Serving customers’ needs should be a top priority for power companies, irrespective of the regulatory construct and business model. Transformation doesn’t change this basic fact, but how do we...
Unforeseen consequences of dedicated renewable energy transmission.
Growth in renewable electricity (RE) generation will require major expansion of electricity transmission grids, and in the U.S. this could require building an additional 20,000 miles of transmission over the next decade—double what’s currently planned. To facilitate this, government policymakers are planning to build what are sometimes called “green” transmission lines that are restricted to carrying electricity generated by renewable sources, primarily wind and solar.
However, state and local jurisdictions are resisting siting of transmission unless it serves local constituents and existing power plants. If such transmission is built and local access is allowed, then the major beneficiaries of the added transmission might be existing power generation facilities, especially coal plants. Many of these facilities have very low electricity generating costs and their capacity factors are transmission-constrained. Their access to added transmission lines could enable them to sell electric power at rates against which RE can’t compete.
20,000 Miles of Wire
JP Morgan studied a possible federal renewable energy standard (RES) and its impact on the growth rate of RE. 1 We used JP Morgan data to estimate the potential impact of an RES and the transmission required to facilitate it on the existing fleet of power plants. The analysis focused primarily on coal plants because they can increase their capacity factors, whereas U.S. nuclear plants already have capacity factors above 90 percent. Given the location of the coal plants throughout the U.S. and their current capacity factors, we estimated the impact of expanded electricity transmission lines on RE generation and costs and on conventional electricity generation and costs.
The locations of the RE central station technologies and their distances from major load centers largely determine the new transmission that will be required. Geothermal will be installed in a small number of Western states, 2 while biomass will be installed primarily in the northern Great Plains, the Pacific Northwest, and perhaps parts of the South. Solar thermal (ST) and photovoltaics (PV) will be installed in some Western and Southwestern states, and wind will be installed primarily in the northern Great Plains.
The major load centers are primarily metropolitan areas in the coastal states, the Boston-Washington corridor, the West Coast corridor, and major Midwestern cities. In general, increased transmission capability is desirable, because a robust interstate electric transmission system is in everyone’s interest—consumers, power producers, and governments. An expanded transmission network will allow for power system growth, provide greater flexibility in expanding generation at existing plant sites, and facilitate construction of new generating plants at optimal locations.
However, there’s a mismatch between RE resources and load centers: Most of the best RE sites are west of the Mississippi river, but most of the load centers are east of the river or on the West Coast. Even West Coast load centers are far from the best RE sites. We estimated how much new transmission needs to be built to