13 Sep, 2023
Report highlights progress on US grid expansion but calls for further reforms
By Zack Hale
Three dozen "ready-to-go" electric transmission projects would boost existing US grid capacity by approximately 15%, but further policy reforms are needed to bring development in line with expected growth in power demand, according to a report released Sept. 13.
The report, produced by consulting firm Grid Strategies LLC and Americans for a Clean Energy Grid, found that significant progress on US grid expansion has been made since a 2021 version of the report identified 22 "shovel-ready" projects.
Ten of those 22 projects are now under construction and will accommodate approximately 19.5 GW of new power generation. The 36 projects identified in the updated report would result in an additional 22,500 GW-miles of US transmission capacity, but the report said that is still only about 10% of what is needed to "cost-effectively decarbonize the power system."
To arrive at that estimate, the report relied on various federal and academic studies modeling high-electrification scenarios. The US Department of Energy, for example, released a draft needs study in March finding that transmission capacity may need to double by 2040. Researchers at Princeton University and the Massachusetts Institute of Technology have also estimated that US transmission capacity may need to double or even triple by 2050.
"We've had encouraging signs that certain projects can get permitted and find a way to get their cost recovery in order to move forward," Grid Strategies President Rob Gramlich said in an interview. "But we've got such a long way to go relative to need and the lines take so long that we're quickly getting behind schedule, and the clock is already running out unless we move quickly to pick up the pace of development."
Cost allocation seen as key to recent progress
The Sept. 13 report found that the 10 projects now under construction were able to advance because they had a relatively easy path to cost recovery.
Some of the lines — such as Pattern Energy Group LP's 550-mile SunZia project — are being developed on a merchant basis, meaning the line is largely paid for through offtake contracts with individual generators. The 525-kV direct-current line will connect central New Mexico with south-central Arizona, enabling over 3,500 MW of new renewable energy.
Other lines, like Transmission Developers Inc.'s 339-mile Champlain Hudson Power Express project, were selected as part of state-level solicitations. That project, which broke ground in 2022, will carry power from Hydro-Québec's wind and hydropower resources to New York City through an underground transmission line.
Additional success stories include Public Service Co. of Colorado's 560-mile Colorado Power Pathway project and PacifiCorp's 1,000-mile Gateway West and 400-mile Gateway South projects. Those projects, located within the utilities' respective service territories, were planned to meet future expected load growth.
"The challenge remains for all of the really important projects that span very large areas," Gramlich said. "Those projects have so many beneficiaries across so many states that there's not any clear way to get their costs recovered, so they're languishing."
Christina Hayes, executive director of Americans for a Clean Energy Grid, stressed that policy reforms need to be implemented quickly. The SunZia project broke ground on Sept. 1, almost 18 years after it was first proposed, she noted.
"Your transmission line should not be old enough to vote," Hayes said in an interview. "That's just not appropriate. We're hoping to boil it down more towards kindergarten, which would be terrific."
Policy recommendations
To that end, the Federal Energy Regulatory Commission's proposed rule on long-range transmission planning and cost allocation, issued in April 2022, is "
The proposed rule would require regional grid operators and public utility transmission providers throughout the country to plan at least 20 years ahead of the estimated in-service date of new transmission facilities.
FERC's proposal would also require transmission providers to seek the agreement of state regulators within a planning region on cost allocation. In addition, the proposed rule outlined a more comprehensive list of benefits for consideration, including improved grid resiliency and avoided energy costs.
"The planning rule simply says, 'Be realistic about future additions and retirements and then plan for that future,'" Gramlich said. "I don't see how anybody can oppose that. It's certainly been vetted thoroughly with the states and other stakeholders."
FERC must finalize a "strong rule" so that best practices being implemented by grid operators such as the 15-state Midcontinent ISO, which in July 2022 approved the largest portfolio of grid projects in US history, become uniform throughout the country, Hayes added.
Hayes also highlighted the need for permitting reform, a top priority for federal lawmakers as they work to avoid a government shutdown at the end of the month.
"We need to make it easier to build these lines," Hayes said. In August, the DOE issued a proposed rule that would set a two-year deadline for final decisions on federal authorizations for high-voltage transmission lines.
"This administration has done a great job doing what they can, but we need to see that in practice and more can certainly be done," Hayes said.
Enacting a 30% federal transmission investment tax credit would also make cost allocation easier for state regulators, the report said. Such a tax credit would likely cost the federal government less than $9 billion if all 36 projects in the report were to use it, Grid Strategies estimated.
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