FERC Approves New Transmission Development
Feb 26, 2009 - SustainableBusiness.com News
Two transmission companies owned by TransCanada (NYSE:
TRP) have proposed a new model for developing much
needed electricity transmission in the U.S.
Chinook Power Transmission, LLC and Zephyr Power
Transmission, LLC have agreed to provide half of the
capacity on their proposed new transmission lines
to wind developers. The agreement is expected to help
finance the transmission lines and convince utilities
that the project is viable, while still leaving half
of the transmission line capacity available for other
The approach attempts to overcome a financing dilemma
faced by independent companies wanting to build new
transmission lines. Under current federal rules, they
must open all access to that transmission line to
a competitive bidding process, but they need to make
significant investments prior to reaching that point.
In other words, they need to attract investors before
they have a single customer. They also face a chicken-and-egg
dilemma: power generators won't support a transmission
line unless a utility says it needs the line to supply
its customers, and utilities won't support a transmission
line unless there is a power generator backing it
On February 19, the Federal Energy Regulatory Commission
(FERC) approved the new approach, allowing the two
projects to go forward.
FERC noted that it needs to show greater flexibility
for such "merchant" power line projects, because the
project developers assume all the market risks, and
unlike electric utilities, they have no set pool of
customers from which they can recover their project
The two projects include a 1,100-mile transmission
line running from Medicine Bow, Wyoming, to just south
of Las Vegas, Nevada, and a 1,000-mile transmission
line that runs from Harlowtown, Montana, to the same
ending point in Nevada.
Each transmission line will have a capacity of 3,000
megawatts (MW), which means that each line has an
agreement with a wind power developer that plans to
build 1,500 MW of wind power by the time the lines
are completed in 2014. For comparison, at the end
of 2008, Montana had only 272 MW of wind power capacity,
while Wyoming had 676 MW of wind capacity.
The companies did not name the wind power developers,
although several wind developers reportedly were in
favor of the proposal.
The proposed transmission lines are significant for
a number of technical reasons, as well, according
to the Energy Efficiency and Renewable Energy (EERE)
division of the Department of Energy. They will be
the first transmission lines to ship large amounts
of wind power from windy northern states to distant
customers in the Southwest.
To achieve this feat without losing too much energy,
the lines will be high-voltage direct-current (HVDC)
lines, operating at voltages of 500 kilovolts. Such
HVDC lines can carry 3,000 MW of power on a single
string of towers, while multiple towers would be needed
for traditional lines using alternating current.
According to TransCanada, each transmission line
will cost about $3 billion, even though they follow
the same path from Boise, Idaho, through Nevada. The
construction of such "green power superhighways" is
advocated in a white paper that was released on February
17 by AWEA and the Solar Energy Industries Association.