US DOE announces up to $1.3 bil in funding for 3 interregional grid projects

The Biden administration will commit up to $1.3 billion across three interregional electric transmission projects as part of a program that enables the US Department of Energy to accelerate grid expansion.

The Oct. 30 funding announcement is tied to a 2021 bipartisan infrastructure law that established a $2.5 billion revolving fund authorizing the DOE to serve as an "anchor tenant" by subscribing to part of a transmission line's capacity. The program effectively "de-risks" transmission projects and "gives developers the confidence that they can actually build and that there will be offtake," Energy Secretary Jennifer Granholm told reporters ahead of the announcement.

On the same day, the DOE released a final transmission needs study estimating that the US will need to more than double its existing transmission capacity to achieve President Joe Biden's goal of 100% clean electricity by 2035.

The three projects selected for capacity contract negotiations, totaling 3.5 GW of additional capacity, will help meet specific regional needs, the DOE said in a news release.

The 214-mile Cross-Tie Transmission Line is a development partnership between affiliates of Berkshire Hathaway Energy and Arizona utility holding company Pinnacle West Capital Corp.

TransCanyon LLC is developing the 500-kV line, which will run from PacifiCorp's Clover substation near Mona, Utah, and NV Energy Inc.'s 500-kV Robinson Summit substation northwest of Ely, Nevada.

The 1,500-MW project will use bidirectional technology that increases interregional transfer capabilities in the US West, the DOE said.

Cross-Tie will meet approximately 14% the estimated need for the Mountain region by 2030, according to DOE's transmission needs study. Construction is expected to commence in the first quarter of 2025.

The DOE also is also negotiating a capacity contract for the first phase of the Southline Transmission Project, which will connect Arizona and New Mexico.

Southline is a partnership between independent transmission developer Grid United LLC and Black Forest Partners LP.

The first phase of the project — totaling 175 miles with 748 MW of transfer capacity — will meet approximately 14% of the Southwest's estimated transmission needs by 2030, according to the DOE.

Southline will make significant use of existing rights-of-way.

"The approach to find existing rights-of-way or creative rights-of-way that are less disruptive is one that we are finding successful across the country," Ali Zaidi, the White House national climate adviser, said during a press call. "As we build out, I think that will be an area of lower friction."

Construction on Southline is expected to start in the first quarter of 2025. The full project is 280 miles with an expected in-service date of 2027.

In addition, the DOE is looking to purchase capacity from National Grid PLC's Twin States Clean Energy Link, a 1,200-MW high-voltage direct-current line that will carry hydropower from Canada to Vermont and New Hampshire. Route plans for the project include 75 miles of buried lines across Vermont, 26 miles of underground lines across New Hampshire and 110 miles of upgrades to the existing transmission infrastructure across both states.

The project will also use bidirectional technology, allowing the New England region to export surplus power to Canada.

Twin States Clean Energy Link will meet approximately 79% of the New England region's interregional transmission needs by 2030, according to the DOE. Construction is expected to commence in the second half of 2026.

Granholm said the DOE anticipates releasing a second round of funding of up to $1 billion through the DOE's anchor tenant program in the first half 2024.

Earlier this month, the DOE announced up to $3.5 billion in grants for 58 projects to bolster grid and climate resilience across the country. The department is also seeking to speed the permitting and development of high-voltage transmission lines through a proposed rule that would set a two-year deadline for final decisions on federal authorizations.

S&P Global Commodity Insights reporter Zack Hale produces content for distribution on S&P Capital IQ Pro. S&P Global Commodity Insights is a division of S&P Global Inc.