Whipping up Support for Transmission

Nov 7, 2008 - Ken Silverstein - energybizinsider.org

Supporters of wind power are whipping up support for new transmission. Without a notable increase in the capacity to carry such energy, the optimistic forecasts for more renewable power will never happen. Ken Silverstein EnergyBiz Insider Editor-in-Chief Read Ken's Blog Respond to the editor.

While the number of transmission miles is projected to rise in the United States over the next 10 years, the expansion will not occur at a sufficient pace to handle the anticipated growth in wind capacity. The expected congestion will assuredly impede utilities as they try to work more renewable energy into their portfolios. Such power facilities are often based in remote locations, requiring high-voltage transmission systems to ensure their energy supplies make it to population centers.

"There would be negative consequences if we cannot get the transmission we need," says Rick Sergel, chief executive of the North American Reliability Corporation that released its annual state of the utility industry. "We are already seeing that. We are operating the grid closer to the edge than ever before."

According to NERC, new generation supplies are forecast to outpace transmission development. That constrains wind development. Of the 145,000 megawatts of wind energy planned in the next 10 years, only a portion will get built -- due in some measure to limited transmission. The matter necessitates more involvement from state and federal lawmakers, the group adds, emphasizing that a better cost-sharing formula must be introduced to pay for the expansion and upgrade.

The nation may look to Texas, which leads the country in wind generation with 5,300 megawatts of installed capacity. The three-member utility commission there has approved the construction of electricity transmission lines that will transport wind power from remote sections of the state to major metropolitan areas that include Dallas, Houston and San Antonio. The roughly $5 billion project, which will be able to transmit about 18,500 megawatts of wind power, is expected to cost consumers an extra $4 a month when the lines are complete in four years.

According to a study performed by the grid operator in Texas, ERCOT, expansions are economical after factoring in the cost savings from using wind power. Conservatively speaking, it estimates the use of sustainable energy sources will save utilities there $1.2 billion per year in fuel costs.

Altogether, the U.S. Department of Energy says that wind energy could provide 20 percent of the generation mix here by 2030. The cost, it adds, would be $60 billion spread over the life of the undertaking. A bigger and more modern grid not only would relieve congestion but it would also diminish the nation's reliance on fossil fuels. A cramped system, by comparison, forces utilities to rely on base load coal and gas facilities that are nearer to customers they serve.

Dedicated Lines

To be sure, utilities have other pressing needs. As recession hovers, they are focused on cutting debt and strengthening their cash positions. Such prudence comes atop a regulatory structure whereby companies must fight vigorously to win the permits necessary to build transmission. Major expansions take years.

The reality now is that the nation's generation capacity is expected to exceed the pace at which transmission is getting constructed. While 1,700 circuit miles are supposed to be added over the next 10 years -- about 10 percent growth -- the reliability council says that new generation supply is projected to grow by 21 percent during that time frame.

It's a predicament that has been in the making for decades. The Energy Department says that in the 1970s, investment in new transmission totaled about $5.5 billion a year. That outlay then fell to about $3 billion a year in the 1990s. It attributes that decline to electricity restructuring and open access laws that left grid owners uncertain as to which entities would be responsible for financing future fixes.

Increased attention to the matter, particularly in the aftermath of the 2003 blackout, then forced Congress to give more incentives to transmission owners and to provide greater assurances to those lines considered to be in the country's national economic interest. That focus has led to an upsurge in transmission investment -- an amount that the Energy Department says will be $8 billion annually for the next couple years.

Southern California Edison is expanding its transmission system to accommodate 4,500 megawatts from an array of generation sources. It's a $1.8 billion high-voltage pursuit that can move renewable energy sources from remote areas to city centers. Xcel Energy, meanwhile, is constructing transmission lines to carry wind power from 137 wind mills into Minneapolis and St. Paul. The utility says that the added lines will ultimately be able to transmit 800 megawatts of wind energy.

The increased capacity, in all cases, is supposed to give utilities a chance to access more renewable energy sources in a cost effective manner. A study by the Midwest Independent System Operator, for instance, concluded that adding 5,000 miles of new, high-voltage transmission lines so that wind power could travel from the Dakotas and into New York City is economical. While the cost to build the line would be $13 billion, the grid operator said that consumers would save about $600 million a year because utilities could buy more predictably priced power.

"Investing in new transmission for renewable energy not only increases our electricity supply, it reduces carbon emissions from power generation and applies downward pressure on electricity costs," says Randall Swisher, head of the American Wind Energy Association."

Expanding the transmission grid will remain a formidable task. But the utility industry has joined forces with its wind energy counterparts, who understand implicitly that a constrained system stifles both the economy and wind's promise.

More information is available from Energy Central:

* The Costs of Failing Infrastructure - Tallying Up Disasters, EnergyBiz, Sept/Oct 2008

* Focusing on Smart Transmission Investment - Kansas Project Launch, EnergyBiz, Sept/Oct 2008

* Infrastructure Needed - Steps to Encourage Building, EnergyBiz, Jan/Feb 2008

* Continental Grid Vision Needed, EnergyBiz, Nov/Dec 2007