June 6, 2023 - A recent New York Times Editorial Board opinion (“NYT Opinion”) stated that “To tap the potential of renewable energy, the United States needs to dramatically expand the electric grid between places with abundant wind and sunshine and places where people live and work. And it needs to happen fast.”
The world must reduce its carbon footprint and slow climate change. However, dramatically expanding new transmission lines may not be the only answer and may not even be the right answer. The NYT Opinion pushing for new transmission lines is rooted in a century-old business model - generating power far from users and transmitting that power hundreds if not thousands of miles away - that must be re-examined.
There are alternatives if not better business models - alternatives that may not need miles and miles of high power transmission lines with their attendant transmission loss, collateral damage to property owners along the route, and high costs to electric consumers.
Amazingly, the failed management by one utility company of epic proportions led to attractive financial incentives that drove an insatiable “need” for new transmission lines and became the catalyst for a financial boom for utility companies.
Despite the finding by the joint US - Canadian Task Force that the cause of the 2003 cascading blackout that affected much of the northeast United States and Canada was primarily due to failed management by FirstEnergy from the inadequacies of its system and situation awareness, Congress passed the Energy Policy Act of 2005 that, among other things, ordered the Federal Energy Regulatory Commission (“FERC”) to offer financial incentives to build new transmission infrastructures.
It took a few years but, not surprisingly, the FERC financial incentives spur significant growth in transmission investments. Transmission projects became the solution in search of problems. Arguably, regional transmission organizations (RTO) and independent system operators (ISO) have done a marvelous job in over-building transmission projects within their region for the benefit of their utility company members. However, there has been total neglect of short lines connecting RTOs and/or ISOs at the seam during this period. In other words, despite being given the opportunity, the industry has completely missed the goal of truly increasing the reliability and resiliency of our grid system on a national basis.
In the mid-Atlantic region alone, it has been estimated that consumers paid a staggering $55.6 billion in new transmission costs from 2005 to 2018. New Jersey’s largest utility PSE&G customers saw transmission rates increase by more than 400% since 2010. All this happened despite a consistent decrease in peak demand coupled with a substantial and steady increase in generation capacity.
These attractive financial incentives, known as FERC candies, continue to fuel for-profit utility companies’ insatiable “need” for new transmission lines. The new twist is that it is now wrapped under the guise of the new renewable energy movement.
US Energy Information Administration predicts significant growth in smaller, locally produced electricity, and distributed power generation in the next 30 years. The concept is that instead of massive wind farms or solar fields far from users, smaller distributed models of renewable electrical generation can be installed close to end users. These smaller models would avoid major transmission and permitting hurdles.
This is already in operation in some areas. A regional electric cooperative serving west-central Minnesota is buying electricity from an innovative wind-and-solar hybrid energy system at savings from previous costs. The hybrid system is a commercial size that is scalable to the needs of a community. Most importantly, the much smaller footprint can be installed just outside electric distribution systems, thereby avoiding long-distance high-power transmission lines. Having more “local” renewable generation only makes the grid system more reliable and resilient.
Another alternative is offshore wind. According to DOE’s Wind Energy Technologies Office, there is data to suggest the potential for more than 4,000 gigawatts per year in federal waters of the United States and Great Lakes – or approximately 3 times the annual US electricity consumption.
NOAA’s National Ocean Service estimated that nearly 40% of the American population lived in counties on the coast.
Offshore wind projects have their challenges including stakeholder opposition and transmission infrastructure. However, given the fact that this renewable source of power is so much closer to the end users, doesn’t it make strategic sense to examine and assign offshore wind as a higher priority as part of our national energy policy?
The NYT Opinion also advocated putting a single federal agency in charge of major transmission projects and stated that the pre-emption “would only apply to major projects of national importance like the Grain Belt Express project …” Emphasis added.
There are two issues with this position. When the infrastructure bill was first introduced, FERC Commissioner Mark Christie and the National Association of Regulatory Utility Commissioners voiced their opposition to the federal override of state authority for siting applications. Commissioner Christie stated that “while utilities and grid operators may promote an infrastructure project they deem necessary, state regulators are responsible for doing their due diligence to ensure there is a need for such facilities.” He added that “these regulators sift through hundreds of pages of evidence and listen to hours of public testimony before coming to a decision.” Essentially, Commissioner Christie said that it’s a bad idea to usurp state authority to site and permit new transmission.
Secondly, it is arguable whether the Grain Belt Express project is a major project of national importance or not. Merchant transmission projects, such as Grain Belt Express, are market-based projects that must show customers to demonstrate a need before being built. The sponsor of this merchant transmission project could only show one customer for less than 5% of its capacity. The sponsor failed to demonstrate that it has enough customers and it is this lack of customers that is the downfall of the project.
Due to the historical development of the utility industry, an essential public service is provided by for-profit companies with inherent conflicts of interest. These companies operate under a century-old business model and have protected franchises with high barriers against alternatives and new technologies.
We need to tap into the potential of renewable energy for our planet and for future generations. However, we also need to be clear-eyed regarding the future of our electric grid and rethink the old business model that it operates under.
CHARGE – Consumers Helping Affect Regulation of Gas & Electric