Green Superhighway: Overhauling the Grid to Accommodate Renewables

Efforts are needed to promote transmission and distribution expansion in the US if the country is to realize its full potential. Elisa Wood explains.

US green energy advocates wasted no time. Just one day after President Barack Obama signed a bill giving the industry significant tax incentives, grants and loan support, they went to work on the next logical step: an overhaul of the transmission grid to accommodate a dramatic build-up of renewable energy.

The American Wind Energy Association (AWEA) and the Solar Energy Industries Association (SEIA) called for new federal policy to expand the transmission network – no small task given that the US grid is often described as the world’s most complex machine. The push comes as the US renewables sector finds itself in an enviable political position. The nation’s newly elected President says that his top policy objective is to green the nation’s energy supply, followed by strengthening education and the healthcare system. Obama underscored his support when he signed the American Recovery and Reinvestment Act on 17 February, a stimulus bill that includes several billion dollars to bolster development of renewable energy projects.

Obama’s goals cannot be realized, say green energy advocates, unless the nation revamps its transmission system to accommodate a massive influx of megawatts from wind, solar and other renewables.

‘President Obama has issued the bold challenge to double renewable energy generation in the US in three years,’ said Rhone Resch, SEIA president and CEO. ‘This will not be achieved without renewed investment in our electric transmission infrastructure to ensure that the regions with the best solar resources are connected to population centres where they are needed most.’

Obama laid more groundwork for renewable energy later in February when he addressed Congress for the first time. In outlining his goals, he said: ‘It begins with energy. We know the country that harnesses the power of clean, renewable energy will lead the 21st century.’

He called for legislation creating a cap-and-trade programme for carbon dioxide. At the same time, he signalled that a rebuild of transmission is imminent. ‘We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country, and we will put Americans to work making our homes and buildings more efficient, so that we can save billions of dollars on our energy bills,’ Obama said. ‘But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy – the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest US$15 billion a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.’

Resurrecting Thomas Edison

The ‘thousands of miles of power lines’ will not come soon enough. Already transmission limits have delayed about 300 GW of wind power projects – enough to meet about 20% of the nation’s electricity needs. ‘The wind industry is ready to get these projects in the ground, create thousands of jobs, generate investment here in the US and provide an inexhaustible supply of clean, affordable energy for years to come,’ said Denise Bode, AWEA chief executive.

The failings of the US grid are based in both its physical structure and policy management. Little change has been made in its mechanics since its inception. Advocates of grid change like to say that our telephone system, with its cell towers and digital text messaging, would flummox Alexander Graham Bell if he returned from the dead today. On the other hand, resurrect Thomas Edison and he could pick up where he left off on the electric system.

What has changed, however, is the grid’s size and scope. The North American grid is an enormous mechanism that represents $1 trillion in assets and encompasses about 340,000 km of high voltage transmission lines, to support 830 GW and 334 million people – according to the North American Electric Reliability Corporation (NERC), which develops and enforces reliability standards for Canada and the United States.

Built gradually over time, the grid emerged as a patchwork of remedies, rather than a singular co-ordinated unit. While progress has been made in grid reinforcement since 2005, public and government opposition to new lines is obstructing the $1.5 trillion in new investment needed by 2030, according to American Society of Civil Engineers.

Grid inadequacy is onerous to renewable energy. The US Department of Energy’s report 20 Percent Wind Energy by 2030 identified lack of adequate transmission as the biggest barrier to reaching the 20% goal. Wind developers want to build projects, but transmission lines do not exist – or are in inadequate – in the remote plains most suitable for wind farms. Utility-scale solar faces a similar problem, given that concentrating solar power (CSP) works best in the desert, where few people live. More than 4000 MW of large solar power plants are planned in the next five years and require transmission grid upgrades or construction, according to an AWEA/SEIA white paper, Green Power Superhighways: Building a Path to America’s Clean Energy Future.

If these plants cannot interconnect to the grid, some states may find it hard to meet renewable portfolio standards – requirements that a certain amount of their power come from renewables by a set date. California, for example, appears unlikely to reach its goal of providing 20% of retail electricity sales from renewables by 2010. ‘As of January 2009, California had 13,000 MW of wind plants and 30,000 MW of solar plants waiting to connect to the grid. Similar backlogs exist in other regions, with 70,000 MW of wind projects waiting to interconnect in the upper Midwest, 40,000 MW in the lower Midwest, 40,000 MW in the Great Lakes/Mid-Atlantic, and 50,000 MW in Texas,’ said the paper.

Transmission inadequacy not only hinders development, but also inhibits use of existing wind resources, according to the report. In several regions, grid operators fail to dispatch wind power, even when the wind blows steadily, as the lines lack capacity to carry the power. ‘With many consumers paying record prices for electricity from fossil fuels and mounting concern about climate change, it makes little sense to waste zero-fuel cost, zero-emissions electricity. With renewable energy deployment expected to continue its rapid growth, curtailment of wind generators due to a lack of transmission capacity is only likely to worsen over the coming years,’ the paper continues.

How to fix a national grid

Create a plan

To begin with, the nation needs comprehensive interconnection planning that identifies where it should add or expand transmission for renewables, says AWEA/SEIA. The plan would create a green superhighway – high-voltage transmission built to accommodate renewable energy. Other resources, such as nuclear, coal and gas-fired generation, could use the new transmission lines too, but first priority for interconnection and capacity rights would go to renewable energy, Resch said.

Who would do the planning? AWEA/SEIA suggest that the Eastern and Western Interconnections – the two major, connected portions of the national grid – each create their own regional plans. They would receive assistance from a planning entity that answers to the Federal Energy Regulatory Commission (FERC). Governors, public utility commissions, and other regulatory bodies would serve as planning partners to make sure local interests are also considered.

AWEA/SEIA do not advocate a particular map for the new transmission lines; nor do the organizations push a specific technology. They do not prescribe lines that are alternating current, direct current or any particular combination of the two. They do, however, argue that high-voltage lines are essential to the new system, because one 765 kV line can carry as much power as six 345 kV lines, reducing the amount of land needed by a factor of four. Given their efficiency, very high voltage lines will significantly reduce congestion and transmission losses. This will in tun reduce power costs, the organizations say. A 765 kV grid overlay could cut peak load losses by 10 GW.

Modify grid operations

While the mechanics of the grid have changed little over the decades, its oversight and operation has grown more complex. AWEA/SEIA suggest several changes to grid operation, aimed at reducing costs and better managing the unique characteristics of renewable energy.

The US grid is divided into 140 balancing areas, some overseeing as little as 100 MW; others more than 100 GW. Grid operators balance supply and demand in each area and oversee the flow of power through their individual systems. An area may have too much supply at a time when a neighbouring area is running short. But the over-supplied area may not be able to assist the under-supplied area because of transmission constraints that exist between the two regions.

AWEA/SEIA contend that if the US creates larger balancing areas it can overcome this inefficiency. The Midwest grid operator found that by consolidating 26 of its balancing areas it can save $113–$208 million annually. Moreover, consolidation makes it easier to accommodate the intermittent nature of renewable resources. ‘If the wind slows or clouds cover the sun in one area, electric output from other areas can make up for the loss,’ the white paper says.

The organizations also call for system operators to reconsider the way they schedule power plant for dispatch. Grid operators often schedule plants in hourly blocks. But demand for power can shift radically within that hour, depending on how much electricity consumers use at any given moment. If the system runs short on generation, it must turn to expensive reserve power. Renewable generators can increase the need for reserve power if their output slows down because of a sudden lack of wind or sun. AWEA/SEIA says the grid operators can overcome this problem by scheduling power plants to operate in five or 10 minute blocks.

Socialize costs

Resch emphasizes that the transmission plan does not seek government funding. But it does seek change in how the US typically pays for transmission. The interconnection plan would identify necessary renewable energy projects. Then, the cost of building transmission for the projects would be spread among a large number of utility ratepayers.

‘When you share those costs, it is very small portion of someone’s bill ... pennies on the dollar,’ Bode says.

The organizations say the current approach to paying for transmission – assigning costs to specific users – does not work. Instead it creates a ‘free rider problem.’ The first generators to connect cover the capital costs; others that connect later get a free ride because the line is already paid for.

Still, the idea of passing costs on to consumers does not always sit well with states. In New England, two Maine utilities recently met resistance when they tried to socialize costs for a transmission line that would connect an 800 MW wind farm under development by Horizon Wind Energy. They argued that the line would provide economic benefits throughout the region because it would push wind power into other states that need to meet renewable portfolio standards and mandatory carbon reductions. However, two states – Connecticut and Massachusetts – fought the plan, saying that their ratepayers would end up covering costs that should be carried by generators. The utilities are now looking at other funding options for the transmission project.

Expand federal role

Finally, the white paper calls for a stronger federal role in siting transmission lines, now often stalled before state or local authorities because of not-in-my-backyard or political forces. AWEA/SEIA call for FERC to permit lines, not state regulators. FERC would act as the lead agency, co-ordinating all reviews, including those for habitat protection, environmental considerations, and cultural site protections identified by state agencies. The organizations acknowledge this can be a controversial proposition. States, particularly in the south eastern US, have a long tradition of states’ rights that they are loath to relinquish.

‘The infrastructure required to serve future electricity needs requires a new approach and justifies giving FERC exclusive authority for siting green power superhighways,’ the paper argues.

Congress already created a FERC backstop authority in the Energy Policy Act of 2005. If a state ‘withholds’ approval of a transmission line, FERC may step in and supersede the state. However, AWEA/SEIA say the law is flawed and has failed to produce desired results. In particular, the law fails to make clear whether ‘withholding’ approval and ‘denying’ approval are one and the same. Consequently, as the law stands, if a state disapproves of a project, FERC may not be able to step in. In addition, a further loophole exists that states can use to stop FERC from interfering; the backstop law does not apply to state-owned property. So a state can ultimately prevent construction of transmission by buying the land the line is supposed cross.

Quick action

The call to improve the grid is not new. Serious discussion has been underway since the Northeast blackout of 2003 that left New York City in the dark. Initially, much of the talk centred on modernizing what was seen as an aging system. Over the last couple of years, attention has instead turned to greening and smartening the grid.

American Electric Power (AEP) and AWEA have circulated a conceptual 765 kV plan to kick-off discussion of how to build a national transmission backbone. Late last year, AEP announced plans to begin building a part of this backbone across the Upper Midwest. The lines will connect major wind developments in the Dakotas and nearby states to the existing 765 kV network that ends near the highly populated Chicago area. Still in early planning, the $5–10 billion project is expected to require 1000 miles (1609 km) of high voltage wire, built over a decade.

Meanwhile, in February, the Southwest Power Pool (SPP) approved a transmission expansion plan for improving the electric grid in an eight state region, which already includes 40,000 miles (64,376 km) of transmission lines and 56,000 MW. The 10-year plan identifies $2.7 billion in transmission upgrades, including 1753 miles (2821 km) of new lines.

Evident in the plan ‘is the importance of providing more access to all generation, including the vast potential for renewable resources in our region,’ said Nick Brown, president and CEO of SPP. In 2008, SPP had interconnection requests for 29,389 MW, up from 13,057 MW in 2007. Of these requests, 28,126 MW came from wind developers.

The Western Governors Association (WGA) is pressing the Obama administration to act quickly on the creation of a long-term energy plan to expand the grid and bring renewables to market.

Gov. Jon M Huntsman Jr. of Utah, WGA chairman, said such a plan ‘will require unprecedented co-ordination among states and the federal government.’ He added that the West ‘is not starting from square one. We have an unprecedented number of proposals for major transmission projects. Appropriate and timely action by the federal government in concert with the states will avoid the construction of multiple transmission lines to the most promising areas, capture economies of scale and minimize environmental impacts.’

WGA, which represents 19 states and three US-flag islands, is pushing for federal funds to ‘up-size’ transmission projects that are already well into development, since once a transmission line is built, it is difficult and expensive to increase its capacity. The association has also called for federal legislation to preserve the ability to expand other proposed projects to their maximum technical capabilities.

On the Congressional level, shortly after Obama’s first speech to Congress, Senate Majority Leader Harry Reid introduced legislation to move green power from remote areas to population centres. Reid wants Obama to designate renewable energy zones with significant clean energy generating potential. ‘Then, a massive planning effort will begin in all the interconnection areas of the country to maximize the use of that renewable potential by building new transmission capacity. If that process falters, then the federal government would be given clear authority to keep it going and get that new transmission built on schedule,’ he said at the National Clean Energy Project forum on 23 February in Washington, D.C.

‘With a new President and a bipartisan mandate in Congress, as well as among the American people, now is the time to boldly put our knowledge into action,’ Reid said.

Indeed, the consequences of inaction go beyond just making it difficult for renewable energy development. Grid reliability is at stake, Resch said. The US is using the same transmission system that allowed its citizens to watch televisions as Apollo 13 struggled to make its way back to Earth in 1970. That aging system cannot indefinitely sustain the nation’s demand for electricity, growing at 2% per year. ‘The bottom line is without renewed invest in transmission we will face blackouts in many parts of the US,’ he said, concluding: ‘We can no longer wait. The time for Congress to act is now.’

Lisa Wood is US correspondent for Renewable Energy World.