11 working groups and committees. 150 meetings. The evaluation of more than 2,000 potential solutions. 27 months of study.
The result?
Recommendations for $7.7 billion in transmission projects, the single largest portfolio of such investments in the history of Southwest Power Pool (SPP).
Last week, SPP stakeholders voted in favor of the plans proposed by its Integrated Transmission Planning (ITP) process, asserting that studies show the transmission investments will pay for themselves in a matter of years and return benefits at a rate of at least eight-to-one.
In the face of unprecedented load growth, the electric grid and wholesale power market manager across 14 states in the central U.S. recognizes the need to improve reliability across its service territory and increase resiliency during extreme weather events.
SPP’s Markets and Operations Policy Committee, which includes representatives from every member of the SPP regional transmission organization (RTO), voted in approval of the recommended portfolio of 89 projects that represent 2,277 miles of new transmission and 443 miles of transmission rebuilds. SPP’s board of directors will decide whether to grant their final approval next Tuesday, October 29.
Since it became the planning authority and RTO for its region in 2004, SPP has directed the construction of more than $12 billion in transmission projects. Studies have shown projects constructed in the SPP region provide net benefits at a rate of 5-to-1 or better when compared to engineering and construction costs. The latest recommended tranche of projects has the best benefit-to-cost ratio of any ITP portfolio SPP has ever proposed. According to SPP, its previously directed transmission investments have facilitated the lowering and leveling of wholesale electricity costs across the RTO’s region.
SPP needs this, badly
SPP contends it requires significant investment to enable continued load growth from oil and gas production, mining, and the placement of data centers in its territory and to ensure long-term reliability and address the impacts of planned fossil fuel generation retirements.
The RTO wants to become the first to provide full services in both the Eastern and Western Interconnections beginning in 2026, according to a filing this summer with the Federal Energy Regulatory Commission (FERC). SPP filed an amendment to its tariff with FERC on June 4 to include provisions specific to its western members. Barbara Sugg, SPP’s president and CEO, said the proposal “improves the reliability of the electric grid and provides economic benefits for entities in both the Eastern and Western Interconnections.”
SPP said it will enable transmission owners to participate in its energy markets by using an optimized solution across the direct current (DC) ties that connect the Eastern and Western Interconnections. Optimization of the DC ties’ use will increase resilience by leveraging diverse resources via the 510 MW of bi-directional DC tie capability. Joining Western entities can anticipate about $200 million in annual benefits, per SPP.
The Western utilities now pursuing RTO membership are currently participating in the SPP Western Energy Imbalance Service (WEIS) market. The WEIS, which facilitates real-time energy dispatch, provided an estimated $31.7 million in net benefits for participants in 2022 and reduced wholesale energy costs by $1.35/MWh. The noted enhancements to reliability and increased value for participants helped spur full RTO membership.
A queue to nowhere?
SPP recently filed a request with the Federal Energy Regulatory Commission (FERC) to postpone its processing of 2024 interconnection requests and hold off on accepting new ones until it can catch up on previous clusters. Blaming unprecedented queue volume, integration complexities, and resource limitations, SPP suggests the waiver is necessary to focus on existing requests and provide them with more reliable study results. SPP says the waiver will allow it to streamline its interconnection management process, reduce unreliable study assumptions, and ultimately ensure more reliable outcomes for all involved stakeholders. Without the waiver, SPP suggests it’s likely new customers would incur unnecessary costs and time related to studying potentially unreliable interconnection data.
SPP’s current generator interconnection active queue totals 405 projects totaling 82.5 GW of capacity. More than 90% of it comes from renewable sources.
The number of interconnection requests in SPP’s territory has grown to be untenable without some sort of cluster study process. SPP’s cluster eclipsed 100 for the first time in 2022 and in 2023 hit a record-high 129 requests, totaling more than 2.8 GW of capacity.
SPP’s fuel mix still relies very heavily on fossil fuels. The below pie graph is a glimpse of the RTO’s mix on the morning of October 23, 2024, showing a roughly threeway split between usage of natural gas (30%), wind (30%), and coal (29%). Recent afternoon mixes have been much more reliant on coal and gas, leaving scant space for clean energy- but a massive amount of new transmission projects would enable the interconnection of more renewable generation.
