Renewable Energy Cannot Continue to Grow Without a Significant Investment in transmission infrastructure. The U.S. Department of Energy has identified transmission limitations as the largest obstacle to obtaining 20% of our electricity from wind power. Currently, almost 300,000 MW of wind projects — more than enough to generate that much electricity — are waiting in line to connect to the grid. However, not enough transmission capacity is available to carry the electricity they would produce.

It's widely recognized that high renewable energy penetration will require substantial investment in new transmission lines and that the nation's existing obsolete regulatory structure is not up to the task. This awareness can help push transmission policy changes through the system.

INCREASED CAPACITY

The key to any cost-effective plan is the usage of high-capacity lines, which have several economic, environmental and efficiency benefits over the lower-capacity lines typically built today.

The economies of scale are massive. For example, a single 765-kV line can carry as much electricity as six 345-kV lines on a quarter of the amount of land. This makes it easier to acquire rights-of-way and minimize land-use concerns. A 765-kV line costs one-half to one-third as much as 345-kV lines of equivalent capacity.

PRICE REDUCTION

A robust transmission grid gives consumers access to lower-cost electricity. On a severely constrained grid, by contrast, consumers must rely on local power plants even though plants in other regions can produce power less expensively.

New transmission would increase competition in wholesale power markets. A weak grid makes it possible for power generation owners in constrained areas to raise prices beyond those in a competitive market.

Transmission also can protect consumers against fuel price volatility. Because of inadequate transmission, for example, consumers in New York and New England were forced to use oil-fired generation to meet some of their power needs even as the price of oil rose by a factor of five.

A stronger power grid will be more reliable, significantly reducing the immense cost of power outages for American consumers and businesses. The 2003 blackout in the northeast U.S. and Canada caused about $7 billion to $10 billion in economic losses.

The greater consumer savings mean that the cost of building a new transmission infrastructure will be recovered. For example, the preliminary Joint Coordinated System Plan study estimated that a $50 billion to $60 billion investment in transmission is required to significantly reduce congestion and integrate 240 GW of wind in the eastern U.S. This investment would produce enough benefits to pay for itself in seven years, even with a 15% rate of return factored into the cost.

KEY ISSUES

Getting new transmission infrastructure approved and financed can be a challenge. The current utility-by-utility, state-by-state approval process is not suited to a national agenda of building high capacity regional lines. Most states are limited by siting and authorizing cost recovery for a transmission line that will serve users beyond an individual state.

The wind industry supports federal legislation that would substantially reform the regulatory structure by addressing the three Ps: planning, permitting, and paying.

Planning would be interconnection-wide for high-capacity lines necessary to meet national renewable energy goals. This would require state input, but with a federal government “determination of need.”

Permitting could be consolidated at the Federal Energy Regulatory Commission under certain circumstances. All users in the region would pay for the lines through a simple cost-allocation method.

With these key barriers addressed, substantial private capital would be interested in building lines, and states would have an ample opportunity to guide development and be involved in local routing decisions. Senators Reid, Bingaman and Dorgan all introduced bills early in the 2009 session that include these features.

The need for transmission infrastructure to deliver renewable energy to the grid is one of several major energy challenges facing America. It will take a joint effort by Congress, the new administration, energy companies and others to get the necessary legislation passed. The results, however, will be worth it. The new transmission system will create jobs, cut greenhouse-gas emissions and reduce our dependence on fossil fuel imports.

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Rob Gramlich (RGramlich@awea.org) is the senior vice president of public policy for the American Wind Energy Association, the national trade association of more than 2400 entities involved in all aspects of wind energy production.