September 24, 2023

Building new transmission lines in the United States is like herding cats. Unless that process can be fundamentally reformed, the nation will have difficulty meeting its climate goals.

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The transmission system in the US is outdated, doesn’t go where an energy grid powered by clean energy sources needs to go, and isn’t being built fast enough to meet projected demand growth.

It takes so long to build new transmission lines in the US – if they are built at all – that electricity transmission has become a roadblock to deploying clean energy.

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“Right now, more than 1,000 gigawatts of potential clean energy projects are awaiting approval – about the current size of the entire US grid – and the primary reason for the bottleneck is a lack of transmission,” Bill Gates wrote in a Recent Blog Posts about Transmission Line,

the stakes are high.

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From 2013 to 2020, transmission lines have only expanded by about 1% per year. To achieve the full impact of the historic Inflation Reduction Act, that pace would need to more than double to an average of 2.3% per year, according to a Princeton University report led by Prof. Jessie Jenkinswho are macro-scale energy systems engineers.

herding cats with competing interests

Building new transmission lines requires countless stakeholders to come together and come to an agreement on where a line will run and who will pay for it.

There are 3,150 utility companies in the country US Energy Information Administration told CNBC, and for transmission lines to be built, each of the affected utilities, their respective regulators, and the owners of the land that would host a line would have to agree on where the line would go and how to pay for it. as per their respective rules.

Aubrey JohnsonVice President of System Planning for the Midcontinent Independent System Operator (MISO), one of the seven regional planning agencies In America, his work was compared to making a patchwork quilt from pieces of cloth.

“We’re connecting and connecting all these different pieces, all these different utilities, all these different load-serving entities, and really trying to see what’s best for Trying to figure out what works best and how to solve the most issues. For the most people,” Johnson told CNBC.

What’s more, the parties at the negotiating table may have competing interests. For example, an environmental group is likely to disagree with stakeholders who advocate for more electricity generation from a fossil-fuel-based source. And a transmission-first or transmission-only incorporated company is going to have higher profits than a company whose core business is power generation, potentially putting the parties at odds with each other.

The system really falters when a line spans a long distance across multiple states.

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States “look at each other and say: ‘Well, you pay for it. No, you pay for it.’ So, that’s how we get stuck most of the time.” Rob Gramlichfounder of Transmission Policy Group Grid Strategiestold CNBC.

“The industry grew to have hundreds of utilities serving small geographic areas,” Gramlich told CNBC. “The regulatory structure was not established for lines crossing 10 or more utility service areas. It’s like we have municipal governments trying to fund an interstate highway.”

This type of headache and bureaucratic clutter often deters utilities or other energy organizations from even proposing new lines.

Gramlich told CNBC, “More often than not, nobody’s proposing the line. And nobody’s planning it. Because the energy companies know there’s really no workable way to recover the cost.”

Who Benefits, Who Pays?

Energy companies building new transmission lines need to get a return on their investment, explains james mckellyProfessor of Electrical Engineering at Iowa State University. “They have to pay for what they’ve done, otherwise there’s no point in doing it.”

Ultimately, an energy organization – a utility, cooperative, or transmission-only company – will pass the cost of a new transmission line on to electricity customers.

“A principle that underlies most cost allocation mechanisms for transmission is, to the extent that we can identify beneficiaries, the beneficiaries pay,” McKellie said. “Someone who benefits from a more frequent transmission line will pay more than someone who benefits from a less frequent transmission line.”

But the mechanism for recovering those costs varies regionally and on the relative size of the transmission line.

Regional broadcast organizations, such as MISO, may oversee the process in some cases but are often mired in internal debate. “Their footprints are asymmetrically shaped and they have trouble deciding internally who should pay and who should benefit,” Gramlich said.

The longer the line, the greater the problem of planning. Gramlich told CNBC, “Sometimes it’s three, five, 10 or more utility areas that are crossed by the necessary long-distance high-capacity lines. We don’t have a well-functioning method to determine that.” There is no system as to who allocates the benefits and costs.” ,Here There’s a map that shows planning units area-by-area.)

MISO’s Johnson says there has been some incremental improvement in approving new lines. Currently, the regional organization has approved a $10.3 billion plan for the construction of 18 new transmission projects. Johnson told CNBC that those projects should take seven to nine years, instead of the 10 to 12 historically required.

“Everyone is becoming more aware of the impact of allowing and allowing and how to do that more efficiently,” he said.

There has also been some incremental federal action on transmission lines. The IRA had about $5 billion for transmission-line construction, but that’s not nearly enough, said Gramlich, who called that amount “like peanuts.”

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The US Department of Energy has a “Building a Better Grid” Initiative Which was included in President Joe Biden’s bipartisan infrastructure legislation and aims to promote cooperation and investment in the nation’s grid.

In April, the Federal Energy Regulatory Commission issued a notice of a proposed new rule, titled RM21-17, which aims to overcome transmission-planning and cost-allocation problems. The rule, if it passes, is “potentially very strong,” Gramlich told CNBC, because it would force every transmission-owned utility to engage in regional planning. That’s when there aren’t too many loopholes for utilities to undermine the spirit of the rule.

what does success look like

Gramlich points to some broadcast success stories: The Ten West Linka new 500-kilovolt high-voltage transmission line that will connect southern California to solar-rich central Arizona, and $10.3 Billion Long Distance Transmission Planning Project Including 18 ongoing projects throughout the MISO Midwestern region.

“Unfortunately, they are more the exception than the rule, but they are good examples of what we need to be doing everywhere,” Gramlich told CNBC.

In Minnesota, the non-profit electric cooperative great river energy According to the Vice President and Chief Transmission Officer, it is charged with ensuring that 1.3 million people have reliable access to energy now and in the future Aao Patel,

“We know that an energy transition is happening in Minnesota,” Patel told CNBC. Patel said that in the last five years, the region’s two largest coal plants have been sold or retired and the region is getting more of its energy from wind than ever before.

Great River Energy serves some of the poorest in the state, so keeping energy costs low is a primary objective.

“For our members, their north star is reliability and affordability,” Patel told CNBC.

Great River Energy and Minnesota Power are in the early stages of construction 150-mile, 345-kv transmission line northern to central Minnesota. it is called Northland Reliability Project and will cost an estimated $970 million.

It is one of the segments of the $10.3 billion investment miso allowed In JulyAll of which will be in service before 2030. Achieving that plan involved more than 200 meetings, according to miso,

The benefits of the project are expected to be at least 2.6 and 3.8 times the project cost or a delivered value of between $23 billion and $52 billion. Those benefits are calculated over a 20- to 40-year time period and take into account a number of construction inputs, including avoided capital cost allocation, fuel savings, decarbonization and risk reduction.

The cost will ultimately be borne by energy users residing in the MISO Midwest subregion based on the retail rate arrangement the utility uses with their respective state regulator. MISO estimates that consumers in its footprint will pay an average of more than $2 per megawatt-hour of energy delivered for 20 years.

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But there is still a long process ahead. Once a project is approved by the regional planning authority – in this case MISO – and the two endpoints for the transmission project are decided, Great River Energy and Minnesota Power obtain all the land use permits necessary to build the line. responsible for receiving.

“MISO certainly won’t be able to know what Minnesota communities want or don’t want,” Patel told CNBC. “And it gives the electric cooperative an opportunity for some flexibility in the routing between those two endpoints.”

For Great River Energy and Minnesota Power, an important component of engaging with the local community is hosting open houses where members of the public who live along the proposed route meet to ask project leaders questions.

For this project, the utilities specifically planned the route of transmission to run along a pre-existing corridor to minimize land owner disputes. But it is always a delicate subject.

“Communities with transmission going through, landowner property is something that is very sensitive,” Patel told CNBC. “We want to make sure that we understand what the challenges may be, and that we have direct face-to-face communication so that we can avoid any problems in the future.”

Sometimes landlords give an outright “no”. In others, Money Talks: The Great River Energy Cooperative may pay a landowner whose property is in operation through a one-time “easement payment,” which will vary depending on the land involved.

“A lot of times, we’ve been able to successfully — at least in the past — successfully get landed properties,” Patel said. And this is due to the work of Great River Energy employees in the Permitting, Siting and Land Rights Department.

“We have individuals who are very familiar with our service area, our communities, local government units, and state government units and agencies and are collaborative in solving problems when we have to set up our infrastructure. work properly.”

Engaging with all members of the community is a necessary part of any successful transmission line build-out, Patel and Johnson stressed.

In late January, MISO held a three-hour workshop to plan its next tranche of transmission investments.

“There were 377 people in the workshop for the better part of three hours,” MISO’s Johnson told CNBC. Environmental groups, industry groups and government representatives from all levels demonstrated and MISO energy planners worked to try to balance the competing demands.

,And it’s our challenge to listen to all of their voices, and ultimately try to figure out how to bring it all together,” Johnson said.

Also in this series: Why America’s aging energy grid is a climate problem