Transmission: The New Green Energy?
Today's transmission system is a truly interconnected network with more than 150,000 miles of high-voltage transmission lines. Our increasingly technology-dependent society depends upon the transmission network itself as much as on the power plants that use and feed the network.
Numerous trends are occurring in our industry that are putting the spotlight on this important area. This is especially true with regards to the important role that transmission plays with regards to renewable energy. Renewable energy is a major factor that will continue to drive transmission investment. With most solar and wind generation located in remote areas, transmission lines are required to connect these projects to the distribution system.
Southern California Edison, for example, has a five-year capital spending program that includes $5.5 billion in transmission spending. Of this, $3.7 billion is dedicated to projects that will access renewable energy resources.
Oklahoma Gas & Electric also plans to spend approximately $800 million on transmission projects over the next five years to connect to wind projects and to enhance system reliability.
With most states having enacted renewable portfolio standards (RPS) that require the increased production of energy from renewable energy sources, this trend should continue. The RPS mechanism generally places an obligation on electricity supply companies to produce a specified fraction of their electricity from renewable energy sources. Some of the more aggressive RPSs include Colorado with a RPS of 30 percent by 2020, California with a RPS target of 33 percent by 2020 and Hawaii with a RPS goal of 40 percent by 2030.
Another important trend that is shaping transmission investment is the Smart Grid Investment Grants that were announced last fall. Among the recipients, five independent system operators (ISOs) received federal funding, and their funding all pertained to the implementation of phasor measurement units. These units measure the electrical waves on an electricity grid to determine the health of the system. They are also commonly referred to as synchrophasors and are considered one of the most important measuring devices in the future of power systems.
While most conventional technology reports once every four seconds, synchrophasors report back 30 times a second. With more frequent sampling, grid operators can see disturbances as they begin to materialize, take appropriate actions and manage the grid more effectively.
Transmission projects will not be without its challenges. The transmission siting process remains one of the most difficult elements of the transmission debate. A mixture of local, state and federal government agencies hold jurisdiction over who can build what, where and when they can build it and who pays for it. In the end, transmission siting in some states is one of the most difficult yet most important elements of the transmission system.
There is also the issue of NIMBY or Not in My Backyard. To the surprise and consternation of many green energy advocates, people who live in areas where power lines are needed to transmit the power from wind and solar farms are putting up a fight because of their concerns about the impacts these green energy projects will have on their environment.
As a result of the prevalent NIMBY attitude, utilities are trying to increasingly educate customers about how new transmission lines help the environment by allowing increased renewable energy. In fact, utilities such as Southern California Edison are labeling their transmission projects with monikers that promote the fact that the project is promoting green energy projects, as witnessed by the utility's Tehachapi Renewable Transmission Project.
Cost allocation for new interstate transmission lines is another important issue facing the industry - that is, deciding which electricity customers pay how much of the cost of building and operating a new transmission line that crosses several states. Currently, there is no uniformity in cost allocation procedures, and to date the Federal Energy Regulatory Commission (FERC) has declined to go beyond establishing general principles.
The energy industry continues to debate how to best use a combination of technology and policy to shore up the weak sections of the network, and obviously transmission will play a prominent role in this debate. As more states adopt RPS, and as the states that have already adopted RPS pursue their aggressive goals, I expect transmission's role to heighten.
Christopher Perdue
Vice President, Sierra Energy Group
cperdue@energycentral.com
310.471.7396
