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Southern Cross could spur 3GW of new wind build-out in Texas grid

Pattern Development’s trailblazing Southern Cross transmission project could stimulate 3GW of new wind capacity build-out within the main ERCOT electrical grid in Texas by enabling other US states to access abundant low-cost energy there, a senior company official tells Recharge.

The proposed 400-mile-long (644km), 500kV direct-current line and related 37- to 40-mile-long 345kV Rusk-Panola transmission project in Texas will allow export of 2GW of power (after line losses) to Louisiana, Mississippi, Alabama and other southeastern states with poor onshore wind resource.

Ward Marshall, director of business development at Pattern, believes that investors will advance wind projects that easily exceed Southern Cross'  carrying capacity. In part, because wind is variable and additional generation capacity will be necessary. But also because the huge ERCOT market provides ample opportunity to sell any excess electricity.

“This represents a new portfolio of projects not just in West Texas but throughout ERCOT. This portfolio increases the efficiency of wind and land royalties,” he says, referring to lease payments to landowners that now total $60m annually in Texas, the most in any state.

Pattern itself is scouting locations in central and south Texas and the blustery northern Panhandle for additional wind farm investments to help feed the line, Marshall adds.

Pattern plans to have Southern Cross built and energised by 2021. The overhead line will start in De Soto Parish in western Louisiana just over the Texas border and terminate in Lowndes County in eastern Mississippi near the border with Alabama. The actual route remains under study.

The double-circuit Rusk-Panola line will link Southern Cross with the ERCOT system. Municipal utility Garland Power & Light is sponsoring the project in conjunction with Rusk Interconnection LLC, an affiliate of Southern Cross. Garland will be the sole owner of the line and will operate it.

The Federal Energy Regulatory Commission (FERC), which regulates interstate transmission of electricity from Washington, DC, has approved the project. It still needs state approvals and permits.

ERCOT an island

Even though ERCOT is by far the smallest of three main interconnections that comprise the US power system, it has a disproportionately high percentage of the nation’s wind generation capacity – 17GW or more than 20% of 82.18GW on 1 January. ERCOT also leads with new capacity under construction.

Despite the abundance of wind energy, there are no exports from ERCOT to the east and west interconnections as all three operate largely independently from each other with limited transfers of power from any source between them.

ERCOT is unique in that it is located entirely within one state that also happens to be the nation’s largest state power market. Traditionally, Texas policymakers and regulators have been fiercely protective of ERCOT’s status as an island within the US power system, largely free from what they view as unwelcome federal interference.

They have viewed its mission as managing the flow of power to about 90% of the state’s electric load, not provision of economical energy elsewhere. (ERCOT also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for 7 million premises in competitive choice areas).

Their resistance to potential exports of energy has begun to soften somewhat with the meteoric rise of wind generation during the last decade within ERCOT.

Southern Cross, for example, would improve competitive conditions with ERCOT (and Southeast) by improving transmission service availability and electricity supply. The project would allow for increased utilisation of several thousand miles of heavy-duty power lines built earlier this decade known as CREZ to transport wind energy from remote resource-rich areas to major load centers in Texas.

The project’s ability to move electricity bi-directionally would also benefit ERCOT (and Southeast) by more efficiently using generation capacity, according to FERC.  Having access to outside energy sources will also contribute to ERCOT’s system reliability.

“I think we are doing generally what the Texas legislature has always wanted which is to create more competition and things that help the Texas economy. If you are able to take your products and sell them in other places, to me this is the true market concept,” says Marshall.

Only users of Southern Cross will pay the tolling fees and there will be no cost for ratepayers within ERCOT, according to Pattern. “It is self-supportive,” he says.

Transmission and Trump

Wind industry officials here say that Southern Cross is a project that should appeal to President Donald Trump, who has talked about a massive public-private investment initiative to modernise the country’s infrastructure. Details remain unclear.

They note that private capital will entirely finance the project, it will create new jobs, investment, tax base and economic development opportunities regionally, and domestic companies will entirely supply it. “We really haven’t spent this kind of money on our grid for a long time. The backbone was built in the 1960s and 1970s, and for a while we’ve really have been taking advantage of that overbuild,” says Marshall.

Officials say the federal government can do its part by facilitating any additional regulatory approvals and cooperating more broadly with states so that badly needed interstate transmission projects for wind can advance.

Trump has sought to ease the regulatory burden in his first month in office. On 24 January, he issued an executive order to streamline environmental reviews and approvals for of high-priority infrastructure projects. On 30 January, he issued another executive order that requires any executive department or agency that proposes a new regulation to identify two regulations to be repealed.

Texas Governor Greg Abbott and the state’s business leaders are hopeful that Trump’s administration will pursue economic policies that encourage investment for all forms of energy development. His appointment of former Governor Rick Perry to head the US Department of Energy was auspicious given his long public record of support for transmission infrastructure expansion and modernisation.

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