by Jeff Siegel, North American Wind Power, May 2010 http://www.wind-watch.org/news/2010/05/31/federal-transmission-policy-faces-several-roadblocks/
Talk about the challenges facing the wind business, and several issues come to mind, including siting, the debate over a federal renewable electricity standard (RES), and financing a project in the throes of the worst recession in 40 years.
So, where does transmission – as important to wind as any financing or regulatory issue – fit into all of this? The issue tends to be put on the back burner because building transmission – not to mention enacting a federal standard – is so complex and requires the approval of many stakeholders. In fact, analysts and industry officials say that transmission is much more complicated than other issues that wind power faces.
Solving transmission constraints means working with state regulators, independent system operators (ISO), regional transmission operators, utilities and the Federal Energy Regulatory Commission (FERC) – almost all of which have different agendas.
“It’s not just one of the main challenges facing the wind industry;’ says Georgina Benedetti, an energy and power systems analyst at Frost & Sullivan. “In my opinion, it’s as serious an issue as the extension of any of the incentives.”
More complicated still is that not everyone in the same group always wants the same thing. Utilities are split between those that want to add capacity and those that do not because they fear lower prices from increased supply, according to Michael Goggin, manager of transmission policy at the American Wind Energy Association (AWEA).
Defining the agenda
The one thing almost everyone agrees on is that the U.S. power grid needs upgrading – especially if it is going to handle the amount of wind necessary to reach the U.S. Department of Energy’s “20% wind energy by 2030″ goal. Mason Willrich, a senior advisor to the Massachusetts Institute of Technology Energy Innovation Project, notes it takes 10 to 12 years to build transmission in California, but takes only three to five years to build a wind farm.
Furthermore, there is a general consensus that some wind projects, especially in less windy areas, are already being held up because there is not transmission available to take the electricity to market. . .
Smart grid or bigger grid? Does the U.S. need more capacity, or does it just need to better manage the capacity it has by taking advantage of new technology? On the one hand, says Ed Krapels, CEO of Anbaric Transmission, it does not look as though the country will need all of the extra capacity that was forecast just a couple of years ago, thanks to the recession and increased conservation. This is where smart transmission could help.
On the other hand, says Goggin, relying solely on a smart grid will not provide additional capacity to bring wind-generated electricity from places such as Wyoming and North Dakota to market. . .
Cost allocation. This decision may be the biggest obstacle, says Willrich. State regulators are reluctant to pass costs on to ratepayers for transmission that is not solely contained in their jurisdiction. This limits the options for building regional transmission. Meanwhile, public utilities prefer public financing, as opposed to investor-owned utilities, which prefer to build privately.
FERC’s role. Few can agree what FERC can do, let alone what it should do. It is unclear whether existing legislation gives the agency the authority to regulate siting and cost allocation. Legislation in 2005 seemed to give FERC authority to expedite permitting’ but the agency has not yet used its power to override state authority, preferring to wait until state permitting processes play out.
FERC and the courts. Meanwhile, several court cases that have dealt with cost allocation also seem to limit FERC’s authority, depending on appeals and whether what happens in one part of the country is precedent in another part. . .
Regional planning. This issue involves more than encouraging groups of states agreeing to work together to add transmission in their respective regions.. .
Continued regulation or less regulation? Transmission is the last part of the electricity business that is still mostly regulated, and there are those who argue that regulation is hampering transmission construction. . .
A larger view
But the issue looming over all of these uncertainties, say those interviewed for this story, is the lack of suitable U.S. energy policy. . .
“It’s all about the mission statement,” says Krapels. “And, so far, there has not been enough of one to help transmission. Transmission, because it’s so complicated, needs to be part of the broader, more comprehensive package. . . ”
The problem in the end, says Fagan, is that “everyone wants their cake and to eat it, too. They want transmission, but they don’t want to pay for it.”
Nevertheless, transmission is a problem that needs to solved – even if it doesn’t seem to get as much attention as it should.
