Industry experts across the country generally agree that other regions of the nation are not at the bottom of the “boom and bust” cycle of transmission planning that was recently described as the current state in the Pacific Northwest.
“A few years ago, our transmission plan was just covered with projects; now, it’s reduced and we’re at the bottom of that ‘bust’ cycle,” Jeff Miller, ColumbiaGrid’s vice president and manager of planning, told the group’s Aug. 21 board of directors meeting.
Miller cited the recent suspension of the Cascade Crossing project as an example, while noting that the organization is seeing few other project changes.
That situation may be shared elsewhere in the region. British Columbia’s BC Hydro recently completed the Columbia Valley transmission project and is making progress on four other major transmission projects that are set to be energized between early 2014 and early 2015.
BC Hydro has referred to the recently completed project and those still underway as “the most significant investment made by BC Hydro … in almost 50 years,” perhaps an indication that the current spate of construction was driven largely by the need to replace and reinforce aging infrastructure.
After those projects are completed, activity appears poised to drop off. In its draft integrated resource plan (IRP) released for public review and comment on Aug. 23, BC Hydro recommended upgrades or reinforcement to two additional areas of its transmission system.
One expert says BC Hydro’s situation is reflective of what has happened across much of North America.
“We built this magnificent grid in the ‘50s, ‘60s, and ‘70s, and then we effectively walked away from it, started investing in gas turbines and other things, and didn’t come back to assess the condition of the electric transmission system until 2004 or 2005,” Jim Hoecker, former FERC chair and counsel to the industry trade group WIRES told TransmissionHub. “We’re playing catch-up as a result of all of that.”
Once caught up, planning and construction will slack off, but some suggest any slow-down is most likely a temporary blip.
“Definitely there are cycles in [transmission] investment, but if we’re looking at the macro cycle versus the micro cycle, I think North America is still on the upswing of the cycle,” Teresa Mogensen, vice president of transmission, Xcel Energy (NYSE:XEL), told TransmissionHub.
While the experts concur that transmission planning and construction is cyclical, not every region is at the same place in the cycle, or for the same reason.
“We’ve had a major economic downturn [but] we’re pretty bullish about Arizona and specifically the [Phoenix area] recovering and as it recovers, we’ll be ready to serve it,” Steve Cobb, director of transmission planning for Salt River Project (SRP), told TransmissionHub.
Although SRP is nearing completion of a regional transmission upgrade and has only a handful of other projects in its queue, Cobb is reluctant to characterize the current climate as a lull.
“Our goal is to not build a lot of long transmission lines [that lead] outside the state,” he said. “We want to keep the [generated power] in state for the state’s benefit as well as the benefit of our customers by not having to spend a lot of money to transport energy from remote sites.”
Moving energy across state borders, however, is precisely what is driving transmission development elsewhere, particularly where it is needed to move renewable energy from where it is generated to where it will be used.
“There is still a very great demand for new transmission to bring renewables on as well as to provide reliable energy,” Michael Goggin, senior electric industry analyst with the American Wind Energy Association (AWEA), told TransmissionHub.
Goggin cited the competitive renewable energy zone (CREZ) transmission lines in Texas, the multi-value projects (MVP) in the Midcontinent ISO (MISO), and the priority projects in the Southwest Power Pool (SPP) as examples of projects that are being proposed, designed, and built to meet unmet needs.
“You’ve still got massive wind energy resources that are trapped in many parts of the country where there is very little, if any, existing transmission, so we’re going to need to see a lot of transmission for that,” he said. “There is still a pressing need for more transmission, particularly in MISO and parts of the West.”
Xcel is in the middle of what Mogensen describes as “a big boom cycle” with many projects designed to move renewable energy. Those include the CapX 2020 projects in Minnesota and Wisconsin, the Power for the Plains projects in New Mexico and Texas, and 15 other smaller projects in Colorado, New Mexico and Wisconsin.
While renewable portfolio standard (RPS) mandates served as the policy driver for many of the projects currently underway, Mogensen predicts that emerging policy drivers will serve as the impetus for future projects. Those policy drivers could include FERC orders and EPA rules.
“We’re executing projects that have been coming out of previous planning, including FERC Order 890, and all kinds of state initiatives that are focused a lot on renewable portfolio standards and other kinds of things,” Mogensen said. “Now, the next evolution will come into play with FERC Order 1000.”
Pending environmental regulations will also affect transmission planning, but the extent of that effect is still to be determined, she said.
“How do the environmental drivers come into play with the existing fleet of fossil plants, and how does that change the mix if we have many more retirements than were originally planned?” Mogensen asked. “Depending on how much that mix of resources change, that could have a pretty material impact on what transmission is required to make the whole thing hang together.”
Despite planning and construction cycles, changing mixes and mandates, the experts agree maintaining the reliability of the grid is of paramount importance.
“If our grid isn’t strong and doesn’t reach where it needs to reach, if it’s not 100% reliable, if it’s not resilient [and] if it’s congested, then the ripple effects run through not only the rest of the industry but through the economy as a whole,” Hoecker said.