‘Archaic’ institutional, political structures are main obstacles to transmission – Energy Foundation

The balkanized regulatory framework and outdated energy policies present in the electric power industry today fail to accommodate for a changing energy landscape, one in which electricity generated by renewable resources plays a more significant role.

A new paper, “Transmission Policy: Planning and Investing in Wires,” authored by John Jimison, managing director of the Energy Future Coalition, and Bill White, former vice president for David Gardiner & Associates and current president at Norton White Energy, was published on Sept. 16 with six other papers as part of “America’s Power Plan,” a coordinated effort by more than 100 of the nation’s top energy experts that addresses and assesses the power system’s main challenges and outlines potential policy and market design solutions, according to a statement announcing the plan.  

“One of the reasons we don’t make what we would think are good decisions to build transmission that we really need is [that] we don’t do a very good job of estimating, assessing and communicating the benefits of transmission,” White told TransmissionHub. “We need to set priorities for the investments that are the most helpful for ratepayers and clean energy. Those are in particular are lines that link these balkanized balancing areas. When we link those areas up, … that’s a much more efficient way to manage resources.”

The balkanization of the power industry is one of the biggest contributors to a disconnect between planning and executing long-distance, extra high-voltage lines, which are the focal point of the paper, he said.

“Regulation of the electric sector is chopped up,” White said. “Some regulatory structures are aggregated into large organizations, RTOs, and others aren’t. It’s a patchwork of different approaches and different structures all over the country. This really makes it harder to get folks to agree on building transmission lines that would span long distances and cross a lot of jurisdictions, in terms of how much to pay and where to put them.”

America’s Power Plan calls for a more coordinated, thoughtful and efficient approach to transmission planning, taking into consideration not just needs arising from connecting remote renewable resources, but the technologies and programs that mitigate those needs – energy efficiency, distributed generation and demand-side resources.

“Regional transmission planning increasingly requires consideration of a vast array of alternative resources that can reduce or even eliminate the need for some transmission investments,” the authors said. “Demand-side resources are increasingly available to meet reliability and economic goals that automatically prompted proposals for increased central generation and accompanying transmission from traditional utility planners. These options should thus allow the capital available for new transmission to be better focused on capacity to provide access to clean energy that would otherwise remain undeliverable.”

The plan proposes that the benefits of transmission expansion be assessed and communicated; interregional lines that link balancing areas be prioritized; competition in electricity markets increase and grid operations harmonize; the timeline for planning, building and siting be reduced; and the lines be made the most of once built.

To that end, FERC Order 1000, which requires regional and interregional transmission planning, has helped move the conversation in that direction, White said.

“We’re definitely encouraged by the fact that people are sitting down and looking at regional transmission needs in a systematic way, in many cases for the first time,” he said. “That’s crucial and is happening in every part of the country right now.

The next step will be to see how quickly and easily those planning activities get translated into decisions to share costs and build things.”

The paper also makes a series of recommendations for different categories of decision-makers.

Though the paper does not call for a specific timeline in which to develop a better approach to transmission planning, White said the effort was “more long-term,” in order to integrate high levels of renewable energy on the grid by 2050.

However, he noted that, in the context of building transmission lines, which can take an average of around 10 years, “long-term” isn’t necessarily that long.  

“You’ve got 40 years and it’s 10-plus years to [build transmission] – that’s not as much time as it first appears,” White said. “We’re very mindful of that, which is why one of our key recommendations is we have to go faster to get this job done. That is really pretty critical.”

Ideally, the amount of time it takes to build transmission would align more with the amount of time it takes to build renewable generation, or would be within that timeframe by a factor of one or two, he said.

“We have to go fast enough to enable ourselves to take advantage of these unbelievable renewable resources in this country,” White said. “One of the key barriers to taking advantage of that wealth of resources is transmission. We can’t put wind and sunlight in rail cars and pipelines; we have to generate power and move it over the transmission lines.”

The paper also discusses how transmission enables more efficient markets, thereby allowing markets to foster greater competition, White said.

The removal of the right of first refusal in Order 1000 is also helping to foster competition, White said.

“Certainly, for the types of lines we focused on in our paper, absolutely more competition for those lines is going to be appropriate,” he said. “It’s going to lower costs, it’s going to foster a lot of innovation and creativity in the marketplace, in competition and we’re going to build these things cheaper and faster as a result. I think there’s evidence in the market under Order 1000 that that’s already happening.”

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.