New transmission tech can easily double clean energy capacity. Will utilities buy it?

To decarbonize its electricity supply, the U.S. will need to deploy hundreds of gigawatts of new wind and solar power. To transport this electricity, the country will need to install hundreds of billions of dollars’ worth of new high-voltage power lines. But transmission projects can take up to a decade to site, permit, finance and build — and over the past decade, many more proposed transmission projects in the U.S. have failed to overcome the regulatory, legal and financial challenges involved than have succeeded.

There are ways to squeeze more power flows from already-built transmission corridors, however. Among them, the deployment of new conductors — the industry term for the cables that carry high-voltage power — could significantly expand capacity on existing transmission towers and along existing rights of way.

Jason Huang, CEO of TS Conductor, believes this could be how his company’s high-tech transmission conductor can find its way into U.S. markets. In fact, he thinks the costs of replacing existing conductors with his firm’s technology could be recouped within just a few years because of the new conductors’ dramatically expanded capacity and efficiency.

Now, the Arcadia, California–based company has to convince the conservative and slow-to-innovate U.S. utility industry to embrace its novel product alongside those of some more well-established competitors. What’s more, it will also need U.S. regulators and utilities to shift their transmission-planning regimes from the current focus on upfront costs, which tends to undervalue technologies like TS Conductor’s, to considering long-term capacity and efficiency, a framework that would incorporate novel products’ value into the equation.

Right now, U.S. utilities ​“make money by investing in bigger, more expensive projects,” Huang explained. This approach works against not only new conductor technologies like TS Conductor’s and others on the market but also a range of grid-enhancing technologies that can expand the capacity and efficiency of decades-old transmission networks.

But Huang hopes that the need to rapidly and vastly expand clean energy will shift these dynamics: ​“There’s so much efficiency our solution brings.” 

Investment to open the door to U.S. markets

TS Conductor will soon have a chance to put this bold proposition to the test. On Tuesday, it revealed the completion of a $25 million Series A round to build its first U.S. manufacturing facility. Investors include Breakthrough Energy Ventures, the $2-billion-plus venture arm of Bill Gates’ Breakthrough Energy, as well as investment subsidiaries of two global energy companies with a vested interest in expanding the grid’s clean energy capacity: National Grid and NextEra Energy.

TS Conductor’s cables are made with aluminum surrounding a carbon composite core, making them lighter, more durable and more conductive than the aluminum-conductor steel-reinforced (ACSR) cables that have been the industry standard for more than a century. Pound for pound, the new cables can increase electricity capacity by as much as 250 percent compared to traditional ACSR equipment, Huang said in a September interview.

TS Conductor can also reduce line losses by 50% due to electrical conductor inefficiency, which now add up to between 5 and 15 percent of the power flowing on modern transmission grids, he said. That’s a benefit not only for reconductoring projects, which replace old conductors with new ones, but also for new-build transmission projects.

The improved capacity and efficiency are both highly valuable to transmission operators facing substantial upgrade costs to integrate new wind and solar power, said Pradeep Tagare, head of strategic investments for National Grid’s venture arm National Grid Partners, one of TS Conductor’s new investors.

TS Conductor’s technology ​“accelerates the adoption of renewable energy on the grid, because as you put more capacity on the grid, you don’t have to do a major rehaul of your existing infrastructure,” he said. Transmission capacity limits are a major barrier to connecting wind and solar projects that are already in active development, let alone the future projects that will be necessary to meet carbon-reduction goals.

TS Conductor now makes its cable in China. Building a U.S. factory is just the first step in getting its technology into U.S. and European markets, Huang said.

The company’s first U.S. project, with Montana Dakota Utility, saved a year of deployment time and about $1.8 million in equipment costs by avoiding the need to rebuild or retrofit existing transmission towers to carry a heavier set of conductor cables, according to Huang.

But there’s a long road from small-scale projects like this one to widespread adoption, Tagare said. Utilities are quite conservative when it comes to deploying new technologies. TS Conductor will ​“need to build a first manufacturing plant, get it done efficiently and get the technology into field trials.”

Why new transmission tech hasn’t caught on yet in the U.S.

Joseph Coffey, director of North American overhead transmission and power distribution for Prysmian Group, the world’s biggest wire and cable manufacturer, agreed that utilities are slow to take up new technologies. Prysmian Group makes its own cable designs, but it also manufactures technologies under license with third-party providers such as TS Conductor.

“How do utilities get in trouble? They try something new and the lights go out,” he said. That’s a strong disincentive to putting new technology into the field, even if it could save money for utility customers.

But there’s also the issue of how utilities earn money, Coffey said. Most U.S. utilities earn a guaranteed rate of return on the cost of capital investments such as transmission projects, giving them no reason to strive to reduce those costs.

At the same time, utilities don’t bear the costs of transmission line losses, which are passed on to customers, he said. That gives them little incentive to choose projects that emphasize those long-term savings.

These incentive structures work against updating equipment in an existing transmission corridor, said Hervé Touati, a former energy company executive and a venture capitalist who invested in TS Conductor’s new round and joined the company as part-time chief strategy officer last month.

“If a utility has a choice between spending $1 billion on a new line and $100 million on reconductoring an old line, they have all the incentive in the world to spend the $1 billion,” said Touati, who is a former managing director at nonprofit research organization RMI. He was brought into contact with TS Conductor through its participation in Third Derivative, a startup accelerator founded by RMI and New Energy Nexus. (Canary Media is an independent subsidiary of RMI.)

There are clear limits to how much utilities can spend on capital costs for transmission equipment. Regulators and the regional transmission organizations that manage transmission development across the U.S. operate under mandates to keep costs in check and prevent utilities from making ​“gold-plated” grid investments plans that increase customer electricity rates. Many spending plans deemed to be excessive have been rejected by regulators over the years.

But these same cost-constraint dynamics can work against building transmission with extra capacity to meet the needs of a future grid, said Liza Reed, research manager for low-carbon technology at think tank Niskanen Center. Reed co-authored a 2020 research paper that highlights the benefits of reconductoring compared to building new lines. But projects built with just enough capacity to meet clearly defined, short-term needs tend to ​“use the cheapest conductor,” she said.

Different regulatory regimes, varying appetites for new tech

Other countries have different regulatory regimes that give transmission owners more incentive to focus on efficiency. Besides operating transmission networks in the U.S. Northeast, National Grid runs the U.K.’s nation-spanning transmission grid under a regulatory construct that considers operating costs as well as capital costs. This has encouraged National Grid to earn revenue from investing in technologies that route power flows in ways that expand grid capacity for renewable energy, for example.

In the U.S., oversight of transmission grid planning and cost allocation is split between state utility regulators and the Federal Energy Regulatory Commission, which regulates the regional grid operators that oversee transmission investment decisions for the power grids serving about two-thirds of U.S. electricity customers.

FERC has launched a transmission policy review with the goal of expanding clean energy capacity and improving reliability in the face of climate-change-induced extreme weather. But that process will take about a year to reach its initial conclusions, and it could take even longer to result in any policy changes.

“Depending on the geography and the use case, the adoption of TS Conductor will look different,” National Grid Partners’ Tagare said. But he believes the increasing focus on decarbonization will force regulators in the U.S. and Europe to change their approach to technologies that expand grid capacity.

“As you get more renewables that [need] to integrate with the grid, and as you get more EVs and more energy storage, that…changes the equation on where the grid is going to be stressed,” he said.

The first applications for a technology like TS Conductor’s will most likely be in circumstances where utilities and regulators don’t have a lot of viable alternatives, according to Prysmian’s Coffey. ​“Only when they run into a challenge — like a reconductoring of a really difficult line — do they say, ​‘Hey, here are some interesting tools’” to help solve the problem, he said.

The transmission status quo versus pressure to grow clean energy

J.D. Sitton, CEO of CTC Global, agreed that U.S. utilities generally consider reconductoring only when ​“they literally have no choice.” 

CTC makes aluminum-conductor composite-core (ACCC) cables with capacity and efficiency benefits similar to TS Conductor’s technology. CTC cables have been deployed in hundreds of projects around the world. In the U.S., its ACCC line has been used in reconductoring projects by utilities Southern California Edison and American Electric Power in Texas, both of which fell into the ​“no-choice” category, he said.

The Southern California project required expanding capacity from a power line in difficult-to-access, mountainous territory where existing lines were sagging under high electrical loads, creating a fire hazard in a state under major pressure to reduce the risk of grid-sparked wildfires. ​“There was nothing else that would remove the constraint,” Sitton said.

The AEP project in Texas involved power lines that couldn’t be taken out of service without cutting off power to large swaths of southern Texas, he said. That forced AEP and contracting partner Quanta Services to employ a tricky ​“live-line” reconductoring procedure, with lineworkers wearing specialized protective suits to allow them to work safely in close proximity to live high-voltage wires.

In most cases, however, instead of reconductoring existing transmission towers, utilities would rather tear down towers and replace them with new ones that can carry more electricity over traditional power lines, Sitton said. ​“It’s a lower regulatory risk, and it doesn’t hit their operating budget.”

The immense pressure to decarbonize the power grid may be changing this equation, however, he said. Utilities are facing timelines that don’t allow for the four to five years it takes to tear down and rebuild existing power lines. Southern California Edison’s success with its first reconductoring project has spurred it to propose several others, a move that may receive favorable regulatory treatment in a state that will need lots of new transmission capacity to handle the gigawatts of clean energy it plans to add to its grid in the next half-decade.

“There’s a fundamental shift going on that’s challenging the utilities and independent system operators to change how they think,” Sitton said. Mid-Atlantic grid operator PJM, for instance, last month released a study on the immense transmission needs to come as its member states along the mid-Atlantic seaboard follow through on plans to build gigawatts of offshore wind that must be connected to transmission networks on the shore. Reconductoring came in at a significantly lower cost than rebuilding in that study.

Competing technologies, common targets

CTC Global and TS Conductor have a contentious history. TS Conductor’s technology was patented in the U.S. in 2019 based on technology designed by James Huang, the brother of TS Conductor CEO Jason Huang, who was formerly chief technology officer at CTC. In 2017, CTC filed a lawsuit against Jason Huang, alleging a complex series of improper intellectual-property exchanges between different Chinese companies involved in CTC’s carbon-fiber core and conductor technology. CTC dropped the lawsuit last year, freeing TS Conductor to pursue technology development in the U.S.

Tagare said National Grid Partners and TS Conductor’s other investors ​“obviously took a look at the [intellectual property issue] and at all those patents to ensure that those patents were all clear.” As for the lawsuit, ​“in our point of view, that is history.”

CEO Jason Huang told Canary Media that TS Conductor’s technology is more secure than CTC’s against the risk of its composite core snapping when the conductor is bent and that its installation doesn’t require the specialized training and tools that CTC’s conductor does.

Sitton dismissed these issues, noting that CTC has ​“100,000 kilometers of product up in the air, in all grid conditions around the world, operating fabulously.” 

“We’ll compete with them in the marketplace — when they grow up enough to compete with,” he said. 

Sitton also highlighted the underlying regulatory changes needed to open up the U.S. market to both companies’ technologies. ​“Utilities are doing what you’d expect them to do — they’re moving slowly, they’re being conservative, they’re making sure their regulators are on board with whatever they’re planning to do,” he said.

Regulators ​“need to change the mandate to ​‘Move fast; we’ll cover you,’” he said. ​“Let’s be aggressive about this and see how many renewables we can integrate quickly and responsibly.”

Touati agreed that regulators need to open up the field to novel technologies and approaches to allow for the rapid deployment of more efficient transmission. TS Conductor is contemplating shared-savings models that allow transmission owners and technology providers to pay for the cost of new deployments and reconductoring with the money saved in reduced line losses, for example, he said.

“What is really helping us today is this huge push toward decarbonization,” he said. ​“We need to talk to U.S. regulators to tell them, ​‘This is what our technology can do.’”