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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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