Electric Transmission 102: Policy Challenges to Grid Expansion

The need to strengthen, upgrade, and expand the electric transmission system has emerged as a major concern of state and federal policymakers. After a period of disinvestment in transmission during which electricity demand grew and wholesale power markets became vibrant and active, the interstate high-voltage system experienced increasing congestion, more instances of outage and failure, and lack of digitalization. Addressing these issues is critical to the country's economic health, its energy independence and security, and the reliability of electric service. Equally important, and perhaps more urgent, is the public policy impetus that leaders wish to give to alternative and location-constrained energy resources such as power from wind, solar, biomass, and geothermal. These resources are far from load in many instances and adequate transmission is key to their development.

 

On February 27, the Environmental and Energy Study Institute (EESI), WIRES (Working group for Investment in Reliable and Economic electric Systems), and the American Wind Energy Association (AWEA) held a briefing on key policy issues associated with the upgrade and expansion of the interstate electric transmission system. The National Renewable Energy Laboratory (NREL) has identified several critical challenges to transmission: planning, cost allocation (who pays?), cost recovery, and siting. There are also substantial questions about how transmission should be regulated, who should own and operate it, which agency should determine that transmission is needed and which resources or load should be entitled to use these essential facilities. Utilities, merchant developers, technology companies, environmental groups, federal, state and local governments, transmission customers, and electricity consumers all have a stake in finding answers. This briefing focused on three main issues: (1) regional planning, (2) cost allocation, and (3) facilities siting.

This briefing was the second in a series co-sponsored by EESI and WIRES. The other briefings were "How the Grid Works", "Upgrading the Grid", "Cost Allocation", "Integrating Variable Renewable Resources" and "Planning to Expand and Upgrade the Grid".

• At present, planning for new transmission lines is generally done at a small scale, either by a single public-utility commission or even by a single electricity company. Regional plans get written, and are useful exercises, but are not binding.
• Wind and solar are “location-constrained” power sources, meaning that their availability varies by region. This is not true for coal or gas, which can be transported to power generation sites anywhere in the country. Planners now need to consider that wind and solar energy may be generated many states away from where it is consumed. This creates a need for regional or interconnect-wide planning to utilize location-constrained resources effectively.
• The panel generally agreed that transmission planning is detached from the larger clean-energy policy discussion. Integrating the two so that planning for transmission takes into account a desired fuel mix was generally considered necessary by the panel. A commitment to constraining carbon, or to a large fleet of electric vehicles, would be significant to transmission planning.
• Local stakeholders continue to play a significant role in the siting of transmission lines. However, the politics of siting is growing much more complex as renewable energy generators (and other generators) seek to transport electricity across much greater distances to urban population centers. Local participation and support in siting decisions will remain key.
• Above-ground lines require very large rights-of-way (as much as 200 feet wide), while underground lines require only a 20-foot right of way. However, underground installation was estimated to cost about four times as much – a price premium rarely deemed tolerable by either companies or public officials.
• Cost allocation problems are a serious roadblock for bringing new generation on line – especially for renewable energy that is generated in remote, rural areas.
• New lines are very expensive – building even 50 miles of transmission can cost hundreds of millions of dollars. There is no standard policy that determines who shares in that cost, or how much each party should pay.
• Two methods of allocating the cost for new lines were discussed. The first involved socializing the cost, i.e. sharing it out to energy retailers throughout the state or region where a new line is built, in the expectation that they will pass the cost on to customers. The second involved requiring generation facilities to pay the entire cost of adding new transmission to connect themselves to the grid.