President Donald Trump's $1.5 trillion infrastructure plan pays "notenough attention" to significant upgrades needed in the US transmissionsystem, advocates for transmission development and sustainable energysaid during webcast Tuesday.
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"Obviously, the word of the day is infrastructure," said James Hoecker,holding up a newspaper section with that word spread across the page,referring to the White House plan released Monday.
Hoecker is senior counsel and energy strategist at the Husch Blackwelllaw firm; counsel for WIRES, a transmission advocacy group; and a formerchairman of the Federal Energy Regulatory Commission. He was speakingduring WIRES' joint briefing with the Environmental and Energy StudyInstitute, a group that focuses on developing a sustainable energyfuture.
"In the president's proposal ... you will find not a great deal ofinformation about electric transmission," Hoecker said. "We think it's acritical network that not enough attention is being paid to." Between $80 billion and $90 billion has been spent on the transmissionsystem over the past decade, Hoecker said, "mainly to make up for a lackof investment" in prior decades.
Julia Frayer, Boston-based managing director of London EconomicsInternational, acknowledged that short-term load forecasts around the UStend to show relatively slow, flat or negative power demand growth, butthat does not diminish the need for new transmission, because thelocations for load expansions do not always match up with the existingtransmission grid.
For example, manufacturing loads may be diminishing in some areas of theRust Belt, but loads are growing in other areas, said Nina Plaushin,WIRES president and vice president for regulatory federal affairs andcommunications at ITC Holdings, an independent transmission owner anddeveloper owned by Fortis.
"We have a very large data center going into Iowa," Plaushin said, addingthat the location now has relatively low-voltage transmission.
On the supply side, the changing generation fleet mix is trending awayfrom coal plants, frequently located near coal mines, to wind fleets inflat rural areas and sites on top of major shale natural gas reserves,Frayer said.
Frayer and Hoecker also said that the nation's transportation fleet istransitioning to electricity, which Frayer said is expected to add about1,000 TWh of annual load by 2030 and about 2,000 TWh by 2050.
Hoecker said, "It's clear to those of us in the business that the grid isnot as robust as it needs to be to meet the coming demands of theelectrified economy."
One factor that may diminish policymakers' and ratepayers' enthusiasm fortransmission development is that each project tends to require a large,relatively certain, up-front capital investment, while the benefits arespread over decades and may seem much less certain, Frayer said. But "the fact that we have uncertainties should not stop us from doinganalysis," Frayer said, which should "help us make a robust decision onlong-term investment."
"To be unprepared has a big cost or price tag as well," she said. Also, benefits begin as soon as work begins, with the construction jobsassociated with the project, congestion and power production cost savingsbeginning as soon as it is complete, and long-term benefits from enhancedreliability, Frayer said.
Also, organized markets such as the Midcontinent Independent SystemOperator conduct extensive studies to ensure each project's benefitssignificantly outweigh its costs before recommending a project to bebuilt. For example, the MISO Transmission Expansion Plan for 2016indicated that its portfolio of multi-value projects was estimated toprovide between $6.8 billion and $32.8 billion in net benefits above theestimated costs of $8.8 billion to $16.4 billion. MISO requires that multi-value projects have a benefit-to-cost ratio ofat least 1.8 to 1. The MTEP 2016 indicated the net present value of theMVP portfolio to range from $21 billion to $57.3 billion, with a totalbenefit-to-cost ratio of ranging between 2:1 to 2.7:1.
Also, ITC's Plaushin noted that failing to act has a cost, too. Forexample, if a company wanted to locate a large business demanding accessto high-voltage transmission on Michigan's Upper Peninsula, a wirescompany might have to say, "That's great -- in seven years, you can putyour business up there." --Mark Watson, firstname.lastname@example.org
--Edited by Annie Siebert, ann.siebert @spglobal.com