The US must build more high-voltage transmission lines that tap abundant renewable energy resources in both interior regions and shallow coastal waters if it wants to meet greenhouse gas emission (GHG) reduction targets, according to the nation’s top grid regulator.
“If we don’t act, I think we’re not going to be able to get to our GHG goals,” Richard Glick, chair of the Federal Energy Regulatory Commission (FERC), told the CERAWeek virtual conference, referring to both US sovereign pledges and state mandates.
For that reason, building utility-scale generators near those low-cost resources will need to occur even with advent of distributed energy resources and products like demand response, “which are terrific and can make a dent in our GHG emissions”, he said.
The US recently re-joined the Paris Agreement on climate after a 107-day absence resulting from former President Donald Trump’s completion of the three-year withdrawal process on 4 November.
The present US pledge is to cut GHG emissions between 26% and 28% by 2025 from levels in 2005. President Joe Biden’s administration will unveil a more ambitious commitment at an international climate summit in April, reportedly as much as 50% by 2030.
Glick, named by Biden in late January, has made long-haul transmission development a priority for the agency during his five-year term. FERC regulates the interstate transmission grid including planning and cost allocation, but not over siting for the infrastructure. That is done at the regional and state levels.
“We have to figure out ways to incent or encourage transmission planning to build these long-distance inter-regional lines,” he said. A major hurdle has been cost allocation for those sponsored by utilities. “Obviously, no one wants to pay for transmission. They all want the benefit of it, but no one wants to pay for it. That’s just human nature.”
With a price tag of several billion dollars per project, states are reluctant to have their residents pay for wires strung across their territories that transport clean, low-cost energy to other jurisdictions.
“That’s certainly a legitimate issue. The commission has a responsibility to ensure that we only allocate costs to those who benefit,” said Glick, although he noted that those residents also benefit as grid expansion increases reliability and resiliency while reducing congestion of the system overall.
Project costs continue to increase due to lengthy local, federal, and state permitting hurdles and community opposition in some cases that forces routing changes. Much of the best renewable resource is located on western public lands where multiple federal agencies have cumbersome and sometimes duplicative regulatory jurisdictions.
After taking office, Biden signed an executive order requiring the Department of Interior, which manages federal public lands, to identify steps to fast-track renewables development there and related facilities such as transmission lines.
No energy infrastructure – hydroelectric dams, natural gas pipelines, nuclear plants, offshore oil platforms – takes longer to win approvals. A decade or more is not unusual versus two or three years to build a solar or wind project, and failure to obtain a single permit can cripple it.
The ratio of development cost to construction cost is higher for merchant transmission, for example, than for any renewable or fossil fuel technology – 40%, even 50%, versus 4-5% for a typical wind or solar farm.
Much can change over a decade including electricity markets, state and federal environmental, regulatory and tax policies, and technology, and few investors can afford to park capital for a 10-12 planning cycle.
On the other hand, a fully utilised and well-managed 50-plus-year merchant wire asset delivering an initial several gigawatts of electric power could be a potential overhead cash register for its owners. Even more so with capacity additions, something that are far easier to gain approvals for if done on existing transmission corridors.
Biden has proposed a $2 trillion, four-year climate-related infrastructure plan that could include federal tax incentives for grid modernization and new interstate transmission build. The White House has not decided whether to seek funding from Congress as stand-alone legislation or part of a broader package.
With both the federal budget deficit and US national debt at record levels, how much financial and political leeway Biden will have to push through another huge spending bill is unclear, and many Republicans say they will oppose it if financed through higher corporate and personal income taxes on wealthier Americans.