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Paying for the Green Grid

Subsidies might not be the best solution for interconnecting renewables.

Fortnightly Magazine - April 2009

its magnitude in a recent transmission build-out study that AWEA and SEIA cite favorably, undertaken in the Joint Coordinated System Plan 2008 (JCSP) by the Midwest ISO, SPP, PJM, TVA and MAPP. This study estimates that an $80 billion investment would be necessary in the Eastern Interconnection alone to meet the 20-percent wind-energy scenario the Department of Energy envisioned in its Eastern Wind Integration and Transmission Study. It seems reasonable to assume a nationwide program might cost at least twice that amount.

Carbon Emission Reduction Options

The options for responding to a federal RES or some form of carbon control, whether a cap-and-trade system or a carbon tax, include: 1) demand response and efficiency initiatives; 2) distributed renewable generation; 3) centrally-located, environmentally-sound generation (new or retrofitted); and 4) access to remote renewable resources that might call for transmission development. Greenhouse gas capture and storage ultimately might play a significant role, although the technology for wide deployment of this alternative isn’t yet commercially viable.

The Electric Power Research Institute (EPRI) through its “Full Portfolio” analysis and McKinsey and Company in its 2007 “U.S. Greenhouse Abatement Mapping Initiative,” have detailed the many options that must be brought to bear in this area. These studies reveal a myriad of options, including: energy consumption efficiency initiatives (many calling for capital investment); conversion of existing generation to more efficient operations; the development of additional nuclear capabilities, advanced coal generation and carbon capture and storage; distributed renewable resources (including distributed solar); plug-in hybrid vehicles and the development of large-scale remotely-located renewable generation. 2

These studies inescapably lead to the conclusion there is no magic bullet for reducing carbon emissions, and that the U.S. energy industry must rely on a large number of alternatives. Many of these options call for meaningful capital investment, and they all will compete with one another—and should—for the capital devoted to meeting GHG-reduction goals.

Transmission Solution Obstacles

Where remotely-located renewable resources economically can be connected to transmission, obstacles in that path must be cleared away. AWEA, SEIA and EFC are right to target, as a significant obstacle to connecting renewable resources, the absence of workable federal-siting authority for interstate transmission facilities crossing state lines. State-siting authority is inadequate to address interstate transmission for renewable resources, since state authorities generally are restricted to considering the best interests of their jurisdictions in isolation, leaving any state in a proposed interstate-transmission pathway in a position to exercise an effective veto. Nor is federal authority currently adequate to overcome this barrier. While the Energy Policy Act of 2005 added section 216 to the Federal Power Act, authorizing FERC to exercise so-called “backstop” siting authority, the authority is restricted, and of limited utility for renewable resources. The Act authorizes FERC to issue certificates in instances in which states fail to site facilities that would address transmission constraints in so-called “national interest corridors” identified by the Department of Energy. Yet, these designations generally aren’t designed to address transmission for renewable resources. Moreover, the scope of federal authority recently was narrowed by the court’s decision in Piedmont Environmental Council v. Federal