DATC: Tenor of conversation around transmission must be changed

The main drivers of transmission growth for the next decade will continue to revolve around the fact that the transmission system is being asked to do things it was never initially designed to do, namely, to be an enabler of markets – to deliver renewable energy resources from where they are generated to load centers, according to John Flynn, executive vice president, strategic projects, with Duke-American Transmission Company (DATC).

“[W]e need to change the tenor of the conversation around transmission because when we talked about transmission development in the past as a country, as policymakers, as regulators, as utilities, we talked about it primarily from the perspective of cost,” he said on Oct. 30 during a panel on electric demand forecasts and generation retirements, part of TransmissionHub’s TransForum East event in Washington, D.C. “What’s the cost of building transmission? I think we need to talk, going forward, more and more about what’s the value of transmission.”

Sebastian Krynski, senior associate with ICF, said industry drivers also include coal plant retirements in light of environmental regulations and state renewable portfolio standard (RPS) requirements, for instance.

He further noted that demand response has been a big factor in subduing peak demand growth, especially in the Northeast, and was one of the key drivers behind the traditional fossil generators not getting the capacity revenue that they had been getting in the past. Those capacity markets have been subdued by energy efficiency, demand response and distributed generation components.

However, while demand response is reaching levels in New England where it is not growing as robustly, in part due to the increased requirements that the ISO is placing on those resources to participate in the market, energy efficiency is projected to keep growing quite strongly, Krynski said.

ISO New England, the New York ISO and PJM Interconnection are forecasting energy efficiency resources to grow robustly “but all of these forecasts are tied to assumed budgets for these programs,” he said.

If those budgets go away, at some point in the future, energy efficiency’s rapid rate of growth will cease, he said.

Distributed generation will grow but a lot of utilities are “definitely not crazy about DG because it reduces the revenue,” so the extent to which it will grow will vary in the market, he said.

Flynn said there is a real opportunity for the industry and society to embrace technologies that make sense. From a transmission planning perspective, there is still a requirement that the system be designed and built to assume that “behind-the-meter” generation is not available.

He added that while some may believe that in the advent of microgrids and distributed generation, there is no need for a lot of transmission, or high voltage transmission: “I’m not so sure I’m ready to move to that world. … I like my lights on.”

On the role of environmental regulations and the associated shutdown of certain plants on transmission planning, Flynn noted that while he has always been a bit concerned about the rush to gas, this is a different time from 10 to 12 years ago given the “incredible supplies that we found.”

He said there will be great regional differences in that regard, noting for instance, that, given the lack of gas infrastructure, there is no other option to provide reliability to the Upper Peninsula region of Michigan than to build transmission if and when coal plants in that area shut down.

“That’s a very different answer than in other places in the Midwest where it might be much quicker and much more responsive to just locate a gas combined-cycle [plant] in the right spot on the existing transmission system to replace a coal plant,” he said.

Looking toward 2025 or 2030, he noted that from a policy perspective, “we’re going to continue to see the shutdown of nuclear [plants].”

In the context of low gas prices and the subsidization of renewable energy sources, nuclear energy does not appear to be economic in today’s market, so nuclear units that have potentially 20, 30 or more years of life left are shutting down.

This is a phenomenon that Nainish Gupta, manager of risk advisory services with PriceWaterhouseCoopers said “does not make economic sense.” The subsidies for renewable energy are masking the true price of power, he said.

Rather, Gupta and Flynn said, the country should be taking a more holistic view of its energy portfolio. From a 2030 standpoint, there must be a diversified mix of generation, Gupta said.

“You don’t want to have all renewables because they’re intermittent, they’re not on all the time,” Gupta said, adding that, on the other hand, the country should not rely solely on natural gas either, as the future of gas is not necessarily predictable.

Flynn urged the industry to think more pragmatically about where society should be 10, 15 or 20 years from now and to have a strategy to get there.

“I don’t think we can rely on Washington to get us there, so I think it’s probably incumbent upon us as an industry to try to figure that out to some degree,” he said.

About Corina Rivera-Linares 3286 Articles
Corina Rivera-Linares was TransmissionHub’s chief editor until August 2021, as well as part of the team that established TransmissionHub in 2011. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial from 2005 to 2011. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines.