Money may be difficult to come by for Wall Street financiers in these dark days, but apparently not for electric transmission construction—at least so far. A rash of recent orders from FERC shows...
Titans of Transmission
ITC and AEP jockey for the lead in building the grid of tomorrow.
The Obama stimulus package may have grabbed headlines with its promise of nearly $1 trillion in new spending for the overall economy. But that’s just chump change, in a manner of speaking, compared to what the U.S. electric industry plans to spend on new electric transmission lines in the next several years.
Enacted on February 17, the American Recovery and Reinvestment Act of 2009 (see, H.R. 1., Title IV, secs. 401 & 402) grants $3.25 billion each in additional borrowing authority to the Bonneville Power Administration and the Western Area Power Administration, for new, upgraded, or replacement transmission facilities that BPA or WAPA might choose to finance and construct.
But compare that paltry $6 billion-plus with the news from the week prior.
On February 9, even as Barack Obama headed out from the White House to stump for his stimulus, a group of the nation’s major grid system operators released a study estimating the nation’s electric industry sector needs to spend some $80 billion—more than 10 times the size of that portion of the stimulus package directed specifically at transmission construction—in order to achieve a 20 percent retail penetration for renewable wind energy in just the Eastern Interconnection.
That estimate comes from the Joint Coordinated System Plan (JCSP), a collaborative effort among the PJM Interconnection, the Midwest ISO, the Southwest Power Pool, the Tennessee Valley Authority, the Mid-Continent Area Power Pool (MAPP), and various participants within the Southeast Electric Reliability Corporation (SERC). The study employs a single, multi-regional analysis, rather then conducting parallel, regional-specific analyses (see www.jcspstudy.org.)
Citing the JCSP study, plus 39 others addressing the same problem, the Lawrence Berkeley National Lab reported that same week that estimates of the unit transmission cost needed for bringing wind energy up to a 20 percent market share were congregating around a median of about $300/kW, or about 15 percent of the current prevailing marginal cost of $2,000/kW of installed wind-generation capacity (see The Cost of Transmission for Wind Energy: A Review of Transmission Planning Studies, by Andrew Mills, Ryan Wiser, and Kevin Porter, LBNL-1471E, February 2009) .
By coincidence, perhaps, the same week of February 9 brought news from ITC Holdings, the nation’s largest independent, stand-alone electric transmission company, heralding what may prove to be the biggest single grid project seen in this country in at least 30 years, if not ever, and costing an estimated $10 billion to $12 billion.
Dubbed the Green Power Express, the ITC project would comprise approximately 3,000 miles of extra-high-voltage 765-kV AC lines, running roughly parallel along several distinct rights-of-way, all the way from North Dakota to Indiana, with South Dakota, Iowa, Minnesota, and Illinois in between. Designed as a green-power “superhighway,” the line could move as much as 12,000 MW of wind energy to the Midwest load centers such as Chicago, the Twin Cities, and Southeastern Wisconsin.
It was as if the president himself had drawn up the blueprints.