Source: Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure

While investment in the electric grid has increased slightly in the past decade, we are still underinvesting in our transmission infrastructure. In order to connect remote renewable energy resources, like wind in the Midwest and solar in the Southwest, we need to build the infrastructure to deliver that power to the cities and towns where it is needed. You can’t put wind in a railcar, and you can’t put the sun in a pipeline – you need transmission lines to deliver these renewable energy resources to market. New regulations, such as Federal Energy Regulatory Commission Order 1000 and the Department of Energy’s Memorandum on Grid Modernization in the Power Marketing Administrations, will help spur the investments needed to develop a 21st Century clean energy grid.

To read the full ASCE report, and to view infographics summarizing their findings, click here.

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• Implementing new transmission construction and financing powers as authorized in the Energy Policy Act of 2005 and the American Reinvestment and Recovery Act of 2009.
• Improving PMA rate design to incentivize energy efficiency, demand response, and the integration of renewable energy and electric vehicles.
• Improving collaboration between PMAs and grid owners and operators, both within the regions and in neighboring regions. This includes increasing PMA participation in the strategic local planning processes already taking place, including those established by FERC Order 1000.
• Working with Congress to simplify and streamline oversight of the PMAs, including asking Congress to authorize revolving funds for both WAPA and SWPA to expedite capital improvements (BPA already has a revolving fund). This would make it much easier for WAPA and SWPA to make the investments needed to keep the lights on.

Upgrading the rapidly aging power grids in these regions will deliver numerous benefits to families and businesses. It will allow for more clean energy to be integrated into the system, increase deployment of cyber-security technologies to protect the grid, and increase energy efficiency and demand response investments. These steps will make the power grid more reliable, secure, and will lower costs for consumers while stimulating job growth and economic development. In fact, the Brattle Group estimates that U.S.-wide grid investments over the next 20 years will support 150,000 to 200,000 full time jobs while stimulating $30 to $40 billion in annual economic activity.

What’s a PMA?

The federal government operates four Power Marketing Administrations – the Western Area Power Administration (WAPA), the Bonneville Power Administration (BPA), the Southeastern Power Administration (SEPA), and the Southwestern Power Administration (SWPA). These PMAs were created in the early 1900s to market and deliver hydropower from U.S. dams (such as the Hoover Dam). Today, PMAs collectively own 134 power plants and 33,730 miles of transmission lines, many of which are in need of upgrades.

ACEG’s own Bill White will today speak to how transmission is key to realizing the region’s clean energy future during the 2:45 PM panel today titled “A solar super hub in the Southwest: Imagining Arizona and surrounding states as the exporters of solar energy to the rest of the nation.”

This panel will envision a future in which the Southwest is propelled to a solar future by a national transmission overlay or a national REC market, becoming both a hub for utility scale solar as well as a region rich in distributed generation. Panelists will address what policies and market changes would be required for this to occur.

Bill will be joined on the panel by:

• Vijay Vittal, Professor, Ira A. Fulton Chair Professor in Electrical Engineering, Ira A. Fulton School of Engineering, ASU, and Director, Power System Engineering Research Center
• Peter Esposito, Senior Vice President and Chief Commercial Officer, Tres Amigas
• Keith Sparks, Director of Development, Centennial West Clean Line Energy
• Bill White, Senior Advisor, Americans for a Clean Energy Grid
• Craig Robb, Senior Vice President, National Bank of Arizona, and Managing Director, Zions Energy Link

Tomorrow at 9:00 AM, FERC Chairman Jon Wellinghoff will discuss how the federal government is working to help the Southwest develop its solar potential during the “Future Promise of Solar Energy” Keynote address.

The Summit is being hosted by the Sandra Day O’Connor College of Law at Arizona State University with sponsorship support from Americans for a Clean Energy Grid.

Arizona is a renewable energy powerhouse, with huge solar potential – a vast resource that is among the largest in the entire country. That renewable energy potential is the key to providing Arizona and neighboring states with clean, secure electricity sources and new economic opportunities. To access those opportunities, building new solar installations is one key step; the other is building transmission to bring that solar energy to consumers.

ACEG supports smart state and federal policies that will improve the way the grid is developed, planned, and paid for. Policy reforms are the key to ensuring our nation has a more robust, reliable, and secure network that supports expansion of renewable energy, competitive power markets, energy efficiency, and lowers costs for consumers. Policies that support transmission and renewable energy will have a great impact on the state of Arizona.

Arizona’s Solar Resource

Arizona is one of the sunniest states in the nation – Tucson gets more than 350 days of sun a year, on average. It’s no surprise that the state ranks in the top five for installation of solar photovoltaics (PV), according to the latest industry data from the Solar Energy Industry Association. From 63MW in 2010 to 273MW in 2011, Arizona’s PV installations grew by more than 300 percent.

Solar PV Installations by State: 2010 vs. 2011  

Source: SEIA US Solar Market Insight 2011 www.seia.org

The Need for Transmission

While Arizona is home to a world-class solar resource and rapid growth in solar installations, transmission development in the state and region must be supported in order to sustain that growth. 

Utility scale solar – large projects that connect to and serve the larger transmission grid – in particular is dependent on a robust transmission system. Arizona leads the pack in utility scale solar development. According to SEIA, as of January 2012, the state had 112MW of utility scale capacity online, another 749MW under construction and more than 2,000MW in development. Around the country, this sector enjoyed its biggest jump ever in the last quarter of 2011, with 400MW installed.

And transmission does more than connect homes and businesses to solar power. A robust grid also allows for states and regional power trading markets to connect to one another, giving consumers access to a greater mix of resources and potentially lower electricity prices.

Arizona has the fourth-highest power prices in the region, at 10.3¢/kWh in November. Residents in the neighboring state of Utah pay an average of 8.98¢/kWh.

Policy, Transmission and Renewables

There are new policies at the national level that could help Arizona and states around the country develop the electric grid they need to support renewable energy development. The Federal Energy Regulatory Commission (FERC) last year released guidelines to help regions plan and share the costs of transmission.

FERC’s new rule, named Order 1000, is focused on ensuring that those who benefit from updates to the grid pay for it, while also protecting those who don’t benefit from bearing the costs of any transmission they do not benefit from.

The rule offers Arizona and the West the opportunity to plan and share the costs of transmission infrastructure that will accelerate development of solar resources – to the benefit of both developers and electricity consumers.

The 2012 Arizona Solar Summit is being hosted by the Sandra Day O’Connor College of Law at Arizona State University, the Phoenix event will convene CEOs from the renewable energy and clean tech industries, state public utilities commissioners, and transmission experts and developers March 26 and 27 to discuss the legal and policy structures necessary to make the state a “solar hub” for the region. Check out the full conference agenda here. 

Hosted by the Sandra Day O’Connor College of Law at Arizona State University, the Phoenix event will convene CEOs from the renewable energy and clean tech industries, state public utilities commissioners, and transmission experts and developers March 26 and 27 to discuss the legal and policy structures necessary to make the state a “solar hub” for the region.

Check out the full conference agenda here. Highlights include a keynote from FERC Chairman Jon Wellinghoff where he’ll discuss how the federal government is working to help the Southwest develop its solar potential.

ACEG’s own Bill White will speak to how transmission is key to realizing the region’s clean energy future as part of a panel with Peter Esposito, Senior Vice President and Chief Commercial Officer of Tres Amigas, and others.

The Summit will also include a “Solar CEOs Roundtable,” where leaders of America’s top solar companies will discuss the major issues facing their industry in 2012.

Stay tuned for more details about the event!

These are the findings from a new survey for the 21^st Century Jobs Coalition. The survey reveals that citizens support upgrading transmission infrastructure in the state because it will create jobs and expand access to clean energy sources. In fact, more than three out of four residents surveyed favor better power lines to improve access to wind energy.

What’s more, Michiganders, who are paying some of the highest electricity prices in the region, support an improved transmission system in the state in order to help lower their utility bills – a whopping 86 percent of those surveyed.

Michigan has the second highest retail electricity price in the region, which as of November, was nearly 13¢ per kilowatt hour. That’s compared to a national average of approximately 11¢ per kilowatt hour.

 Source: EIA

And it’s not just families who stand to benefit from access to lower-cost electricity through expanded transmission. In a state and a regional economy heavily dependent on manufacturing, lower electricity costs to industrial users will make businesses stronger and support the entire regional supply chain.

RPS Progress

Michigan is forging ahead to build renewable energy in-state with a 10 percent by 2015 renewable portfolio standard (RPS). The state utility regulator has said that Michigan currently produces 110 MW, or 3.8 percent, of its total electricity supply from renewable energy from wind, biomass and other sources. Production is expected to soar this year to 930MW.

That expansion has driven at least $100 million in new investment and supported job creation in Michigan – much needed economic development.

Developing clean power in Michigan has multiple benefits, benefits that are facilitated by the transmission lines that are crucial to delivering renewable energy to the consumers and businesses that need it.  Lines like the Thumb Loop Project, the first Multi-Value Project (MVP) approved by the Midwest ISO (MISO), will unlock Michigan’s excellent wind resources. Now, the peninsula needs new transmission infrastructure to open up power markets to renewable energy from the rest of the region. MISO’s proposed MVP projects are expected to deliver a positive return on investment to Michiganders of 1.7 to 3 times the cost by providing greater reliability and access to a larger market and diverse energy sources.  This means that Michiganders will see even greater benefits from clean, lower-cost electricity, but only if we build the regional transmission infrastructure needed to deliver these benefits.

A recent New York Times story “Drawing the Line at Power Lines” discussed the political and logistical challenges to transporting both traditional fossil fuels and renewable energy from remote regions to population centers across the U.S. 

The article explains:

Indeed, some of the most pitched energy battles being fought today involve not oil pipelines but ”next generation” energy transport: the expansion of pipe networks for natural gas and the high-voltage transmission lines that connect large-scale wind and solar farms to population centers. And these systems are expanding rapidly as the United States shifts away from traditional fossil fuels.

For the country to benefit from our wealth of renewable energy, we must expand our transmission capacity. However, expansion is contingent on a more strategic approach to planning and cost allocation – two key challenges that were addressed in FERC Order 1000.

Despite concerns, transmission lines do provide the best opportunity to utilize renewable energy, decrease the demand for foreign sources of energy and the need for controversial pipeline projects that carry fuel sources of the past.

As Michael A. Levi, of the Council on Foreign Relations said in the article:

“I live on Second Avenue, where they’re building a new subway, and it’s been really noisy for a long time now. But at some point we have to function as a society rather than as individuals, in order to get the things we need built.”

To read the full New York Times story, please click here.

That new capacity is an annual record for the state, which has the most aggressive renewable portfolio standard (RPS) in the country.

Take a look at the year-over-year increases in the amount of renewable energy installed to meet the RPS, according to the latest report from the state utility regulator, the California Public Utilities Commission (CPUC):

It’s not just the quantity of renewable electricity in California that’s exciting. The development of a robust market for clean power capacity and the falling costs of contracts for renewable electricity are equally encouraging. (AWEA’s blog has a good take on the report here.)

As the CPUC sums it up:

“The overall picture is that the renewable market is robust, competitive, and has matured since the start of the RPS program. Based on the current 2011 RPS Solicitation, costs are decreasing, making renewable energy more competitive with fossil fuels.”

Clean power and lower-cost power are two primary goals when we look at building the modern, strategic electricity grid, and incorporating all of that new power into the grid requires transmission. The wires that connect wind and solar electricity to people and businesses are, in fact, a prerequisite to meeting renewable energy goals in California and around the country.

The transmission grid in the United States needs to be built up “to be more regional like an interstate highway system versus a local state highway system,” to meet growing energy demands most effectively, said Welch.

He likened our current transmission grid to the pre- interstate highway system, saying, “There weren’t many highways that went from state to state on a contiguous basis that could travel freely. We need the same thing in the high voltage electric business.”

“The high voltage transmission grid in the United States is fragmented. It’s not complete. It doesn’t serve all customers on an equal basis, and as a result of that, our country is suffering from a lack of liquidity in the electric energy business such that not everybody has access to equal amounts of power at the same price,” said Welch.

Watch the full interview on the Platts Energy Week website.

All six states in the New England region have some sort of renewable energy portfolio standard. However, to help meet these standards, up to date transmission lines are needed to connect the region to its own remote sources of renewable power, like Northern Maine, as well as abundant, renewable sources from across the country. Modernizing a region’s transmission infrastructure can be a delicate process due to cost allocation and siting issues.

In his interview with the Associated Press, Bill White explained:

“While transmission costs are initially high, the infrastructure lasts decades, brings down costs, and is a good investment it in the long run. He said transmission costs average just 10 percent or less of the total on utility bills nationwide — electricity generation costs makes up the bulk of the bill.

New collaborative planning processes also mandated under the federal order will allow people to help determine which lines are needed, where they’re needed, and how they help states reach their own goals for things such as more renewable energy, White said. He thinks once that’s understood, the projects will find strong support.”

While more renewable power generation could do more than satisfy state mandates, it also has potential to decrease New England’s electricity prices, which are high because of the region’s dependency on fossil fuels.

To read the Associated Press story, click here.