The US is building power lines faster, but not fast enough

The U.S. needs a lot more power lines to support its transition away from fossil fuels.

The good news is that it’s made some serious strides toward that goal over the last two years. The bad news is it’s not nearly enough to support the enormous amounts of new wind and solar power needed to meet climate goals.

So says a new report from consultancy Grid Strategies and commissioned by trade group Americans for a Clean Energy Grid (ACEG), which counts 36 high-voltage transmission projects primed to start construction across the country in the near future.

That’s 14 more ​“ready-to-go” projects than Grid Strategies identified in a similar report in 2021 — and if they can be built, they could make significant improvements in the country’s grid reliability and clean energy needs.

The 36 projects on the list include high-voltage direct-current lines to carry power from onshore wind farms in Great Plains states and offshore installations along the Atlantic coast. They also include networks of high-voltage alternating-current lines to link renewables-rich areas to population centers in California, New York and the Great Lakes states.

Collectively, the projects represent $64 billion in investment, with the potential to create 1.3 million direct construction jobs and another 2 million jobs building the estimated 187 gigawatts of new renewable energy capacity they would enable.

But these 36 projects, which will likely take many years to complete, are only a starting point for the power grid’s transformation. While they could expand U.S. transmission capacity by about 15 percent when built, that’s less than 10 percent of the investment needed to reach a zero-carbon grid. Studies from the U.S. Department of Energy, the Massachusetts Institute of Technology and Princeton University have found the country must roughly double its existing transmission capacity to cost-effectively support all the clean energy needed to reach a carbon-free grid. 

This map is much more crowded than it was only two years ago. That was before Congress had passed the Bipartisan Infrastructure Law and the Inflation Reduction Act, and before several U.S. regional grid organizations had secured commitments from utilities and state regulators to push ahead on multibillion-dollar grid expansions.

Of the projects still awaiting final permitting and financing to start construction back in 2021, 10 have begun construction, enabling an estimated 19.5 gigawatts of new generation to be built. Those include several large-scale transmission expansions led by utilities, as well as long-range projects carrying clean power across multiple states, including the $3 billion TransWest Express and $5 billion SunZia Southwest projects.

“It’s a good-news, bad-news story,” said Rob Gramlich, Grid Strategies president and report co-author. ​“The fact that 10 projects are moving into construction is good news. And the fact that there are a bunch of new projects on the list is really good news.”

But ​“it’s only a tiny fraction of what we really need,” Gramlich added. 

In-progress projects are also moving too slowly to meet nearer-term clean energy targets at the state and federal levels, such as the Biden administration’s goal of a carbon-free grid by 2035. Big power lines like TransWest and SunZia have taken more than a decade to move from concept to construction, with years of fighting to secure permits from federal, state and local authorities and negotiate with private landowners, community groups and other stakeholders.

“The clock is really running out on us if these lines are going to take 10 years” to plan, permit, finance and build, he said. 

And despite years of lobbying from clean energy trade groups and corporations eager to buy more wind and solar power, Congress and federal regulators have yet to enact policy changes to unlock ​“meaningful progress on a whole category of transmission lines — the large regional and interregional type,” Gramlich said.

Those lines are the hardest to build, both because they require navigating a far more complex permitting landscape and because they require multiple states and utilities to agree on how to share the costs of building them.

Notably, the 10 transmission projects that have successfully started construction between 2021 and this year ​“all have something in common: They all have some entity that’s able to pay for it,” Gramlich said.

TransWest, SunZia and the transmission lines connecting offshore wind farms are financed via arrangements between developers and purchasers of their power. Other projects in New York, Colorado and the Pacific Northwest were developed within single utility service territories or grid operator regions, simplifying the task of allocating costs to customers of utilities in those discrete regions.

“For all those other lines hanging out there — the big ones where the beneficiaries are so dispersed — that’s the really hard kind. It’s almost like the more beneficial the line, the harder it is to find a cost-recovery mechanism,” Gramlich said.

Big policy changes needed 

All of these barriers need policy solutions, said Christina Hayes, ACEG executive director. While the details of those policies are complicated, they can be boiled down to what she called the ​“Three P’s” — ​“planning, permitting and paying.”

New approaches to planning are needed at the multistate grid organizations that manage transmission buildouts and cost-allocation policies across most of the Northeastern, mid-Atlantic and Midwest U.S., she said. These regional transmission organizations (RTOs) and independent system operators (ISOs) are regulated by the Federal Energy Regulatory Commission, which is expected to issue a significant new rule on long-term transmission planning within the next three to six months, she said.

“We need a planning rule soon,” Hayes said. But beyond moving quickly, FERC should beef up the rules it proposed last year that would require ISOs and RTOs to make plans that incorporate the full range of benefits that transmission can provide, she said.

Those benefits include the value of capturing the lower cost of wind and solar power called for in state and utility clean-energy plans, she said. It also includes the resiliency against extreme weather events that long-range transmission lines can bring to grids by allowing them to share power with their neighbors, she said.

On the subject of permitting, Hayes highlighted the potential for bills proposed by Democrats in Congress to give FERC and the U.S. Department of Energy more authority to issue construction permits where states have denied them, or even to give FERC the same direct control over transmission permitting that it now holds over permitting for fossil gas pipelines.

It’s far from clear if those legislative proposals will move forward, however, given the divide between Democrats and Republicans on the broader subject of energy-permitting reform. 

As for paying for the hundreds of billions of dollars in new transmission buildout that grid experts say is needed to decarbonize the U.S. electricity system, ACEG is proposing a slew of potential policy solutions. One key hope — creating a federal investment tax credit for transmission projects — seems highly unlikely, given that it wasn’t included among the many tax credits created by the Inflation Reduction Act, which itself was passed by a narrowly divided Congress with no Republican support.

The Biden administration does have some tools available to reduce the upfront cost of transmission projects, including $2.5 billion in DOE lending authority to purchase up to half of the electricity delivery capacity of new power lines.

A group of projects being proposed to connect the territories of Midwest grid operators Midcontinent Independent System Operator and Southwest Power Pool have already applied for this lending authority, Gramlich noted, and it’s likely that other projects are also seeking funding.

Hayes pointed out that this federal funding could also help strengthen the financial prospects of ​“merchant” transmission projects similar to TransWest and SunZia that are built by independent developers. Almost all of the transmission projects now seeking to interconnect different regions of the country fall into this category, including the Grain Belt Express and SOO Green Link projects seeking to connect Great Plains wind farms to Eastern U.S. grids.

Outside of federal funding, the most significant changes in how transmission is funded are likely to come through the country’s regional grid operators, Gramlich said. That’s because most of the investment in transmission today is done through a process called cost allocation, in which grid operators assign different shares of the cost of broader transmission upgrades among the many different states and utilities within their territory.

These cost-allocation processes often pit states and utilities against each other in efforts to push more of the cost onto others — a dynamic that has tended to limit the scale of investments that everyone can agree on. But ISOs and RTOs can also create innovative structures to support the kind of transmission that isn’t supported by traditional planning processes today, Gramlich said.

Hayes cited the example of MISO’s Long-Range Transmission Planning process, which last year approved $10.3 billion in transmission projects expected to enable 53 gigawatts of clean energy development and provide $37 billion in quantifiable benefits. MISO, whose territory covers all or part of 15 U.S. states and Canada’s Manitoba province, is planning an even larger-scale tranche of projects with even greater expected benefits.*

MISO’s Long-Range Transmission Planning process ​“is a totally different model — and we need to replicate that across the country,” she said.

*Correction: This article originally misstated the areas included in MISO’s territory. We regret the error.