Expanding the Grid
Mar 30, 2007 - Ken Silverstein - EnergyBiz Insider - Editor-in-Chief
Western states want to expand their grid to improve regional electrical reliability and make room for renewable energy resources. Altogether, eight transmission owners and operators have come together to provide a high voltage backbone transmission system between Wyoming, Colorado, New Mexico and Arizona.
It's no secret that America must modernize its grid. New financial incentives provided by the Energy Policy Act of 2005 do just that and have helped spur the announcement of several new transmission projects. Raising capital for such projects has always been a challenge. But an even greater issue to expanding the overall grid is resistance by neighborhood organizations and environmental groups.
"Historically, the development of electric transmission has followed the announcement of new generating sources," says Doug Jaeger, vice president of transmission for Xcel Energy that is part of the consortium. "We will develop a proactive plan to create the robust infrastructure needed to support renewable expansion and other generation necessary for Colorado and the surrounding region."
During the past 10 years, investment in transmission by all types of utilities averaged $3.6 billion per year, says the Edison Electric Institute. In 2003 and 2004, the number jumped to $5 billion each year. It says that such investment could average $7 billion a year over the next decade, or in a best-case scenario, $10 billion a year.
The 2005 energy law is giving utilities and their investors more certainty. The law allows the Federal Energy Regulatory Commission to authorize a higher rate of return on these regulated assets. The commission can furthermore identify "national interest electric corridors" -- pushing through those "vital" projects that fail to win state approval after more than a year of wrangling. And, if the process gets foiled in the court system, the interested parties could petition the president of the United States for approval.
Most regions around the country need additional transmission to move electrons. In some cases, the move to upgrade grids is being led by incumbent utilities that serve growing territories and subsequently worry about congestion that could hinder economic growth. In others, it is the regional transmission organizations that operate electric grids and schedule power deliveries that are spurring development.
The New England ISO, for example, says that it has given its OK to build more than five new lines while California ISO says that $3.2 billion in transmission projects have been approved since 1998, including Path 15, all to alleviate the infamous bottleneck between southern and northern California. The RTO, however, says that getting new transmission built to accommodate cheaper generation in the Southwestern U.S. is still problematic. PJM, meantime, can also order transmission upgrades and as such has authorized $1 billion since 1997 toward that effort.
Currently, the New York ISO is trying to identify how much transmission capacity it will need between now and 2016. It expects generation and transmission on the state's bulk electricity grid to be adequate through 2010. Power deficiencies, primarily in the state's southeast region, however, could occur by 2011 and become acute by 2016 if expected demand isn't addressed by then.
"Identifying those problems and rectifying them now will help secure the reliable, safe supply of electricity to satisfy the needs of all New York consumers today and into the future," says Mark Lynch, CEO of the New York ISO.
Without major upgrades to the state's electrical infrastructure, increasing demand will inevitably reduce reliability. In fact, the proposed 200-mile New York Regional Interconnection project could be the first test of the new energy law and whether FERC's backstop authority is real.
Citizen groups and environmental organizations have balked at the project, calling it a danger to the natural habitat and a potential eyesore. Now, though, New York's Public Service Commission has agreed to allow the investor-led transmission group to perform additional studies and analyses to come up with an alternative route and provide more information on endangered species along the line's path.
National Grid and Northeast Utilities, meantime, have proposed the building of 80 to 100 miles of high-voltage electric transmission lines at a cost of $1 billion in southern New England. While local residents are concerned about tall, unsightly towers, utilities have been able to persuade state regulators of the need for more capacity. Northeast Utilities, for example, is building a 69-mile transmission line in Southwestern Connecticut while NStar Electric is constructing an 18-mile line near Boston.
And west coast regulators are also being proactive. The California Public Utilities Commission just approved Southern California Edison's application to upgrade and build new high-voltage transmission lines in northern Los Angeles. The line will be capable of delivering up to 4,500 megawatts of electricity. It's all part of a five-year plan in which the utility will spend $4.3-billion on a transmission expansion program.
"The 'Tehachapi' project will strengthen and enhance (our) transmission system by creating a new path for renewable energy to meet the increasing electricity demand of Southern California," says Ron Litzinger, senior vice president of transmission and distribution for Southern California Edison.
Without a doubt, the demand for power is growing around the country, but the resources to deliver that electricity are becoming inadequate. The risk of economic injury is now running headfirst into fears of irreparable destruction to the eco-system. The conflict must be resolved if the grid is to be modernized. New federal laws, in combination with better community outreach, are designed to do just that.
More information is available from Energy Central:
Cracking the Bottlenecks - Act Spurs Buildup of Transmission Corridors, EnergyBiz, Nov/Dec 2006
Building Tomorrow's Super Grid, EnergyBiz, Sept/Oct 2006Setting Grid Priorities, EnergyBiz, Sept/Oct 2005
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