DOE leverages new and existing authorities to spur transmission development key to energy transition

Source: By Ethan Howland, Utility Dive • Posted: Thursday, January 27, 2022

The Department of Energy has developed a plan for reducing barriers to high-voltage transmission projects that includes public-private partnerships, permitting and planning support, and about $20 billion in financing.

The move comes as the Federal Energy Regulatory Commission, another key player in the transmission arena, is preparing to propose changes to its rules for transmission planning, determining who pays for the infrastucture and connecting power facilities to the grid.

Earlier this month, DOE launched a “coordinated transmission deployment program” that combines its existing authorities with new ones contained in the bipartisan Infrastructure Investment and Jobs Act, signed on Nov. 15.

The Building a Better Grid initiative, released as a “notice of intent” on Jan. 12, shows the DOE is taking the new law seriously, Rob Gramlich, president of Grid Strategies, a transmission-focused consulting firm, said, noting the law is the first major federal energy law since the 2005 Energy Policy Act.

“But I think they’re also going above and beyond by bringing in existing funding sources like loan guarantees and putting all of these somewhat disparate authorities together into one place where there’s the possibility of the sum being greater than the individual parts,” Gramlich said. “It really reflects that transmission is a very high priority of the Biden administration, and [DOE] Secretary [Jennifer] Granholm, specifically.”

Grid investments needed to improve reliability, meet energy goals

Upgrading and expanding the transmission system will improve grid reliability and resilience and enable the cost-effective integration of clean energy, DOE said in its notice of intent outlining the initiative.

Needed transmission investments include increasing capacity on existing facilities, adding technology to make existing lines more efficient and building new lines to connect regional grids and to deliver renewable energy from remote areas to population centers, according to DOE.

“Transmission is just critically needed to unlock the clean energy we need to decarbonize the grid and to meet all of the Biden administration’s goals.”

Christy Walsh

Sustainable FERC Project Senior Advocate

The department said studies suggest the United States needs to expand its transmission system 60% by 2030, and possibly triple it by 2050, to meet greenhouse gas goals

“Transmission is just critically needed to unlock the clean energy we need to decarbonize the grid and to meet all of the Biden administration’s goals,” said Christy Walsh, senior advocate at the Sustainable FERC Project, a coalition housed at the Natural Resources Defense Council. “DOE has taken all of its current authorities and the new transmission authorities under the Infrastructure Investment and Jobs Act, and put them all together in one place so that the public can see just how much work it is doing on transmission.”

FERC has been working with DOE on issues related to the department’s transmission plan, according to FERC Chairman Richard Glick.

The commission, for example, provided technical assistance to DOE on offshore wind interconnections and has been in discussions about how the agency would implement its backstop authority for approving transmission lines in national corridors, Glick said during a Jan. 20 media briefing.

DOE aims to bolster transmission planning

There are potentially common goals between FERC and DOE around transmission planning, according to Glick.

“One of the issues on transmission planning is that we need to be much more anticipatory than we’ve been in the past and focus on where the generation facilities are going to be located in the future, and how much and what types of generation … and the [current] planning process doesn’t necessarily accommodate long term thinking,” Glick said, noting FERC hasn’t yet proposed any transmission changes.

DOE plans to conduct a national transmission needs study to identify where new or upgraded transmission facilities could relieve expected future constraints and congestion, according to the department.

The study could help set priorities for department financing and for designating national interest electric transmission corridors, DOE said.

DOE also plans to conduct a national study looking at potential transmission needs over the next 15 to 30 years. The study could inform regional and interregional transmission planning processes and identify strategies to speed decarbonization while maintaining grid reliability, according to the department.

DOE intends to work with other federal agencies such as the Department of Transportation to consider rail and highway and other existing rights-of-way in the study.

Also, DOE will conduct analyses to identify transmission pathways and develop transmission strategies to integrate offshore wind to meet the Biden administration’s goal of 30 GW of offshore wind by 2030 and to prepare for further offshore development, according to the initiative.

Glick said he was encouraged by DOE’s plan to provide funding to states and others to improve the transmission planning process.

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“That’s going to be instrumental,” if FERC expands transmission planning requirements, Glick said. “It’ll be very helpful to have additional resources for people that engage in transmission planning, such as state regulators and others. I think it will dramatically improve the process going forward.”

Designating ‘route-specific’ corridors

In a move that could help with permitting transmission projects, DOE said it intends to provide a process for designating national transmission corridors on a route-specific, applicant-driven basis.

Instead of DOE identifying and designating transmission corridors for power line development, the applicant-based approach “flips the whole paradigm on its head,” Liza Reed, research manager for low carbon technology policy at the Niskanen Center, said.

“Application-specific corridors are pretty market forward,” Reed said. “It says you come to us with a solution you found and let us help you bring an economic solution to fruition because it is being held up by things outside of your control.”

Potentially, DOE said it would give preference to proposed corridors that overlap as much as possible with existing rights of way.

Transmission developers could use the route-specific process for cases where they have most of a transmission route approved but have reached a permitting roadblock, according to Gramlich.

Instead of planners establishing national corridors, it makes sense to let the developers say, “I’ve tried everything and I’ve worked it out, but I need help at this one choke point,” Gramlich said.

“DOE, presumably, will have criteria and they’ll review those applications, but they’re not relying only on what might be spit out of a model,” Gramlich said. “Rather it’ll be companies in the market with customers and real, tangible projects that might be a lot more tied to the real world than what modeling results might produce.” 

Also, DOE and FERC plan to work together to establish procedures that facilitate “efficient information gathering,” according to the department.

“We get to ‘yes’ by working with states toward outcomes that they think make sense and that they buy into as well as all others, including customers.”

FERC Commissioner Allison Clements on Tuesday cautioned that FERC wasn’t eager to use its backstop authority to approve transmission projects that face permitting roadblocks.

“I have said, and I’ve heard my colleagues say similar things, that that [backstop] authority is not the end all, be all,” Clements said during a webinar hosted by Resources for the Future. “That’s not how we’re going to get to ‘yes’ on building cost-effective transmission in this once-in-a-generation need to make a significant investment in our electric grid. We get to ‘yes’ by working with states toward outcomes that they think make sense and that they buy into as well as all others, including customers.”

DOE eyes public-private partnerships

Meanwhile, DOE said it may solicit interest from companies that want to form partnerships with the department, with a focus on building power line projects identified through transmission planning.

“DOE can help facilitate transmission development in areas where state or local permitting requirements would otherwise make a project difficult or impossible to complete,” the department said.

Under the infrastructure law, DOE can enter into public-private partnerships to co-develop projects that are in a national transmission corridor or that are needed to handle an increase in demand for interstate transmission, among other criteria, according to the department. The partnership can include the design, development, construction, operation, maintenance or ownership of a project, DOE said.

DOE offers $20 billion in financing

On the issue of project financing, DOE is setting up a “transmission facilitation program” to administer a $2.5 billion revolving loan fund for high-capacity transmission projects as required by the infrastructure law.

Sen. Maria Cantwell, D-Wash., originally proposed the loan fund at $20 billion, according to Gramlich. “Hopefully, the program can prove its value and then maybe Congress can expand it in the future,” he said.

The new law also gives the DOE the authority to be an “anchor customer” on new and upgraded transmission lines to facilitate the private financing and construction of the infrastructure. 

DOE aims to help improve grid resilience by providing about $13 billion in grants and competitive awards for upgrading transmission infrastructure. The department plans to request solicitations from states, American Indian Tribes, communities and industry.

DOE will also use its existing Loan Programs Office and the Western Area Power Administration’s Transmission Infrastructure Program, a $3.25 billion revolving loan program, to help finance transmission projects.

DOE plans stakeholder coordination

DOE said it intends to work with stakeholders through existing regional transmission planning venues to identify nationally significant transmission lines, validate transmission modeling approaches and provide technical analysis to states, American Indian Tribes and Alaska Natives, grid operators and utilities.

The clarification that DOE will work through existing regional planning venues is “good and encouraging” according to Sharon Segner, LS Power Development vice president. Previously, it was unclear if DOE would conduct separate planning, she said.

LS Power, a generation and transmission company, expects FERC will bolster the regional planning processes through its ongoing review of its transmission planning requirements, Segner said.

For offshore wind, DOE is partnering with the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) to bring together government partners, grid operators and ocean users to find transmission options for meeting the Biden administration’s offshore wind goal. 

Later this year, DOE and BOEM will hold a series of workshops, in consultation with FERC and other federal agencies, to develop recommendations and an action plan for addressing medium- and long-term offshore wind transmission challenges.

DOE’s Building a Better Grid initiative is a step towards providing a “repeatable process” for transmission development that doesn’t involve a centralized “grid authority” as some had advocated, according to Reed.  

“It looks at these targeted approaches, instead of a major national transmission authority that is making all of the decisions and deploying all the resources,” Reed said. “This is a circumspect and thoughtful approach to removing the barriers that we know high-capacity interstate transmission has.”