FERC should overhaul grid policy to cut CO2 — report

Source: By Arianna Skibell, E&E News reporter • Posted: Tuesday, January 12, 2021

To combat climate change, the Federal Energy Regulatory Commission needs to dramatically restructure its policy for connecting low-carbon electricity sources like large wind and solar farms to long-haul power lines.

That’s according to a report released Tuesday by Americans for a Clean Energy Grid and the American Council on Renewable Energy. The two advocacy groups coordinate the Macro Grid Initiative, which seeks to upgrade the nation’s transmission network.

“Connecting to the transmission grid is like spending four years at the Department of Motor Vehicles, except the costs are much less predictable,” Rob Gramlich, executive director of ACEG, said in a statement. “FERC’s interconnection policy was created in a different era and it no longer works.”

The report authors argue that FERC’s current system for planning and funding grid expansion efforts is “unworkable and inefficient,” creating a massive backlog of unbuilt energy projects. By the end of 2019, 734 gigawatts of proposed generation was awaiting approval to link up with congested transmission lines across the country. The proposed projects — about 90% of which are for wind, solar and storage — often produce cheaper power than competing electricity sources, so their delay is costing consumers, the report says.

“Backlogs in interconnection queues have emerged as a significant challenge to the growth of renewable energy, even as consumer demand increases for low-cost wind and solar projects,” Gregory Wetstone, president and CEO of ACORE, said in a statement.

The authors also note that the uncertainty swirling around pending interconnection requests raises costs for developers.

To clear the backlog; unleash trillions of dollars in investment; and help states, utilities and Fortune 500 companies meet their renewable commitments, the report says FERC should discontinue its current approach to financing transmission projects, known as participant funding. The model mandates that energy developers pay for any grid upgrades needed to accommodate the new connection — a cost that has grown sharply as transmission lines run out of carrying capacity in parts of the country.

“The system has reached a breaking point recently as spare transmission has been used up,” the report says, adding that FERC has failed to account for “broad benefits” of adding large-scale regional transmission.

“It is clear that the large upgrades being identified and assigned to generators in interconnection studies would provide benefits to users across the network, even if those may be difficult to quantify with certainty,” the report concludes.

The report also says that regional grid operators should have a role in reforming transmission planning. Instead of relying on a deluge of developer requests to signal when new transmission infrastructure is needed, regional grid operators should proactively identify lines that could connect new projects to the wider grid, the report argues.

“Consumers would benefit from more efficient transmission at a scale that brings down the total delivered cost, rather than continuing the current cycle of incremental transmission built in the project-by-project or generator-only cost assignment regime,” the report states. “That shift will not happen in the current interconnection process.”

Many of the delayed projects are in rural areas, meaning new transmission in the eastern U.S. could translate to $7.8 trillion in rural investment and create more than 6 million domestic jobs, the report says.

“In addition, rural power projects expand the tax base of local communities and typically generate lease payments or other revenue for farmers and other landowners,” it says.

Delays in clean energy projects also prolong exposure to environmental justice communities suffering the impact of smog, nitrogen oxides and other harmful emissions, according to the report.

Amy Farrell, senior vice president for government and public affairs at the American Clean Power Association, said the report demonstrates that the current interconnection process is “broken.”

“A robust transmission system simply cannot be planned and paid for one interconnection at a time,” Farrell said in a statement. “[R]ather we need a holistic, long-range planning process that optimizes transmission spending to meet economic, reliability, public policy and interconnection goals, and spreads the costs of upgrading the grid to all beneficiaries.”