Underground Midwest transmission project is hung up in PJM’s generation queue

Source: By Kari Lydersen and Karen Uhlenhuth, Energy News Network • Posted: Sunday, March 28, 2021

The Soo Green line is delayed by a glut of renewable energy projects — a problem that, ironically, the Iowa-to-Illinois transmission line could help solve.

As advocates highlight the urgency of expanding interstate transmission capacity in the wake of last month’s energy crisis in Texas, a novel Midwest project is facing delays, but not for the reasons that typically dog overhead power lines.

The Direct Connect Development Company is betting that the higher cost of burying its proposed transmission line along railroad corridors will be offset by the lack of expenses from dealing with legal and legislative challenges. So far, despite a handful of objections from neighbors, that bet appears to be paying off.

Instead, it’s another innovation that has led to the project’s delay.

The 350-mile Soo Green Renewable Rail line would originate in Mason City, Iowa, and go to Plano, Illinois. The 2,100-megawatt, 525-kilovolt direct current line would be buried underground following a Canadian Pacific railroad right of way, relieving it of the need to secure the right of way from private landowners or invoke eminent domain.

Soo Green would bring power from the MISO market to PJM and use advanced converters that PJM could control to dispatch the power when and where it’s needed, a capability that is not in use at a large scale anywhere else in the country, according to Joe DeVito, president of Direct Connect.

But, as DeVito puts it, this has created confusion over whether it should be designated as a generation or transmission project. Because of this and related aspects of the project, Soo Green is in PJM’s clogged queue for generation awaiting study before it can be approved, a process that could take years.

The converters “can react to instructions from the grid operator in 1/100 of a second,” DeVito said. “If you look at what happened in Texas, you see the need for lifelines between regional grids. The benefits this cutting-edge technology can give to grid operators is the bridge into the digital age.”

(DeVito, along with Direct Connect Vice President Raj Rajan, are volunteer board members of Fresh Energy, which publishes the Energy News Network.)

Soo Green would be a merchant transmission project, a relatively novel approach where generators would pay to send their power to market on the line. DeVito said he is in talks with multiple prospective customers who would build new large-scale renewable generation and pay to send their power on the line, as well as customers — like companies and utilities — in the PJM footprint who need renewable power to meet their clean energy goals.

“We’re trying to open it up to as many parties as possible, let them get comfortable that there is a market,” he said. “We’re trying to get broad geographic scope on generation that can feed into the line. That gives you more geographic diversity, and means more renewable energy more of the time. There is not a product like this that exists in the marketplace.”

In order to make the proposition viable, generators also want the ability to sell into PJM’s capacity markets, a measure that also needs specific PJM approval, and which Soo Green is seeking through its own filings.

“The ironic thing is in order to put more generation online we need to build more transmission, but what’s blocking this transmission is too much generation in front of it in line,” he said. “At the end of the day it is because we have a lot of interest in solar. Solar has become very cost-competitive and it is overwhelming [PJM’s] queue.”

A path around landowner opposition

The situation stands in sharp contrast to another proposed merchant transmission project, Grain Belt Express, an overhead line that still faces strong organized opposition from landowners in Missouri despite winning approval from state regulators two years ago.

Last month, the Missouri House of Representatives approved a bill by a margin of 123-33, aimed at killing the Grain Belt Express by prohibiting the use of eminent domain to acquire necessary easements. It is now before the Senate’s Committee on Commerce, Consumer Protection, Energy and the Environment.

Soo Green’s path is much clearer in this respect. While the project needs a franchise agreement from Iowa regulators to proceed, only 11 neighboring property owners — out of more than 2,000 along the corridor — have filed comments to the Iowa Utility Board objecting to the project.

Some said they think Direct Connect should offer them more compensation – like an upfront payment as well as monthly royalty. Spokesperson Sarah Lukan said the company has offered neighbors “a premium to fair market property value based on the 2019 Iowa State University Land Value study,” but notes that the company didn’t need to offer anything because the project will fall completely within the railroad right of way.

Several landowners and their lawyers also contend that electricity transmission does not comport with the right of way agreements that the railroad now known as Canadian Pacific signed with landowners along the route about 150 years ago. However, Lukan says legal precedents both in Iowa and at the federal level make clear that railroads may allow this activity on their right of way.

The state’s Office of Consumer Advocate filed a motion on Nov. 30. asking Direct Connect to prove its claim that it has all of the property rights needed to develop the line.

Jeff Cook, an attorney with the Office of Consumer Advocate, said in an email that the responses from Direct Connect in January satisfied the office, and that no other issues have been found.

Because Direct Connect is not considered a utility, it will not need to obtain a franchise from the Illinois Commerce Commission, according to the company.

‘Unique capabilities’ — and challenges

Beth Soholt, executive director of the Clean Grid Alliance, said, “We really really really need this project and many like it,” to facilitate the development of renewable energy and to avoid situations like the massive outages during the winter storm in Texas, by interconnecting regional grids.

“I would hope PJM is looking at the favorable capabilities that Soo Green has — the line is dispatchable, controllable, it has these other bells and whistles that can help the PJM market, rather than looking at it as ‘it’s a lot of new generation being plopped into the PJM,’” Soholt said. “I’m hoping the leadership and folks doing the day-to-day work are thinking, ‘Here’s an opportunity to really maximize the capabilities that line can bring.’”

“Soo Green does have some unique capabilities — it’s a unique project,” Soholt continued. “There are some challenges in how to categorize and study it. I think there are benefits and challenges of seeing the line either way, but we have a big problem with the queues whether it’s transmission or generation and we have for a long time.”

“The rules for connecting to the grid were designed 20 years ago, at the time grid operators were connecting large centralized fossil fuel power plants,” DeVito said. “The world has changed, to state the obvious. We have a large number of small low-cost resources seeking to connect to the grid.”