The Grid Will Be Better, But When?

Originally published for customers March 31, 2023

What’s the issue?

The United States’ transmission grid continues to be a major point of discussion and concern for the vital role it will play in the energy evolution. In January 2022, the Department of Energy (DOE) launched the “Building a Better Grid” Initiative. The initiative itself was a direct result of the Infrastructure and Jobs Act (IIJA), which provided the DOE with both tools and funding to enable the much-needed focus on improving and expanding the current grid.

Why does it matter?

Without significant upgrades and expansions, the nation’s transmission grid cannot adequately support the huge amounts of renewable capacity additions planned in coming years.

What’s our view?

We believe that the DOE’s initiative is a major undertaking that will likely succeed in addressing the looming issues with the grid, but the grid itself will not undergo the necessary changes needed to enable a carbon free power sector by 2035.

 


 

The United States’ transmission grid continues to be a major point of discussion and concern for the vital role it will play in the energy evolution. In January 2022, the Department of Energy (DOE) launched the “Building a Better Grid” Initiative. The initiative was a direct result of the Infrastructure and Jobs Act (IIJA), which provided the DOE with both tools and funding to enable the much-needed focus on improving and expanding the current grid. The goal of the initiative is simple: improve transmission planning to identify the areas that need it the most while simultaneously performing an analysis of transmission planning at a national level. Without significant upgrades and expansions, the nation’s transmission grid cannot adequately support the huge amounts of renewable capacity additions planned in coming years.

We believe the DOE’s initiative is a major undertaking that will likely succeed in addressing the looming issues with the grid, but the grid itself will not undergo the necessary changes needed to enable a carbon free power sector by 2035.

 

Current Problems Facing Transmission Lines

There are two key issues facing the current grid: lines are aging and they are not located where transmission will be needed. According to the DOE, more than 70% of the United States’ current transmission lines are over 25 years old. The majority of the transmission lines in the U.S. today were built in the 1960’s and 1970’s. Transmission infrastructure typically lasts between 50 and 80 years before it needs to be replaced, which means the majority of transmission lines in the U.S. will need to be replaced by 2050.

When fossil fuels are used to generate electricity, the fuel source itself is typically brought to a power plant, often by rail or by pipeline, that is located close to where the electricity is needed. These power plants can be built just about anywhere where the demand exists. Renewable generation, on the other hand, is much more limited as to where it can be located. For large-scale generation projects, solar and wind farms can really only be built where both these resources and land exist in abundance. The prime areas for renewable generation, then, are typically where the demand is not.

Grid expansion through new transmission projects is a necessity. These projects, however, face their own set of challenges. As we discussed in The Path to Net Zero Runs Through the Electric Grid, Which is a Problem, substantial permitting reform is needed to achieve the Biden Administration’s goal of “100 percent carbon pollution-free electricity use by 2030.” The North American Electric Reliability Corporation (NERC) tracks transmission projects across the country. In NERC’s database, there are over 600 projects in various stages of progress, only 10% of which are currently under construction.

 

US Transmission Projects

 

As seen in the chart above, the average length of projects across all stages of the development cycle is not long at all. Many of these projects are upgrades and modernization to existing transmission lines, which will help with the issue of the aging grid. Very few of these projects, however, address the looming need to transfer electricity generated from renewable resources the long distance that will be required to get the electricity generated from these projects to where it is needed.

 

The Grid’s Role in the Energy Evolution

Upgrading and expanding the transmission grid will be key to the energy evolution’s success for a number of reasons. Most importantly, how and where electricity will be generated is changing drastically. If there are no transmission lines to transfer the clean electricity from where it is generated to where it is needed, fossil fuels will still be needed to keep the lights on. The push for electrification amplifies the already desperate need for more transmission even further. Electric vehicles will increase the demand for electricity in place of gasoline. Traditional heating methods are being replaced in favor of electric ones, pushing the demand for electricity even higher. The grid is the most vital part in ensuring the success of the decarbonization of the electric sector.

 

Building a Better Grid

According to the Notice of Intent issued last January, the DOE plans to “identify critical national transmission needs and support the buildout of long-distance, high-voltage transmission facilities that meet those needs through collaborative transmission planning, innovative financing mechanisms, coordinated permitting, and continued transmission related research and development” under the Building a Better Grid Initiative. The implementation of the initiative will be done through a transmission deployment program, broken into five main categories:

 

Coordination

Coordination is essential in building out the electric grid. There are a variety of stakeholders in every transmission project. Many projects cross multiple jurisdictions and require approvals and permits at many levels making them difficult to plan and execute. As more projects come to fruition, coordination is key to making sure that both new projects and upgrades to existing transmission will be both timely and successful. The DOE specifically calls out the need for regional and offshore wind transmission convenings in this area.

On a regional level, most grid planning is done through independent system operators (ISOs) and regional transmission operators (RTOs), as well as state commissions and different utilities depending on the area. Several ISOs/RTOs have already undertaken their own large transmission projects. The DOE plans to utilize these existing regional planning organizations to determine which transmission lines are nationally significant as well as analyze other key parts of the planning process.

The Biden Administration’s goal of 30 GW of deployed offshore wind capacity will also require significant coordination among different stakeholders. The DOE’s purpose here is to determine and address the challenges related to transmission that will, and have already, presented themself as related to offshore wind generation.

 

Planning

Transmission needs are changing drastically from what they were just a few decades ago. The transmission planning process must also change from what has been used in the past. In the past, transmission planning has not been very flexible and rarely considers transmission needs from a longer term standpoint. As a result, the DOE has just recently released a draft National Transmission Needs Study, which has identified the areas where new transmission facilities and transfer capacity across regions will be most needed. The DOE is also currently analyzing transmission planning on a national and long-term basis to determine where transmission is most needed and how the current planning processes can be adjusted to help fit the new transmission needs.

 

Financing

The IIJA has provided both new authorities and appropriations that the DOE will utilize to help eliminate some of the financial risks that are associated with large transmission projects. The IIJA authorized three new programs to provide various levels of funding to different organizations that will be involved in grid upgrades, whether the projects are new, replacements, or upgrades. The purpose of these programs is to facilitate new transmission, enhance grid resilience, and help improve the current grid through over $15 billion in federal funding. The financing of these programs will serve as a major incentive for different stakeholders to prioritize the grid improvements that are greatly needed.

 

Permitting

Permitting and siting challenges are one of the biggest blockers for transmission projects. Of the delayed projects in NERC’s database, close to 50% of the projects cite one of these issues as the reason for project delay. Large transmission projects typically require authorizations or permits from a number of different governing bodies, which is often an extremely time consuming process. Through the initiative, the DOE aims to make the permitting and siting process both more efficient and more predictable by utilizing a combination of federal permitting coordination, public-private partnership projects, and the designation of route-specific transmission corridors.

Separately from the initiative, permitting reform is at the top of the agenda for Republicans. Their Lower Energy Costs Act (H.R. 1) passed the House yesterday; however, its Permitting Streamlining section does not directly address transmission permitting or siting, and the bill has been declared “dead on arrival” in the Senate.

 

Transmission Research, Development, and Demonstration

There is still room to improve the technologies related to transmission efficiency, and the DOE plans to continue researching and developing these technologies. This also includes the development of different analytical tools that can be used to enable and support transmission deployment.

The Building a Better Grid Initiative is the largest initiative taken to date to help improve the grid. However, improving and expanding the grid is an extremely lengthy process. Most of the activity to date has involved DOE setting up program offices and hiring staff, not financing and breaking ground on new long haul transmission. Of the major transmission projects that NERC is tracking, over 25% are not even scheduled to be in service by 2030. With these lengthy transmission project timelines, action needs to be taken swiftly if we hope to achieve 100 percent carbon pollution-free electricity in less than ten years.

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