Summary

WIRES, the House Grid Innovation Caucus, the National Electrical Manufacturers Association (NEMA), and the Environmental and Energy Study Institute (EESI) held an important briefing on the modernization of the nation’s critical network of high-voltage transmission. Designed and built well before the digital age to serve more localized customer loads, the “grid” is struggling to support active and increasingly competitive wholesale power markets that now operate regionally. It is often congested or inadequate to deliver domestic energy resources that are not close to customers. Its aging facilities have acknowledged weather and cyber vulnerabilities. Moreover, the planning and regulation of this fundamental infrastructure is complex, often uncoordinated, and slow to produce results. However, despite the combined effects of the recession and greater energy efficiency, the grid will be called upon to serve 30 percent more electrical demand over the next two decades.

Modern transmission infrastructure is the fundamental enabler of competition, new technologies, and our high standard of living. Upgrading and expanding the system is a priority. Transmission 101 provided a basic understanding of how the high-voltage system works and then moved to key issues affecting the grid: economic regulation; the regional markets that transmission supports; the importance and role of regional transmission organizations (RTO), which operate multi-state electric grids to promote efficiency and reliability; and the range of diverse economic, environmental, and operational benefits that transmission provides to the whole electric system and electricity consumers. Future briefings will address new grid technologies, policies and barriers.

 

Highlights

 

Rep. Jerry McNerney (D-CA)

  • Transmission is the backbone of our nation’s energy usage and security.
  • The House Grid Innovation Caucus was formed 2 years ago because electricity transmission is underappreciated; the grid needs to be front and center. Issues such as security and grid congestion as well as energy storage are areas that are under the caucus’s purview.
  • The caucus also aims to tackle the natural gas and electric transmission nexus, as a natural gas shortage would affect grid security.
  • Renewable portfolio standards (RPS) have allowed states to individually experiment with their specific energy challenges and opportunities. North and South Dakota, for example, have tremendous wind resources at their disposal.

 

Rep. Bob Latta (R-OH)

  • Looking at where we want the grid to be in 5-10 years is a challenge for regulators and legislators.
  • We need advanced power infrastructure and new transmission lines.
  • Protecting the grid from cyber-attacks is very important and the United States needs to be better prepared.
  • Smart-grid technology can help with blackout prevention. Power outages cost Americans at least $150 billion every year.
  • The government needs to hear from all stakeholders so as to make the right policy.

 

Adriann McCoy, Vice President of Customer Success (Western Region), Smart Wires Inc

  • McCoy provided an overview of the grid's workings.
  • Most generation occurs in power plants by means of hydropower, wind, natural gas, coal, etc…
  • Transformers boost voltages to reduce losses over long distances.
  • Distribution happens within neighborhoods at substation transformers where the power “steps-down” for usage in homes and businesses.
  • "Load" is the term used to indicate the usage of electricity by homes and businesses.
  • There are 3 grid interconnections within the United States: the East, West, and Texas Interconnections. They allow the transmission of electricity across the country.
  • Grid operators have to adjust transmission from different areas to avoid overloading connections.
  • Maintaining a 60hz frequency on distribution lines is important to protect appliances and other electrical equipment.
  • Weather impacts load levels (for example, when it’s hot, homes and businesses use more air conditioning). It increasingly affects generation levels as well, with the greater use of intermittent renewables such as wind and solar.
  • Smart grid technologies give utilities more visibility and control by implementing two-way communication between devices and operators.
  • It takes a long time to build transmission infrastructure—usually 10-20 years. But it is becoming harder to predict electricity demand and generation, because new power sources are being used and consumer behaviors are changing, making planning and coordination and very important.
  • Energy storage will allow us to take electricity generated from solar power (and other renewables) and store it for peak load times to reduce stress on the grid.

 

Mike Ross, Senior Vice President, Government Affairs and Public Relations, Southwest Power Pool

  • Southwest Power Pool (SPP) was formed just 9 days after the attack on Pearl Harbor.
  • SPP is a non-profit that has 60,000 miles of lines, 5,000 substations, and 94 members.
  • SPP directs transmission and does not generate power.
  • SPP develops 10-20 year plans for future transmission, and takes 8 ½ years to put new lines in service.
  • SPP has $10 billion invested in transmission.
  • SPP is the “Saudi Arabia of Wind," with 16,000 MW of wind power in service. It recently beat the North American record for wind penetration, with 52% of its electricity coming from wind on February 12, without any difficulties in its integration into the grid.
  • Grid modernization is important, as every dollar invested yields $3.50 in returns.

 

Clair Moeller, Executive Vice President, Operations, Midcontinent ISO

  • MISO was the first RTO (Regional Transmission Organization) approved by the Federal Energy Regulatory Commission (FERC) and services 42 million people from Alberta, Canada, to Louisiana.
  • An RTO’s job is to minimize electricity bills by bringing in cheaper energy from outside their area, but market volatility can affect this process.
  • The federal government focuses on having an efficient, transparent market, and manages the wholesale market.
  • RTOs try to reconcile state and federal differences with regard to managing the grid. RTOs are regulated, some by FERC, some by the states.
  • The use of coal to power the grid has fallen even without the Clean Power Plan, from 85 percent in 2005 to 42 percent in 2016, as economics drive the move to natural gas and renewables.
  • Planning for the future of transmission is difficult, as planning takes 20-40 years and the political horizon is only 2-4 years.

 

Craig Glazer, Vice President – Federal Government Policy, PJM Interconnection

  • There are policy choices that must be made: what type of grid do we want?
  • If we want a grid that is an enabler, we accept it is a natural monopoly and embrace the “build transmission and they will come” mentality.
  • If we want a grid that is a competitor, we set up a grid that competes using generation and demand-side actions, and electricity prices will reflect the market equilibrium.
  • If we want a strong grid, we must build a grid that is designed to meet the needs of the future and we must build more power generators.
  • If we want a weak (aka localized) grid, we must build generation close to the load, and use demand response and energy efficiency.
  • Who decides what type of grid we want? Agencies, individual states, and FERC all do to some degree. But, in many cases, a clear choice hasn't been made.
  • The grid will be reliable, but the decision on what type of grid we want has been nebulous at best.

 

Q&A session moderated by James Hoecker, Husch Blackwell LLP, WIRES Counsel; former Chair, Federal Energy Regulatory Commission (FERC)

 

What are the main trends and opportunities for the grid and how can Congress help?

  • Moeller
    • We need to maximize the value of what we have.
    • Energy efficiency is important as it has kept electricity consumption from rising over the past few years, even though the economy has grown.
    • There should be a quest for less carbon intensive generation.
  • Glazer
    • Congress shouldn’t be picking sides on what form of energy production or method of transmission we should use.
    • The transmission industry doesn’t need government money, but does require policy guidance.
  • Ross
    • Innovation is changing the grid faster than Congress can act.
    • Energy efficiency is up, battery storage and demand response will only drive this trend.
    • We need to use existing right of ways to reuse and optimize existing transmission pathways.
  • Hoecker
    • Let the market dictate what generation is best, but there are historic examples of government helping push types of generation forward for the good of all.
    • There is a risk in picking “winners and losers” but the government does not have a bad record.
    • Building transmission proactively will save $50 billion for consumers every year.
  • McCoy
    • Electricity consumers are actively affecting the electricity industry through their increased use of solar energy and electric cars, and through their reduced demand because of energy efficiency.
    • This means the industry has to be adaptable.

 

What is the role of the government in creating a greener grid?

  • Glazer said that the government is justified in setting a target to create a greener grid, but should not specify how it's done (“whether you do it” vs. “how do you do it”).

 

What can the federal government do to make collaboration between states on grid issues easier?

  • Glazer said that interstate compacts are a possible solution (there are 182 in place currently), but they are clunky. The federal government could make the process of setting up an interstate compact easier.
  • Hoecker agreed that interstate compacts can work. But when it comes to the electric grid, states would need to give up some of their regulatory authority over their utilities for the good of the group, and they have not wanted to give up this authority.