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Highlights

High-profile rule was meant to encourage transmission buildout

Clean power goals highlighted in debate

Washington — The Federal Energy Regulatory Commission's 2011 order meant to promote greater regional transmission development and competition is not working as intended and is worth examining for potential fixes, according to Commissioner Richard Glick.

In October 10 remarks at a wind industry conference, Glick said a build-out of transmission to access sun- and wind-rich areas is needed to meet lofty clean and renewable energy goals set by states and the private sector. FERC's Order 1000 tried to get utilities and regions to work better to plan, and presumably, build more of the long-distance transmission needed to carry renewables from remote areas, he said.

"The problem with that is I think we've created kind of a perverse incentive under the rulemaking," Glick said at the American Wind Energy Association conference in New York City.

Under the order, transmission infrastructure to support policy objectives is to be developed through a competitive process, but transmission built for reliability purposes is not, leaving incumbent utilities to build those projects. Utilities, wanting to make a good return on investments, are trying to build shorter lines instead of the long distance lines Glick thinks are needed.

"We need to take a look at Order 1000 to figure out a way to try to take away that incentive, whether that means encouraging more competition or getting rid of competition," he said.

Addressing a question from the audience about long distance transmission collaboration, Glick said interregional transmission planning needs to be both encouraged and done, and utilities have to be given the right incentives to invest.

"Right now they are convincing their RTOs that it's better to invest in the shorter lines to address reliability as opposed to longer lines because they're worried about losing those longer lines to competitive transmission developers," he said. "So we need to figure out a way to get rid of those incentives, again, to encourage the longer distance lines to get built."

MIXED REVIEWS

Reviews for Order 1000 have been mixed, and developers have recently given FERC different perspectives on the value of competitive transmission processes.

FERC in July approved changes for the Southwest Power Pool and Midcontinent Independent System Operator to streamline interregional transmission planning.

Also important, Glick said, is that existing facilities be used more efficiently. He noted that FERC held a technical conference on dynamic line ratings and could potentially initiate a rulemaking to give utilities the right incentives to engage in dynamic line rating.

AWEA President and CEO Tom Kiernan said transmission continues to be a priority for wind developers and getting the right infrastructure in place is key to getting wind projects built. "I think there a lot of singles, as opposed to home runs, on transmission," he said.

Some of the incremental steps that can be done include working with FERC on setting the right incentives for transmission, or getting regional transmission organizations to plan together.

HIDDEN SUCCESS

Transmission done by utilities within their service territories has been a hidden success, said Vestas North America President Chris Brown. "If you can buy some, if you can build some, those transmission plays seem to be the organic stuff that we need," he said.

Xcel Energy in 2018 wrapped up work on the 600 MW Rush Creek Wind Farm and a related 80-mile transmission line in Colorado. New Mexico regulators recently approved Public Service Co. of New Mexico's acquisition of the Western Spirit transmission project. The 345 kV line, to be acquired upon completion in 2021, is to run about 140 miles and bring new wind power capacity developed by other companies to the grid.

New York officials also understand the importance of transmission to meeting the state's ambitious clean energy goals, said Doreen Harris, vice president of large-scale renewables at the New York State Energy Research and Development Authority.

The state's Climate Leadership and Community Protection Act, among other things, requires 70% of New York's electricity needs to be met with renewable resources by 2030 and all electricity to come from carbon-free resources by 2040.

Harris said NYSERDA, in concert with the state's Department of Public Service and utilities, is examining what the state's grid will look like in a "100[% renewables]-by-2040 world," to make generation resources available.

"If a wind project is constructed and can't deliver, then it isn't doing New York any good either," she said.

-- Kelly Andrejasich, S&P Global Market Intelligence, newsdesk@spglobal.com

-- Edited by Maya Weber, newsdesk@spglobal.com