Hurdles (Not Financial Ones) Await Electric Grid Update
Feb 6, 2009 - Matthew L. Wald - The New York Times
WASHINGTON — Environmentalists dream of a bigger and “smarter” electric grid that could move vast amounts of clean electricity from windswept plains and sunny deserts to distant cities.
Such a grid, they argue, could help utilities match demand with supply on the hottest afternoons, allow customers to decide when to run their appliances and decrease the risk of blackouts, like the one that paralyzed much of the East in 2003.
The Obama administration has vowed to make the grid smarter and tougher, allocating $11 billion in grants and loan guarantees to the task in the economic stimulus package passed by the House last week.
But it will take a lot more than money to transform the grid from a form that served well in the last century, when electricity was produced mostly near the point of consumption, and when the imperative was meeting demand, no matter how high it grew.
Opposition to power lines from landowners and neighbors, local officials or environmental groups, especially in rural areas, makes expansion difficult — even when the money for it is available. And some experts argue that in the absence of a broader national effort to encourage cleaner fuels, even the smartest grid will do little to reduce consumption of fuels that contribute to climate change.
In fact, energy experts say that simply building a better grid is not enough, because that would make the cheap electricity that comes from burning coal available in more parts of the country. That could squeeze out generators that are more expensive but cleaner, like those running on natural gas. The solution is to put a price on emissions from dirtier fuels and incorporate that into the price of electricity, or find some other way to limit power generation from coal, these experts say.
The stimulus bill passed by the House includes $6.5 billion in credit to federal agencies for building power lines, presumably in remote areas where renewable energy sources are best placed, and $2 billion in loan guarantees to companies for power lines and renewable energy projects. The bill also includes $4.4 billion for the installation of smart meters — which, administration officials say, in combination with other investments in a smart grid, would cut energy use by 2 percent to 4 percent — and $100 million to train workers to maintain the grid.
About 527,000 miles of high-voltage transmission lines stretch across the United States, most installed many decades ago.
Everyone agrees that more lines are needed. But some industry experts argue that the problem of making the grid greener goes well beyond upgrading and expanding the existing power lines. The grid, they say, was set up primarily to draw energy from nearby plants and to provide a steady flow of electricity to customers. It was not intended to incorporate power from remote sources like solar panels and windmills, whose output fluctuates with weather conditions — variability that demands a far more flexible operation.
The experts say that the grid must therefore be designed to moderate demand at times when there is less wind or sun available — for example, by allowing businesses or residential customers to volunteer to let the local utility turn down air-conditioners in office buildings or houses, when hourly prices rise.
An even more significant problem is that utilities increasingly face opposition to expansion and must fight for years for permits.
José M. Delgado, president and chief executive of the American Transmission Company, which operates in four Midwestern states, said his firm’s last major project, a line of about 220 miles from Duluth, Minn., to Wausau, Wis., took two years to build but eight years before that to win the permits. The federal Interior Department took a year to approve the line crossing a wild river and required a $5 million contribution to a national park, but the one-year delay raised costs by an additional $12 million, for a total of $440 million, Mr. Delgado said.
Loan guarantees will not help this problem, he said. “We have had wonderful access to the private bond market,” he added.
The International Transmission Company, a Michigan company, is trying to build a 26-mile line that, had it been in place, would have prevented the great Eastern blackout of 2003, said Joseph L. Welch, president and chief executive. The State of Michigan has approved it, but a homeowner is challenging it in court, Mr. Welch said.
“We burn up three years on a line that will take two months to build,” he said.
But, he added, “We absolutely have no problem — underscore, no problem — financing our transmission grid.”
Other companies said the same, although a few said the loan guarantees in the House bill would be helpful.
As power lines lengthen, the number of approvals they require increases, the complications of dividing the costs become greater and the difference among national interests and local interests becomes starker, said Dan W. Reicher, a former assistant secretary of energy who was a member of President Obama’s transition team.
Policy makers have looked at various models to resolve the conflicting interests in power-line disputes. In the 1930s, the federal government assumed sole responsibility for approving natural gas pipelines, and as a result, gas moves freely from wells in the Gulf Coast states to other areas of the country, with much of it used to make electricity. Gas pipelines are somewhat less objectionable, though, because they are buried.
Another model is the one used to build the Interstate Highway System, with the states using their powers of eminent domain in a system that was centrally planned with state input. But highways were more attractive to many states than power lines would be, electricity officials say, especially if the lines are simply crossing a state without adding much local benefit. A third possibility is a national commission that would present a master plan for thousands of miles of new transmission lines that
Congress could approve for the whole country in spite of local objections for individual pieces. Congress tried to solve the problem in 2005 with a law that gave the Energy Department authority to intervene if states did not approve new lines deemed to be in the national interest, but that has not worked well, said Representative Henry A. Waxman, Democrat of California and chairman of the House Energy Committee. It was criticized as an assault on the traditional control by the states of land-use decisions.
The electric industry is at least planning to better integrate different parts of the grid so that if power is needed in Baltimore it can be imported from Chicago. A group of technical experts, mostly from the Midwest, have been meeting for months to map out new lines, in an effort that industry veterans say is unprecedented in its breadth. But the group’s aim is simply a map of what such a system would look like; it will not seek permission for such lines, or try to finance them or actually build them. The group is scheduled to make an announcement next week.
“We’ve got a real political confrontation that’s going to take place,” said Glenn L. English Jr., chief executive of the National Rural Electric Cooperative Association, who had served as a congressman from Oklahoma for 20 years. “It basically comes down to the question of prioritization. What’s more important to you? Do you truly want to maximize the use of renewable energy?”