Commonly referred to as the Economic Stimulus package, about US$11 billion of the total energy-related provisions of some US$40 billion will go directly to building transmission projects, and as part of DOE assistance to states and regional organisations for planning and permitting extremely high voltage interstate transmission links.
While US$11 billion seems a modest amount to transform the 100-year old US transmission system, utility and regional transmission planners assume private investment and utility rate recovery will pay for transmission development and construction.
Transmission planning and development has taken on almost explosive growth in the USA in the past few years. The most recent study results have been published and plans announced coincided with the writing of the economic stimulus package – but the studies have actually been in the works for a long time.
The Lawrence Berkeley National Laboratory published a review in February of 40 studies completed between 2001 and 2008, that analysed the cost of transmission for wind energy, including a Joint Coordinated System Plan (JCSP) study discussed later.
The studies, scattered all over the US except for the southeast, varied considerably in scope, authorship, objectives methodology and tools. Focusing on the unit cost per kW, they ranged from US$0/kW to over US$1,500/kW. The majority of studies, however, have a unit cost of transmission below US$500/kW, or roughly 25% of the US$2,000/kW cost of building a wind project, the Lawrence Berkely National Laboratory report concluded.
Renewables generation driving transmission needs
The interest and growth in transmission development on the part of utilities and private interests has been driven by state Governments setting renewable portfolio standards (RPS) driven to some extent by concerns over climate change, and concerns over the security of the energy supply. Unfortunately without exception, renewable resources that can satisfy those RPSs are located in areas where there is no transmission.
For example, a major midwest utility and a transmission company have announced plans for major transmission lines in the midwest. American Electric Power is evaluating the feasibility of building a multi-state extra-high voltage transmission project stretching more than 1,000 miles across the upper midwest to connect major wind developments in the Dakotas and surrounding states to the existing 765-kV network that ends near Chicago. The utility is estimating that the lines will cost between US$5 billion and US$10 billion, depending on where they will ultimately be sited, and be built in stages over a 10-year period.
ITC Holdings announced in early February that it had filed a proposal with federal regulators for a revenue requirement and incentive rates for the US$12 billion Green Power Express. The 3,000 mile 765-kV line would run from the Dakotas through Minnesota, Iowa, Wisconsin, Illinois and Indiana to transmit up to 12,000 MW of wind power.
A consortium of regional transmission system operators released a transmission study on 9 February. The Joint Coordinated System Plan study concluded that if wind-generated electricity is to supply 20% of the generation required by the country's entire eastern interconnection, 15,000 miles of new high voltage transmission would have to be built at a cost of about US$80 billion. Carbon emissions would drop 8% if this wind generation goal were reached.
The study is the first inter-regional planning effort by the Midwest Independent System Operator, the Southwest Power Pool, the PJM Interconnect, the Tennessee Valley Authority and the Mid Atlantic Power Pool. The new England and New York areas were also included in the analyses.
Just two scenarios have been studied and the collaborators will examine additional scenarios in the future. The scenario assuming that the entire eastern interconnection will meet 20% of its energy needs using wind generation by 2024 proposes that mostly extremely high voltage 765kV AC and 800kV DC would be built to deliver power to the load centres in New York, Pennsylvania and the Washington DC corridor. The lines would originate in Minnesota, Illinois, Iowa, and South Dakota where major wind resources exist. Additional 800kV DC lines would deliver wind power from Texas, Oklahoma and Kansas to Tennessee, Louisiana and Georgia, and points in between.
The results of this study will be included in the ongoing US Department of Energy's Eastern Wind Integration and Transmission Study. David Meyer, a senior advisor in DOE's Office of Electric Delivery and Energy Reliability said the JCSP study is an example of the interconnection-level analysis that should be done. “Our view is that we need to look at a large number of scenarios before we understand what the needs are.”
DOE's Office of Electric Delivery and Energy Reliability will be receiving approximately US$4.6 billion as part of the Economic Stimulus package. The office has been allocated US$80 million to conduct a resource assessment and analysis of future demand and transmission after consulting with the Federal Energy Regulatory Commission (FERC).
The office is also to provide technical assistance to the North American Electricity Reliability Corporation, regional reliability system operators, states and other transmission owners and operators. The goal is the formation of interconnection-based transmission plans for both the eastern and western interconnections and the Electric Reliability Council of Texas (ERCOT).
Meyer said it will be hard to use stimulus funds for putting hardware in the ground, since specific projects take a considerable amount of time to get through public and environmental reviews, and then to build. Meyer said, “What we can do with some of the funds is to support analyses so people have a clear understanding of what they are about.”
Southwest Power Pool president and ceo Nick Brown, in an email, said, “I believe it is appropriate for the electrical equivalent of an interstate highway system to be funded at the national level or at a minimum through a national rate structure to ensure recovery of investment.” However, SPP is not waiting for tax dollar handouts, Brown said, and is working on regional rate mechanisms to implement cost-sharing for regional transmission construction in its transmission expansion plan.
The Economic Stimulus package does include US$6 billion in DOE loan guarantees for renewable energy systems that generate electricity and for transmission systems, including upgrading and restructuring projects. These loan guarantees should fund around US$60 billion in guaranteed loans.
The package also increases borrowing authority to US$3.25 billion each, for the Bonneville Power Authority – which owns transmission assets throughout Oregon and Washington – and the Western Area Power Administration, which transmits power throughout the western states. Both are federal agencies and are to use the loan guarantee commitments to finance, construct, acquire and replace transmission and related facilities.
Developing smart grids
Another large chunk of the US$4.5 billion going to DOE's Office of Electric Delivery and Energy Reliability will be spent on developing advanced smart grid technologies to actively manage the flow of electricity in much more sophisticated ways. It is to conduct research, test and demonstrate advanced technology and administer a smart grid regional demonstration initiative. DOE is to also develop a smart grid information clearinghouse.
DOE's Meyer said modernising the grid isn't just expanding capacity, it's making all components of the grid digitally capable of communicating with each other. As an example of a smart grid technology already being deployed, Meyer described phaser networks which provide very specific pictures of the operational status virtually on any component. He described it as equivalent to the technological jump from X-rays to MRIs. Phaser network devices installed at appropriate locations across the system will send information at 60 times per second. Particularly valuable in blackout situations, by looking at the same event from different locations you get a greater sense of reality, he said.
An investment matching grant program will also be available to provide grants of up to 50% for qualifying smart grid investments. DOE is to have application procedures in place within 60 days.
Xcel Energy is already mid-way into demonstrating a smart grid application. The utility has several subsidiaries in 8 western and midwestern states – Colorado, Michigan, Minnesota, New Mexico, North and South Dakota, Texas and Wisconsin. It chose Boulder, Colorado to demonstrate its vision of a Smart Grid city, and has already installed 15,000 advanced smart meters, and 1,800 pieces of monitoring equipment. It intends to add another 10,000 advanced meters.
The purpose of Xcel's Smart Grid city is to test 7 projects it has already identified: wind power storage, neural networks, smart substations, smart demonstration assets, smart outage management, plug-in hybrid electric vehicles and a consumer web portal. This latter project will allow customers to program or preset their own energy use and automatically control power consumption based on personal preferences.
Tom Handley, a spokesman for Xcel Energy, said 10 homes have now been set up to demonstrate some of these projects. “We can be directly in contact with a customer's meter and know when the customer is out of power…and know where the outage is on the grid,” he said. Furthermore, “We've been able to discern when utility equipment will fail and replace it before the failure and blackout occurs,” he said.
Identifying renewable energy zones
Meanwhile in the west, several states, including the Western Governors Association, are identifying renewable energy zones where new transmission lines should be built, rather than first identifying transmission system grids as utilities and regional system operators are doing in the midwest and east.
Another distinction is that the west has a wide variety of renewable resources, while east of the Rockies vast wind resources are being targeted to generate electricity for the East Coast. All of the work in the west has been modelled on the innovative work done in Texas.
The Public Utility Commission of Texas on 29 January selected 6 companies or joint ventures plus 6 smaller companies to build 2,300 MW of transmission lines in the state that will deliver wind power from Competitive Renewable Energy Zones or CREZs, already identified, to population centres. The cost of the estimated US$4.92 billion grid improvement program will be borne by the companies chosen to build the lines, and not the state or federal government.
One of the joint ventures is Electric Transmission Texas, with American Electric Power and Mid-American Energy Holdings joining forces to build a US$789 million in transmission projects. Calvin Crowder, president of ETT, explained that the PUCT has only produced a conceptual map and not yet released a final decision. Each of the companies will have to do detailed routing. Crowder said ETT has already begun taking aerial photographs, conducting environmental assessments and preliminary engineering to identify alternative routes in the territory where it will build transmission lines. Environmental reviews and public hearings lie ahead. It will take two to three years to get hardware in the ground, he said.
Dallas, Texas-based Oncor, a regulated electric distribution and transmission company, was awarded the largest number of projects, valued at US$1.3 billion, by the PUCT. Catherine Cuellar, a spokeswoman for the company, said Oncor will be funding the projects partly from its capital budget, on a 60/40 debt to equity ratio. The biggest investment will be in 2011 and 2012, she said. It will soon be closing on contracts to acquire land and begin engineering plans, take aerial photography and cartography.
Other entities that were awarded transmission projects include the Lower Colorado River Authority, Lone Star Transmission, Wind Energy Transmission of Texas and Sharyland Utilities.
California has moved one step closer to completing its transmission development plan which is crucial to the state achieving its official goal of producing 20% of the state's power needs through renewables by 2010. It has an unofficial goal of 33% by 2020. Utilities are not likely to meet the initial goal since they currently produce 12% of their power from renewables on a state-wide basis. One of the many reasons for this is the lack of transmission that can bring the renewable generation to market.
The California Energy Commission on 5 January released the latest report from the Renewable Energy Transmission Initiative, a consortium of stakeholders from throughout the state representing utilities developers, state agencies and environmental organisations, among others. The report ranks 29 competitive renewable energy zones in the state, based on preliminary economic assessments and environmental risks.
The next phase, to be completed by 30 March, will refine CREZ generation potential and develop a statewide conceptual transmission plan with improved transmission costs. The third phase will include proposals for specific transmission projects.
The 29 identified CREZs represent an aggregation of 2,100 renewable projects, many already in development, with a combined generating capacity of over 200,000 GWh/year. An additional 110,000 GWh/year of resources were identified in other states, British Columbia and Baja California Norte. All are linked by common transmission requirements and with close physical proximity. RETI estimates the amount of additional renewable energy needed to meet the 33% goal is about 68,000 GWh/year.
Other western states have initiated or completed analyses of renewable energy zones, including Utah, New Mexico, Colorado and Nevada. A Utah stakeholder group has recently completed Phase 1 which identified REZs totaling about 13,262 square miles and an estimated 837 GW of generating capacity in that state. Jason Berry, Utah's state energy program manager, said in Phase 2 they will look at transmission issues, including the economics, barriers and opportunities of linking the REZs through new transmission lines to population load centers.
The Western Governors Association and the US Department of Energy are working in collaboration and have created western renewable energy zones, or WREZs throughout the 11 states west of the Rocky Mountains, two western Canadian provinces and the Mexican state of Baja California. Areas with vast renewable resources were identified to expedite the development and delivery of renewable, primarily wind, resources to population load centers. Public comments are due on 2 March and final designations will be made 2 June at a WGA meeting.
The maps sometimes reflect work already done by the states since they incorporate data developed by California, Utah and the other western states. But Utah's Berry said there are no conflicts. “We had different criteria and a different methodology.” While the overlays are similar, state REZs are more detailed than are the WGA WREZs, he said.
The stakeholders, representing a variety interests throughout the region, will also produce conceptual transmission plans for delivering the energy. Eventually, once these plans are mapped out, a plan to stimulate development of both commercial generation and transmission projects will be organised with the ultimate goal of developing a region-wide market for renewable power. Collaborative efforts among state and federal agencies will also move ahead to complete environmental reviews and permits for interstate transmission.