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FERC launches sweeping review of US transmission policies to aid clean power

19 July 2021 Amena Saiyid Jeff Beattie

The US Federal Energy Regulatory Commission (FERC) took the initial step on 15 July to overhaul its electric transmission policies to enable planning, building, and funding of new, long-haul transmission to deliver remotely located renewable power to demand centers.

FERC approved an advanced notice of proposed rulemaking that seeks to update decade-old policies and improve a generator interconnection system that is horribly backed up across the nation, with some 750 GW of capacity awaiting grid access.

FERC voted 4-0 to approve the notice, which Chairman Richard Glick and Commissioner Allison Clements, both Democrats, said seeks public comment on "a more forward-looking approach to how we build and allocate the cost of transmission infrastructure in this country."

Although voting for the notice, Commissioner James Danly cautioned that the rulemaking "runs the risk of extending [FERC's] policy beyond our jurisdiction." Also voting for the notice was Danly's fellow Republican, Mark Christie, who raised a red flag about certain provisions in the document that he said had the potential to hike ratepayer bills.

Critical first step

In a joint statement, however, Glick and Clements contended that new transmission policies are needed quickly to match renewable generation's growing share of the US power mix and meet President Joe Biden's goal to reduce power-sector carbon emissions by 80% by 2030 and reach a net-zero power sector by 2035.

"I don't think the transmission grid has ever received as much attention as it is today," Glick said, pointing to Biden's American Jobs Plan, which sought fixes for and expansion of the nation's infrastructure to allow greater penetration and transmission of renewables, a key part of the administration's strategy to decarbonize the power sector.

"Today's action is a critical first step in ensuring that FERC is thinking innovatively and actually anticipating transmission that will meet the needs of new generation as our nation continues to aggressively transition to a clean energy future," Glick said. "This is the commission's first effort at major transmission reform in a decade and I look forward to moving as expeditiously as possible to advance these conversations."

Shift from past practices

In a marked shift from current FERC policy, the commission for the first time is looking at how it can anticipate future generation as part of the regional transmission planning process.

Specifically, the notice asked "whether the commission should require transmission providers in each transmission planning region to establish a process to identify geographic zones that have the potential for the development of large amounts of renewable generation and plan transmission to facilitate the integration of renewable resources in those zones."

Currently, FERC responds to generation requests for transmission only after developers can demonstrate to the agency they have agreements in place to generate power that is in the public's interest.

That change appears to reflect complaints by developers of power lines for planned offshore wind farms who say it is impossible to sign up wind generators years before their complex projects are built and go online.

PJM ahead of others

At least one FERC-jurisdictional market, PJM Interconnection, already has inched towards transmission-first policies in the area of offshore wind, which could prove to be a model of expansion of sorts for the commission to consider. PJM Interconnection oversees the power grid and power balancing for all or part of 13 Mid-Atlantic and Midwest states, and the District of Columbia.

That case began when Anbaric Development Partners, a merchant transmission developer, failed to ink an interconnection agreement with the regional grid operator, PJM Interconnection, for proposed lines to serve multiple offshore wind farms planned by states in the Mid-Atlantic.

Anbaric ran afoul of regular PJM transmission policies that require line developers to specify what generators they will serve and how much power they will deliver to PJM's network in order to get an interconnection agreement. Anbaric said those requirements represented an insurmountable obstacle because offshore wind farms in New Jersey and other Mid-Atlantic states are in the early stages of development.

Piecemeal approach

To solve the problem and move forward with the state's offshore wind goals, New Jersey regulators agreed to tap PJM to conduct a competitive solicitation for offshore transmission projects, with the state regulators serving as the final decision-maker on winning projects and the state's ratepayers footing all the costs for the buildout. That was an instance of success for FERC Order 1000, with New Jersey employing a so-called "state agreement approach" to regional transmission planning established in the 2012 transmission rule.

Aware of the regulatory obstacles faced by Anbaric, Glick said "a piecemeal approach" to transmission planning won't get the job done.

"As the generation fleet shifts at an unprecedented rate from resources located closer to population centers towards resources located far from load centers, we must evaluate whether our transmission planning and cost allocation and generator interconnection processes require a more innovative and anticipatory approach," Glick added.

Cost allocation

FERC said it also would like to consider "whether participant funding of interconnection-related network upgrades may be proven to be unjust and unreasonable…"

Under participant funding requirements, generators pay all interconnection costs. Renewable generation developers and green groups have long called that unfair, saying other market participants benefit from new wind and solar hook-ups and should pay some of the costs.

Apart from figuring how to allocate costs for upgrades, FERC also has reopened the issue of how to properly allocate the costs of new power lines. This is because many transmission projects in the past have run into problems when state officials or utilities have claimed they are being forced to pay outsized shares of projects.

Interconnection logjam

Finally, FERC is taking a fresh look at its generator interconnection policies, with Christie describing overstuffed interconnection queues across the US as "charitably… a mess."

Glick made clear 15 July that cleaning up the queues will be critical to the US drive towards emission-free electricity, claiming that 93% of the 750 GW awaiting interconnection is from renewable generators.

One reason for the logjam is system impact studies that must be conducted to assess the effects of a new generator interconnection on power flows across a regional grid; the studies also determine what system upgrades are needed to support the new generation. With little new transmission being built, existing lines are increasingly crowded and both the studies and the upgrades are becoming more time-consuming and expensive.

Many green energy advocates have pushed for broader cost-allocation of medium and large-sized transmission projects, arguing wider support will make projects more financially tenable and that the emissions reduction benefits of power lines serving renewables are broadly enjoyed.

"Today's announcement begins a welcome process that, if carried through, will help catalyze the development of a modern and resilient clean energy grid," Gregory Wetstone, CEO of the American Council on Renewable Energy, wrote in a 15 July statement.

FERC said it will accept comments for 75 days after the notice is published in the Federal Register and for 105 days for replies to comments.

Posted 19 July 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst

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