Biden administration boosts support for transmission jobs and clean energy benefits

An ACEG report finds that interstate transmission projects could drive 1.2 million jobs and increase wind and solar capacity by 50 percent. A new $8.25 billion federal loan commitment could help.

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Transmission is becoming a hot topic in energy policy circles, particularly for a category of infrastructure whose construction can take decades from inception to completion. But with the Biden administration relying on a massive build-out of high-voltage power lines to reach its carbon-free electricity goals, the stars may be aligning for long-sought policies to unblock the siting, planning and cost barriers that have held back large-scale grid expansions over the past decade.

And then there are the jobs to consider.

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On Tuesday, a group of transmission developers and advocates unveiled a report that details how 22 existing transmission projects could enable 50 percent growth in U.S. wind and solar power generation capacity by linking sunny and windy parts of the country to regions where clean power is in greatest demand.

Those include projects linking the wind-rich Midwest to Eastern U.S. markets like the Grain Belt Express and SOO Green HVDC Link; the TransWest Express and Gateway West and South projects connecting wind produced on the Wyoming plains to markets in California and the Pacific Northwest; and the SunZia, Southline and Western Spirit projects to connect wind- and solar-rich New Mexico to Arizona and California.

The combined investment of $23.3 billion in the 22 projects would spur about $100 billion in new renewable energy development, according to the analysis from Americans for a Clean Energy Grid. What’s more, the roughly 600,000 jobs needed for building the power lines would be matched with another 640,000 jobs to build the wind and solar farms they’d enable, report co-author Michael Skelly said in a Tuesday press conference.

One of the challenges in the transmission business is that people think it’s not possible,” he said. As the founder of Clean Line Energy Partners, the developer that tried and failed to build five power lines to carry 16.5 gigawatts of wind power across the Midwest, Skelly is well-versed in the challenges involved.

But of the 22 projects selected for the study, many of which have been more than a decade in the making, most have [secured] all or almost all of the land rights associated with the project, and they can get underway in the next 12 to 36 months,” he said, if we can get just a little push to get them over the top.”

Image credit: ACEG

Biden administration ups its transmission support

That’s where the Biden administration comes in, according to Skelly. The administration’s $2.2 trillion American Jobs Plan includes $100 billion in proposed incentives to build 20 gigawatts of transmission, in support of its goal to reach 80 percent renewables by 2030 and 100 percent carbon-free power grid by 2035. The administration has also proposed the creation of a Grid Deployment Authority to expedite high-priority” transmission lines, although how it would do that has yet to be clearly outlined.

Bills in Congress are proposing a 30 percent Investment Tax Credit for transmission investments to boost the economics of taking on these mammoth projects. That could improve the economics of independent merchant transmission seeking to link power generators to far-off customers, Skelly said.

It could also help projects developed by utilities through cost-allocation” models that require regulator or grid operator approval to recover costs from electricity ratepayers, said Christina Hayes, vice president of federal regulatory affairs for Berkshire Hathaway Energy. The owner of Western U.S. utilities PacifiCorp and NV Energy is building multibillion-dollar projects listed in the report from Americans for a Clean Energy Grid, which will pose significant pressure on rates for customers” even as they expand access to low-cost wind and solar power, she said.

On Tuesday, the Biden administration cited the ACEG report’s data on the job-growth potential of transmission investment as it announced executive actions to offer billions of dollars of federal loan support to the sector.

The administration announced several steps to encourage transmission build-out. First, it opened up applications for access to a $3.25 billion revolving loan program for transmission incentives managed by the Energy Department’s Western Area Power Administration. Second, it will offer up to $5 billion from DOE’s Loan Programs Office to support transmission owned by federally recognized tribal nations or Alaska Native Corporations, as well as innovative” transmission projects such as high-voltage direct current (HVDC) systems, offshore wind transmission and facilities sited along rail and highway routes.

Underground HVDC lines along rails and highways — a transmission option being pioneered in the United States by SOO Green HVDC Link developer Direct Connect — also got a boost from the U.S. Transportation Department’s new guidance on how state transportation departments can plan for deployments that combine transmission, renewable energy and broadband communications along highway rights of way.

Remaining barriers to expanding the nation’s transmission grid

Financial incentives are only one piece of the transmission puzzle, however. Significant challenges remain in reforming the outdated planning and cost-allocation processes that govern how U.S. grid operators determine how transmission is built in their multistate territories, said Nina Plaushin, a vice president at ITC Holdings, a major U.S. transmission owner and developer.

One of the problems is that U.S. multistate regional grid operators aren’t required to consider policies such as state-by-state renewable portfolio standards that are driving wind and solar growth and will require new transmission, she said. 

What’s more, according to Plaushin, we still suffer from…compartmentalization” in traditional transmission planning, which measures individual projects based on their value in making their grids more reliable, making the cost of energy cheaper and meeting policy objectives.

But the few successful large-scale transmission build-outs of the past decade assessed all three of these values in combination, not in isolation, to design a portfolio of projects to build through cost-recovery from ratepayers across a wide swath of participating utilities, she said.

Those build-outs, which include Texas grid operator ERCOT’s competitive renewable energy zones effort, Southwest Power Pool’s designation of priority” projects and the Midcontinent Independent System Operator’s multivalue projects process, took a lot of effort to bring together, but enabled gigawatts of wind power to be built and connected to markets, she said.

Since then, most transmission has been built by utilities outside regional planning processes, with almost none of it subject to competitive solicitation, according to a Brattle Group analysis of $70 billion worth of projects built from 2013 to 2017

At the same time, gigawatts’ worth of renewable energy projects in grid operator interconnection queues have not been built because they face heavy grid upgrade costs under current cost-allocation policies.

The Federal Energy Regulatory Commission’s role

Transmission projects that span different grid operator regions, like many of the merchant projects on ACEG’s 22-project list, have had even less success being built under cost-allocation models, said Greg Wetstone, president of the American Council on Renewable Energy. 

No such project has been built since the Federal Energy Regulatory Commission (FERC) passed Order 1000 in 2011 to encourage grid operators and utilities to coordinate their development, indicating that new policies are needed to get the job done, he said.

Richard Glick, who was appointed by the Biden administration to the role of FERC chair in January, has pledged to work on policies to expand transmission and support clean energy growth. In a Tuesday talk with the Wires transmission advocacy group, Glick said he expects FERC to have a plan of action in place before the end of the summer” on transmission reform.

We’re looking at ways to encourage, and maybe even require, more planning for interregional transmission projects,” he said. FERC is also considering ways to expand the definition of transmission benefits to include clean energy growth, as part of its mandate to support federal energy policy, he said.

We haven’t gotten over the finish line quite yet in terms of the commission’s approaches,” he noted, with a majority of FERC’s two Democrats and three Republicans required to pass reforms. But I’m very committed to it.”

(Article image courtesy of American Public Power Association on Unsplash)

Jeff St. John is the editor-in-chief of Canary Media. He covers the technology, economic and regulatory issues influencing the global transition to low-carbon energy. He served as managing editor and senior grid edge editor of Greentech Media.