The insurance policies that govern U.S. transmission grid planning and funding can’t help the nation’s want for an unprecedented growth of fresh power. Federal regulators must declare the present paradigm “unjust and unreasonable,” and implement a brand new one to spur a whole lot of billions of of funding in a nation-spanning transmission build-out over the following decade.
That’s the stark conclusion of “Planning for the Future,” a brand new report sponsored by clear power teams which were demanding a serious overhaul of federal transmission coverage for years, and see the Biden-Harris administration and a Democratic-controlled Congress as providing a pathway to get there.
The elemental premise of the report — that the nation wants large-scale, inter-regional transmission to fulfill its future power wants — can be supported by seven former commissioners of the Federal Vitality Regulatory Fee (FERC), the important thing authorities company that may get the job carried out.
“Not solely sure, however hell sure,” James Hoecker, FERC chairman from 1997 to 2001, stated of the necessity for main new transmission funding in a Wednesday webinar introducing the report. Past the necessity to soak up the nation’s rising share of wind and solar energy, the grid will doubtless “must double in measurement to help electrification of transportation, warmth and different industrial processes,” all of that are wanted to decarbonize the U.S. economic system.
Hoecker’s view was echoed by former FERC chairs Elizabeth Anne Moler, Pat Wooden III, Joseph Kelliher, Jon Wellinghoff and Norman Bay and former FERC commissioners Nora Mead Brownell and Phil Moeller.
“There isn’t a local weather plan that’s severe if it doesn’t anticipate a major regional transmission improve,” Wooden, CEO of Hunt Vitality Community and FERC chair from 2001 to 2005, stated in Wednesday’s occasion.
The 92-page report comes amidst a serious shift in federal power coverage. President Joe Biden’s broad-ranging local weather and power govt order signed Wednesday directs federal businesses to “speed up clear power and transmission tasks beneath federal siting and allowing processes in an environmentally sustainable method,” with FERC and the Vitality Division the pertinent federal businesses for transmission. Richard Glick, the newly named Democratic FERC chairman, has highlighted transmission coverage as a key focus for the company this yr.
That would set the stage for reforming a transmission paradigm, advanced over twenty years of FERC coverage, that’s failing to maintain up with current renewable development, not to mention that anticipated beneath the Biden-Harris administration’s objectives to decarbonize the electrical energy sector by 2035.
“Ten years after FERC’s final main transmission coverage motion, there are identified profitable practices to emulate and pitfalls to keep away from,” stated Rob Gramlich, report co-author and CEO of sponsor Individuals for a Clear Vitality Grid (ACEG).
The issues with transmission right now
These pitfalls embrace “tasks that tackle solely native wants, that tackle reliability with out extra broadly assessing different advantages, or that merely change previous retiring transmission belongings with the identical sort and design,” Gramlich and report co-author Jay Caspary wrote.
Over the previous decade, solely a handful of grid operators have taken on the sophisticated means of aligning a number of states and utilities to construct regional transmission capability to help large-scale wind and photo voltaic from the distant areas the place it’s most cost-effective to the inhabitants facilities the place the ability is most wanted.
As these efforts have run their course, standing coverage has pressured new wind and photo voltaic tasks to tackle the grid improve prices of interconnecting to transmission networks themselves. These improve prices have risen to ranges which have pushed an increasing number of builders to desert their plans, and stymied grid planners with a continuing shuffling of their interconnection queues.
In the meantime, FERC Order 1000, handed in 2011, has failed in its purpose of making workable insurance policies to allow transmission to be constructed between the nation’s regional transmission organizations (RTOs) and impartial system operators (ISOs). As an alternative, it has created a construction the place would-be RTO-spanning tasks should cross a “triple hurdle” of planning processes, one for every RTO and a 3rd develooped for the aim of Order 1000 compliance, that has confirmed too advanced to efficiently navigate.
“I say ‘hell sure’ as nicely, we have to do extra inter-regional transmission,” Wellinghoff, former FERC chairman from 2009 to 2013 and present CEO of Grid Coverage, stated at Wednesday’s occasion.
“Order 1000 has fallen quick on its imaginative and prescient, actually quick on my imaginative and prescient of it.”
As an alternative, transmission has turn out to be a largely parochial affair in recent times. A Brattle Group evaluation of the $70 billion in utility transmission tasks in ISO and RTO areas between 2013 and 2017 confirmed about half of it was accepted “exterior regional planning processes or with restricted stakeholder engagement.” A full 97 p.c “was not topic to a aggressive choice course of, both as a result of it was constructed to deal with a near-term reliability want, upgraded current infrastructure, or fell under RTO thresholds.”
To repair this, FERC “has an obligation to seek out beneath Part 206 of the Federal Energy Act that present tariffs are unjust and unreasonable, and should be changed with new transmission planning, price allocation, and evaluation tips,” Gramlich and Caspary wrote.
What a future-forward transmission coverage might appear like
Step one ought to be a “complete FERC planning rule” that opens up the present restricted scope of transmission planning, Gramlich stated. Right this moment, ISOs and RTOs consider the necessity for particular person transmission tasks in silos of fixing reliability issues, yielding financial advantages, or fulfilling public coverage imperatives, he defined.
However the few profitable examples of forward-thinking transmission growth over the previous decade have mixed these disparate valuations, he stated. These embrace Texas grid operator ERCOT”s aggressive renewable power zone (CREZ) effort, Southwest Energy Pool’s designation of “precedence” tasks, and the Midcontinent Unbiased System Operator’s multi-value tasks (MVP) course of.
Because the title of MISO’s effort signifies, it labored to establish a number of values for utilities and states going through a predictable development in wind energy, and get stakeholders to agree on shared prices and advantages for the transmission tasks wanted forward of time to combine it, Gramlich stated.
“It was a consensus plan, and FERC accepted it, and we’ve obtained 15 gigawatts extra of wind than we in any other case would have had in that area,” he stated.
FERC’s new rule ought to standardize an analogous strategy, combining reliability wants with financial and public coverage elements in a much more expansive manner, he stated. Meaning taking renewable power development from state mandates, utility useful resource plans and company clear power procurements into consideration, in addition to the altering nature of load to return from development in electrical autos and constructing heating.
It also needs to shift from finding out single tasks to analyzing a number of portfolios and a number of eventualities, together with these involving impartial “service provider” transmission tasks, he stated. That’s extra sophisticated than assessing proposed tasks one after the other utilizing restricted standards.
“No person likes transmission. We’ll all the time be litigating it,” Nora Mead Brownell, co-founder of power consultancy Espy Vitality Options and FERC commissioner from 2001 to 2007, stated in Wednesday’s occasion. “However I feel if we had a extra fact-based foundation for it — and by the best way, extra coordination between areas,” a broader planning regime might “construct folks’s confidence that they’re getting a good shake.”
To measure extensively various eventualities, FERC might want to direct ISOs and RTOs to undertake revamped methodologies for assessing a number of classes of prices and advantages, he stated. A few of these values may be measured by way of and cents or reliability metrics. However others shall be tougher to quantify and examine.
A nationwide transmission plan?
This may require FERC’s lively intervention in additional native undertaking planning, to consider whether or not a regional or interregional undertaking could be a greater match, the report famous. That would put FERC in battle with utilities which have historically held the initiative in proposing and incomes fee restoration from tasks that meet their very own wants, whereas avoiding people who might power them into the extra advanced realm of negotiating shared prices and advantages with a number of events.
However that’s no excuse for a system during which “so many identified facets of the long run portfolio are merely ignored,” Gramlich stated. In that gentle, the brand new report represents “the novel concept that planning ought to really be concerning the future.”
The previous FERC commissioners in Wednesday’s webinar agrees that FERC has broad authority to set a lot broader federal oversight over interstate and inter-regional transmission coverage. “That is interstate commerce, these are gross sales for resale, and most significantly, it’s within the nationwide curiosity,” Wooden stated.
However till lately, FERC hasn’t had particular steering from Congress on what Hoecker described as “an actual nationwide power coverage and technique.”
The Biden-Harris administration’s plan to create a clear power customary may serve simply that goal, a number of former FERC chairs agreed. That’s as a result of it might codify a federal grid decarbonization coverage that FERC might then take up as offering the mandate to implement transmission coverage to allow.
This idea of a “nationwide grid plan” isn’t included within the lengthy listing of proposed reforms in Wednesday’s report, Gramlich stated, “though we wouldn’t object to that.”
On the similar time, “I feel plenty of events must be introduced alongside somewhat extra steadily than that. I’d like to see some research of nationwide grid plans, just like the NREL interconnection Seams examine. I feel additional work on that is perhaps very useful and helpful.”