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A total of $169.7bn of transmission projects is expected to come online in the United States between now and 2020, according to TransmissionHub data presented at TransForum East in Arlington, Va., on Dec. 6.
This year, $7bn of projects representing about 3,100 miles of lines, most of which are 230-kV, are scheduled to come online. That figure will double in 2013 and 2014, with $15.4bn and $15.3bn, respectively, representing 5,600 miles and 6,100 miles of lines.
TransmissionHub data also shows that that annual investment will more than double again in 2015 to $31bn, representing 9,700 miles of lines.
From 2016 to 2020, North American transmission investment is expected to amount to $101.2bn, with most of that spend, or $74.3bn, taking place from 2016 to 2018.
The largest builder of transmission, ITC Holdings (NYSE:ITC), is set to merge Entergy’s (NYSE:ETR) business into it next year, pending necessary regulatory approvals.
As reported, ITC Great Plains, a subsidiary of ITC Grid Development, has submitted its proposal to the Southwest Power Pool (SPP) for the ITC Great Plains Expansion Project, which is a package of five new projects that involves seven states and includes more than 2,700 miles of new transmission line. The expansion project proposal involves five primary 345-kV AC transmission lines consisting of multiple west-to-east segments starting in Nebraska, Kansas, Oklahoma and Texas, and ending in Iowa, Missouri and Arkansas.
PacifiCorp also has one project that accounts for about half of its planned line miles. The first major segment of the 2,000-mile Energy Gateway project was put in service in November 2010, while construction on the second major segment of the project began in May 2011.
The Western Area Power Administration (WAPA) has 30 projects in the works and while one is 1,000 miles long and another is 725 miles long, none of the others is very large.
Xcel Energy’s (NYSE:XEL) 2,500-mile, 500-kV High Plains Express Transmission Project and PacificCorp’s 2,000-mile, 500-kV Energy Gateway project are among the largest projects.
Key drivers in transmission development are plant retirements/reliability issues, the aging transmission grid and renewable integration into power markets.
The eastern grid, like in other parts of the country, has had an under-investment in transmission for several decades. Complications in New England include the area being at the end of the gas line and the high winter demand for gas for heating and electricity. The closure of several generating stations in the East and Midwest, including Dominion’s (NYSE:D) Salem Harbor plant, will also create issues.
PJM Interconnection generation owners have announced retirements of more than 14,000 MW. PJM has approved 130 transmission upgrades, costing nearly $2bn.
As for renewable energy, by some accounts, connecting such sources to the grid is responsible for 77% of the transmission on the drawing boards today. Furthermore, while there was significant wind development in 2010 and 2011, the possible expiration of the production tax credit in 2013 may have caused developers to put plans on hold. Also, natural gas prices, which are expected to remain low, present a challenge for wind to compete directly with spot market prices in most markets.
TransmissionHub data also shows that while costs for solar installations continue to decrease, low gas prices are driving offtake prices under solar power purchase agreements to levels that some say are not financeable.
Additionally, assuming states stay on track with renewable portfolio standard implementation timetables, renewable development should continue. Therefore, in spite of the cost challenges posed by wind and solar, development may continue in certain regions.
Federal drivers include FERC Order 1000 and the Obama administration’s interagency rapid response team for transmission (RRTT).
As reported, in October 2011, the Obama administration said it would accelerate the permitting and construction of seven proposed electric transmission lines under the RRTT, including the 500-kV Susquehanna-Roseland line by PPL (NYSE:PPL) subsidiary PPL Electric Utilities and Public Service Enterprise Group (NYSE:PEG) subsidiary Public Service Electric and Gas.
One project that has been delayed due to bird concerns and community opposition, among other things, is Southern California Edison’s (SCE) 333-mile, 500-kV Tehachapi Renewable Transmission Project. The city of Chino Hills, Calif., initially agreed to an above-ground alignment, but asked state regulators to order work stopped due to the height of the power poles. State regulators have ordered SCE, an Edison International (NYSE:EIX) subsidiary, to provide a cost analysis of what it would cost to put the lines underground.
In Texas’ competitive renewable energy zone (CREZ) effort, the biggest developer is Electric Transmission Texas, a joint venture between American Electric Power (NYSE:AEP) and Berkshire Hathaway’s MidAmerican Energy Holdings. The CREZ effort stems from 2005 state legislation and the cost has risen to about $6.87bn. The lines are set to be complete by the end of 2013, and be able to deliver more than 18,500 MW of wind from west Texas and the Panhandle.
Another project in Texas is Pattern Energy Group’s Southern Cross project, which adds an HVDC tie between the southeast and ERCOT to facilitate the further development of additional Texas wind projects by creating access to new markets, while allowing the Southeast to share in the state’s abundant wind resource.
As for HVDC projects, another project in development is Transmission Developers, Inc.’s Champlain Hudson Power Express, which will bring power from Quebec to New York City through an HVDC line that will run underwater for most of its length.
Other projects include the Eastern Alberta Transmission Line (EATL) and the Western Alberta Transmission Line (WATL), which along with the Heartland Transmission Line, were declared critical transmission infrastructure by the Alberta legislators in 2009. ATCO Electric will build EATL while AltaLink Management is developing WATL.
Some proposed transmission projects are no longer in the works, such as the Potomac Appalachian Transmission Highline (PATH) and the Mid-Atlantic Power Pathway (MAPP) projects in PJM. Planning staff found that in a 15-year look-ahead, all previous thermal overloads resolved and that for set contingencies, there were no thermally overloaded 500-kV facilities from 2013 to 2017. Furthermore, these projects faced local resistance. This may point to a trend toward projects with shorter lines and focused on more localized grid support accommodating new or retired generation. PATH is a joint venture between FirstEnergy (NYSE:FE) subsidiary Allegheny Energy and AEP, while MAPP was proposed by Pepco Holdings (NYSE:POM).
The information in this article was presented at TransForum East on Dec. 6 by Randy Rischard, V.P. of Data and Analysis at Energy Central, and Carl Dombek, senior editor with TransmissionHub.