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Almost a decade after FERC tried to smooth the path for transmission that crosses RTO seams, developers say little progress has been made.
The Great Plains are blessed with huge wind energy potential but relatively little need for electricity. Meanwhile, cities to the east have lots of demand for power but little open space for wind development.
The challenge of getting clean energy from one place to the other involves overcoming more than just distance. Projects must cross invisible seams that separate regional transmission organizations, and that, developers say, involves a regulatory path so dysfunctional that it’s stunted the prospects for long-distance transmission in most of the country.
Almost a decade after the Federal Energy Regulatory Commission issued an order addressing the issue, developers and others say there’s been little progress even as demand for renewable power continues to grow.
“I don’t think you’ll find anyone that has cracked this nut,” said Chris Winland, director of strategic planning for transmission developer ITC Holdings. “There’s not a place in the country where it’s working great.”
Regional transmission organizations (RTOs) are membership-based nonprofit organizations that coordinate, control and monitor the electric grid across multiple states. The first of the 10 RTOs now operating was created in the 1990s to encourage competitive generation by requiring open access to transmission.
So-called “seam” projects come with a host of unique planning and regulatory issues, said Betsy Beck, director of transmission policy for the American Wind Energy Association. Each region has its own modeling assumptions, approval process, and decisionmakers. Regions also need to come together to analyze whether a project will benefit both regions, and they don’t always agree.
“They may clear the first hurdle, and even the second,” Beck said, but the third hurdle sometimes can’t be cleared.
RTOs just don’t agree on the benefits sometimes because they use different assumptions, said Charles Cates, who manages transmission services for the Southwest Power Pool. “SPP encounters such challenges to identifying and executing… joint projects along seams with all of our neighbors,” Cates said.
That means generation is effectively trapped within regional transmission operator boundaries, and that can deprive customers from the cheapest and most-efficient source of power.
“We’re not building inter-regional transmission anywhere,” said Rob Gramlich, founder and president of Grid Strategies, a consulting firm geared at enabling the integration of clean energy into the grid. “The economics would show there are a lot of opportunities in terms of benefits exceeding costs for consumers. But it’s not translating into action.”
Who pays for what? It gets tricky.
The need for inter-regional transmission, and the obstacles that now lie in the way, are fairly recent developments. During the 1970s and 80s, grid construction was focused on connecting utilities to allow them to share reserves and generation in times of need, Gramlich said.
Starting in about 2005, a focus on regional transmission emerged. Orders from the Federal Energy Regulatory Commission, along with the Energy Policy Act of 2005, put a priority on building more transmission, both regional and inter-regional.
In 2010, the FERC issued Order #1000. One of its aims was to push RTOs to move forward on inter-regional transmission projects. The minimal progress to date has been limited to “the smallest, very marginal projects,” Beck said. The MISO and PJM grid operators approved the first set of inter-regional projects in the region they serve. The border between the two RTOs runs through Illinois, Indiana, Wisconsin, Michigan and Ohio.
“In an effort to find the common ground, the RTOs have really narrowed their scope, resulting in minor upgrades,” Beck said. “They are still beneficial, but pretty marginal. We think the scope should be broadened. We know there would be a lot of benefit if they’d look at some bigger projects.”
The Eastern Renewable Generation Integration Study, published in 2016 by the National Renewable Energy Laboratory, found that transmission “between RTOs would bring huge benefits, huge cost savings and reliability benefits,” Beck said.
Each RTO has its own system for modeling and evaluating proposed projects, and nothing is more difficult than deciding who should pay what, according to Mike Skelly, founder and president of Clean Line Energy Partners, the one company currently trying to build long-distance transmission lines in the Midwest. He offered up a restaurant analogy.
“If you go out to dinner and everybody orders different dishes, and you’ve got to figure out who’s gonna pay for what, it gets tricky,” he observed. In the inter-regional transmission world, typically a number of utilities and other customers benefit from new transmission capacity, but no one is eager to pick up the tab.
Seeking a detour using DC transmission
Skelly said the messy business of dividing the bill is one reason Clean Line has structured its two Midwestern long-distance transmission lines in a way that minimizes dealings with RTOs. It has proposed using DC instead of AC current, will take on power at one location and deliver it to two locations.
“We felt like the inter-regional planning processes didn’t work nine years ago, and they don’t work today,” he said.
Clean Line’s Grain Belt Express would ferry wind energy from Kansas to Indiana – and from the SPP to PJM. The Rock Island transmission line would move wind energy from northwest Iowa to the Chicago area – and from the MISO to PJM. Skelly said he knows exactly who would benefit from the project, and who, therefore, would pay for it: usually the wind farms whose electrons are moving to the east.
Some blame the difficulties of inter-regional transmission on the Federal Energy Regulatory Commission. The Commission recognized a problem and attempted to address it in Order #1000. It instructs regional grid operators to “coordinate,” but offers few specifics on how they should do that.
“There’s no requirement for how they have to use common models or criteria,” said ITC’s Winland. “The only requirement is that multiple RTOs coordinate with each other, and that’s not enough.”
“We’ve seen very little impact of what FERC was trying to achieve with Order 1000,” Beck added. “The solution is for FERC to revisit Order 1000 and require the regions to do things in a more streamlined, collaborate manner. There may be a role here for Congress as well.”
She suggested that the nation’s highway system offers an appropriate analogy.
“Asking each state to design a highway system itself would probably have highways that didn’t connect at the border,” she said. “I think there is a federal role here. We built a national highway system for two reasons: to enable commerce and bring economic benefit… and for national security. I think both apply to why we need to expand the transmission system in a similar way.”
Although many in the transmission industry believe it falls short, a FERC spokesman,Craig Cano, said in an email, “There is no current proceeding to revise Order 1000 and we couldn’t speculate on that.”