISO New England share costs based on their electric load for any transmission projects deemed necessary for reliability. Dispute arose when a project was proposed not for reliability, but to accommodate wind power.
Out of the argument came a new financing concept being pushed by Northeast Utilities, a Connecticut-based utility. Jim Muntz, the utility’s president of transmission calls it a ‘beneficiary pays, not everyone pays’ model. States agree to pay for the transmission only if they want the renewable energy delivered by projects built to accompany the line.
This approach not only frees states from paying for transmission they do not want, but it also guarantees the transmission delivers green energy, and not some other form of power. No such warranty exists for the proposed national transmission corridor, which in fact could ultimately deliver coal-fired generation to New England, Muntz says.
New Englanders aren’t the only ones worried they may foot the bill for a green transmission superhighway, only to discover brown energy sources crowding the lanes. In Minnesota, similar fears played out recently over three high-voltage transmission lines, known as CapX2020. The three lines, over 600 miles (960 km) in all, were proposed in 2005 by several power companies, including Great River Energy and Xcel Energy’s Northern States Power. In May, CapX2020 won an important certificate of need from the Minnesota Public Utilities Commission (PUC).
While the project has support from several stakeholders, it also has its share of critics. The North American Water Office and the Institute for Local Self Reliance, groups that back community-based renewables, argue that the CapX2020 represents investment in an outmoded electric model. The groups recommended the state explore small distributed generators to meet growing demand for electricity, rather than ship power over transmission lines from large plants. Meanwhile, environmental groups, renewable advocates and local landowners sent up warnings that nothing would prevent non-renewable power from gobbling up CapX2020’s transmission capacity, displacing wind power. They asked state regulators to require that the transmission owners build or contract for renewable power to fully subscribe the new lines’ capacity.
In its decision, the PUC rejected the idea of using smart grid/distributed generation instead of transmission, saying it could ‘alleviate the stresses on the existing system temporarily. But none of these strategies ultimately displace the need for new transmission facilities.’ In addition, ‘no party proposed an actual plan’ for a smart grid/distributed energy alternative, according to the state Administrative Law Judge.
The PUC took to heart concerns that non-renewable generation could block wind power on the lines and designated that one of the lines, the 240 mile (384 km) Brookings Project, be dedicated to renewable energy.
Beth Soholt, director of Wind on the Wires, one of the groups that pushed for guaranteeing line access for renewable energy, called the PUC’s decision ‘forward looking.’ The commission ‘understood the importance — at least for the Brookings line — of providing as much certainty as possible that renewables would use the new capacity on the transmission lines’, she said.
Another transmission innovation gaining popularity is the competitive renewable energy zone, or CREZ. The zones are designated for wind development and offer a co-ordinated plan to build an accompanying transmission superhighway. The notion emerged several years ago in Texas, where the first CREZ is expected to pave the way for $4.93 billion of transmission construction to accommodate 11,550 MW of new wind projects.
The Wiser/Bolinger wind market report describes about a dozen CREZ models or related innovations emerging in various areas of the US, including California and Colorado. The report finds that federal, state, and regional entities are making progress that will ‘ease the transmission barrier for wind over time.’
‘Nearly twenty large transmission projects in the central and western US that may carry significant amounts of wind generation are in various stages of development. Though not all of these projects will proceed to commercial operation, those that do may provide development opportunities for thousands of megawatts of new wind projects from 2013 onward’, says the report.
But timing remains a problem. Developers can build wind projects quickly, while transmission often takes many years to site, particularly when opposed by local citizens. T. Boone Pickens, former oilman turned wind energy advocate, recently fell victim to transmission scarcity. Pickens put on hold plans for his proposed 4-GW wind farm in Texas, instead opting to build several smaller projects in various locations. Pickens blamed the project cancellation on both the financial crisis and lack of transmission for his mega project.
So, for some, answers may come too slowly. But innovation appears on the way. The shape of the new US grid has yet to emerge. It is clear, though, that colouring the grid green means weaving resources and policy into new lines of thought. Transmission may look more like generation in the new grid; funding may take new forms; planning may twist and turn in unexpected directions. The grid is big with room aplenty for invention.