Western utilities prefer local renewables as transmission hurdles persist – WGA

Transmission availability, after cost, is the most important driver for utilities’ selection of renewable resource areas, according to an Oct. 26 report by the Western Governors’ Association.

This was one factor contributing to a discrepancy between Western utilities’ preferences for renewable resource areas and, in many cases, the most economic resources in the Western Renewable Energy Zone (WREZ).

For the third part of its WREZ initiative, WGA interviewed 25 Western utilities and 11 Western public utility commissions, among others. The first two phases of the initiative in 2008 and 2009 resulted in the identification of 95,000 MW of high-quality wind in 53 hubs throughout the West, each of which had enough high quality resources within 100 miles of its geographic center to justify a high-capacity transmission line, according to an Oct. 18 draft of the report.

The WGA in its report found 16 WREZ hubs of common interest.

Also helping to determine utilities’ preferences for renewable resource areas were renewable portfolio standard restrictions, the diversification of renewable resources, proximity to load, risk of timely project completion and risk of cost recovery.

With respect to resource planning and procurement, utilities preferred to develop resources close to load, as they may not require new high voltage transmission and are easier to develop in an incremental manner, according to the draft report.

In addition, pancaking transmission charges can ruin the economics of resources that are of higher quality but farther away, the report said.

State policies may limit out-of-state resources, further contributing to utilities’ in-state preferences. In-state resources are also easier to site and recover costs for, according to the report.

Utilities that don’t have aggressive state policies found it unlikely they would be subject to a 33% RPS in the next 10 to 20 years.

With regard to transmission planning, most utilities have adequate transmission for the next 10 years to meet renewable portfolio standards (RPS), provided those standards don’t change, the lines currently under development continue, and resource development continues close to service areas, the report said.

Utilities also preferred resources that use existing transmission, the study found. If they were to use new transmission, the in-service date for the new project had to be “highly certain.”

When it came to transmission development, two-thirds of the 25 utilities polled said state policies or regulations impeded the development of interstate transmission.

Commissions cited as hurdles to transmission development the lack of eminent domain authority, uncoordinated local, state and federal approvals, and cost recovery processes.

Commissions also said they found it difficult to approve a line “sized beyond the definable future needs of retail customers and transmission customers with signed service agreements,” according to the report.

Statutory or regulatory changes may be needed to overcome barriers in transmission permitting and cost recovery processes to allow for building transmission in advance of the need to account for long-term demand, the report said.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.