Without Permit Reform, Path to Clean Energy Could Face a Detour

Source: By Jinjoo Lee, Wall Street Journal • Posted: Wednesday, September 28, 2022

Interstate transmission lines are crucial to building out a cleaner grid but are difficult to erect

There is a natural limit on the number of new utility-scale solar and wind farms that can get on the grid unless there is a faster transmission-line build-out.PHOTO: CARLOS BARRIA/REUTERS

Architects of the Inflation Reduction Act paved a policy road map of solar and wind power paired with electric vehicles. But without a speedy build-out of transmission lines to link them, that path might just lead to more coal and natural-gas usage.

That is the finding of a recent analysis conducted by the Rapid Energy Policy Evaluation and Analysis Toolkit (REPEAT), a project led by Prof. Jesse Jenkins of Princeton. The analysis found that if the U.S. builds out transmission lines at the pace of the past 10 years (a glacial 1% annually), it would result in more coal and natural-gas consumption in 2030 than if the green energy-focused Inflation Reduction Act hadn’t passed.

That is because provisions in the Inflation Reduction Act will in fact push up demand for electricity through incentives for things such as electric vehicles and electric heat pumps. Without a faster transmission-line build-out, there is a natural limit on the number of new utility-scale solar and wind farms that can get on the grid. That is because sunny and windy patches of land ideal for renewable-energy development tend to be located some distance away from actual electricity demand. Net-net, greenhouse-gas emissions still decline in a scenario with the Inflation Reduction Act (compared with one without it) because the legislation also includes provisions to reduce transportation- and industrial-related emissions, according to the analysis.

The bigger takeaway from the analysis is that the green benefits of the Inflation Reduction Act won’t be fully realized without a speedier transmission-line expansion. The analysis found that if the U.S. expands transmission at more than double the recent historical pace (roughly 2.3% a year), greenhouse-gas emissions would be roughly 800 million tons lower in 2030 compared with a scenario where transmission expands at just a 1% pace.

Transmission-line permitting has always been a messy tangle of red tape in the U.S., the product of a fragmented grid and never-in-my-back-yardism. Sen. Joe Manchin’s permitting bill, which now seems to face long odds of passage, attempts to fix that by granting the Federal Energy Regulatory Commission authority to site and grant construction permits for transmission projects deemed to be in the national interest. FERC currently has permitting authority over interstate natural-gas pipelines, but not over transmission lines that cross multiple states. The bill also gives FERC the authority to allocate transmission-line costs to each region based on the proportional benefit if the transmission line project sponsor asks for such an analysis.

Some lawmakers from both parties oppose parts of the bill, however. The sweeping legislation would speed up the approval process for all kinds of energy projects, including natural-gas pipelines, transmission lines, wind farms and solar generators. It also greenlights the Mountain Valley Pipeline, a natural-gas conduit project in Mr. Manchin’s state of West Virginia. “To the extent that nobody likes it, one could argue that it’s a perfect compromise,” says Christi Tezak, managing director at Washington, D.C.-based energy research firm ClearView Energy Partners. Ultimately, allowing a faster build-out of transmission lines would probably result in a reduction of coal and natural-gas consumption that is “several multiples” of what the Mountain Valley Pipeline can enable, says Mr. Jenkins.

There are parallel proceedings that could speed up renewable-energy connections to the grid. FERC itself has proposed a flurry of changes this year, including rules to accelerate the process for connecting new electric-generation facilities to the grid. The backlog of interconnection requests has been a serious bottleneck for new solar and wind generators this year. FERC also has proposed rule changes to address shortcomings in regional transmission planning, including one that aims to address the cost-allocation issue among different states.

It is also possible that the growth in electricity demand itself—spurred by the Inflation Reduction Act—will incentivize a faster build-out of transmission lines. The transmission-line network in the U.S. has grown by just 1% a year over the past decade, but that period coincides with stagnant power demand. If one zooms out to look at the pace of transmission expansion to include periods where demand for power actually grew—from 1978 to 2020—that number is a more encouraging 2%, according to REPEAT’s analysis.

The path toward a speedier transmission-line build-out is still open, even if it looks narrow at the moment. That portends a long and windy road to clean energy, not a dead end.

Write to Jinjoo Lee at jinjoo.lee@wsj.com