Investors Are Building Their Own Green-Power Lines

Source: By RUSSELL GOLD, Wall Street Journal • Posted: Friday, April 7, 2017

Billionaires want to move renewable power from the plains to big cities; red tape blocks progress

What if the wind sweeping down the plains of Wyoming could be harnessed to generate enough electricity to power the city of Los Angeles?

It soon could, thanks to a $9 billion wind farm and electricity superhighway backed by billionaire Philip Anschutz—one of a series of transmission-line projects that private investors are bankrolling to bring renewable energy from America’s hinterlands to its urban centers.

Electron Superhighways


Several high-voltage transmission lines are under development to move large amounts of renewable energy to cities and coasts.

Near Rawlins, in rural Wyoming, crews are prepping land near the state line with Colorado so they can build a 3,000-megawatt wind farm, which could be the largest ever constructed in the U.S. Key to moving all that renewable power to market: Mr. Anschutz’s proposed 730-mile transmission line—a giant extension cord of sorts that will deliver the electricity to a point near Las Vegas. From there, the power can easily flow into southern California’s grid.

Mr. Anschutz isn’t the only wealthy investor pumping money into power-line projects in an effort to bring green energy to big cities. The Ziff family, whose fortune harks back to the glory days of magazine publishing, also is partly funding a green-power project between Oklahoma and Tennessee. Altogether, these and other merchant-transmission projects could cost upward of $17 billion, plus at least another $20 billion in wind, solar and hydro projects to fill these lines.

Despite deep pockets and state mandates for more renewable energy, fortifying the grid to move green power from the middle of the country where it is reliable and cheap to produce to metroplexes where it is needed has proved problematic, said Bill Miller, who is spearheading the Anschutz Corp. project. Other investors and financial partners may later help finance the transmission line.

“Being somewhat naive at the time, I thought that even a project as complex as this could have been done in five years,” he said.

Eight-and-a-half years and counting, the project is still being developed. The multistate transmission line finally received a key federal permit in December. Mr. Miller now expects Wyoming wind power to flow into southern California by 2021.

Backers of the power grid, which is close to breaking ground, hope their efforts will be propelled along by President Donald Trump’s support for large-scale infrastructure. Several renewable energy lobbying groups, including the American Wind Energy Association, asked Congress in March to make sure transmission upgrades were included in any proposed infrastructure bill.

Transmission lines have some of the same issues as pipelines—they move long distances, across many jurisdictions and require rights of way that can spur contentious land disputes. The projects have encountered some local opposition, mainly from local groups that oppose overhead power lines. Environmental groups generally support the renewable-energy focus of these projects.

Unlike big transmission projects of the past, these lines aren’t proposed or paid for by utilities that can pass along the cost to customers and take a guaranteed profit. New power plans are privately financed, similar to oil and gas pipelines.

The projects are driven by “competitive energy markets and demand for clean energy,” said Will Hazelip, vice president of U.S. business development for National Grid PLC. The company is developing two transmission lines, in Maine and Vermont, to bring more wind and hydro power to New England.

National Grid also is backing a giant transmission line proposed between western Oklahoma and Memphis, Tenn. Preliminary work has started on a 4,000-megawatt wind farm to feed power into it, which would eclipse the Wyoming wind farm. Houston-based Clean Line Energy Partners is developing the project, with additional backing from Bluescape Energy Partners, a fund that invests university and endowment money, and the private investment vehicle of the Ziff Family.

Together, that wind farm and line are expected to cost $9.5 billion.

Transmission investors are hoping to position themselves as suppliers of jobs and buyers of materials that will boost economic growth in the U.S.

Michael Skelly, president of Clean Line, said the wind turbines and its Oklahoma-to-Tennessee power line will use 500,000 tons of steel, enough to build four aircraft carriers. French company Sediver has built a factory in Arkansas to provide the project with specialized transmission equipment. The companies expect to generate thousands of jobs over the course of project construction.

“There is tons of money in the world for infrastructure and this is one way for electric transmission to tap into that,” said Edward Krapels, chief executive of Anbaric, a Boston-based infrastructure developer. In March, Anbaric announced a partnership with the Ontario Teachers’ Pension Plan to provide long-term investments for future transmission projects. A private power line can take five to 10 years to develop and put in service, which is “more than what private equity guys want to do,” he said.

The trouble with transmission projects is they can get bogged down in lengthy government reviews. The SunZia Southwest Transmission Project—a 500-mile power line that will span New Mexico and Arizona—was proposed 10 years ago but “regulatory hurdles, plus the threat of lawsuits” stymied it, according to Ian Calkins, a spokesman for the project. He said he hopes the line will be operational by 2020.

The future of such projects depends on whether power lines that have taken nearly a decade to develop produce a profit or not for investors.

“I think success will beget success,” said Mr. Skelly of Clean Line. “The corollary is true as well.”