Expanding and Modernizing Transmission Infrastructure to Facilitate Reliability, Resilience, Lower Costs, and Drive Growth
Reliability, Resilience and Clean Energy
Transmission infrastructure allows electricity generated in one location to be transported, sometimes over long distances, to distribution lines and ultimately, to the consumer. Long-distance transmission is often necessary for utility-scale wind and solar generation to reach consumers as wind and solar resources are sited long distances from population centers. Interregional transmission networks provide increased flexibility by allowing grid operators to source electricity from various generation resources across a wide geographic footprint. This can obviate the need to overbuild generation capacity to meet local peak demand.
Affordability and Economic Growth
Increased interregional transmission infrastructure can provide increased access to low-cost electricity, potentially putting downward pressure on consumer costs. According to the U.S. Department of Energy’s National Renewable Energy Laboratory, increasing interregional transmission capacity, could result in up to $180 billion in net benefits through 2050. A similar study from the Midcontinent Independent System Operator (MISO) found that its proposed regional transmission infrastructure portfolio will create between $12.1 billion to $52.6 billion in net economic benefits over the next 20 to 40 years.
Obstacles to a Modern Transmission Network
Planning Protocols for Interregional and Regional Planning
Currently, a project that spans multiple Regional Transmission Organizations (RTOs) must pass a “triple hurdle” test consisting of each RTO’s different metrics and then a third jointly agreed-upon test with different metrics altogether. Intra-regional transmission is planned in separate silos for reliability, economics, and applicable public policy, which may result in delay and duplication of resources.
State, Federal, and Local Challenges to Permitting and Siting
States: States have primary siting authority over transmission facilities, meaning large transmission projects that cross multiple states require the approval of each state the project crosses. This can present a significant impediment, as states are often reluctant to allow projects to be cited without any direct benefits to the state or its municipalities. This concern is particularly acute for so called “regulated states,” where state utility commissions are the ultimate planning authority for generation and transmission to ensure affordable rates and reliability. Congress attempted to address this challenge legislatively by providing the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) with federal backstop siting authority for transmission in designated National Corridors.
Federal Permitting: Nearly all interstate transmission projects – whether on state or federal land – require an Environmental Impact Statement (EIS) pursuant to the National Environmental Policy Act (NEPA). This is a long and arduous process. Project developers also must successfully dispose of any litigation challenging the veracity of the EIS. Siting transmission facilities solely on federal land has its own challenges, often requiring sign-off from as many as nine federal agencies. Currently, all nine agencies operate under a Memorandum of Understanding that designates DOE as the lead agency for siting lines crossing through areas administered by one or more federal agencies. In addition to NEPA, other federal statutes, such as the Endangered Species Act, increase the duration of transmission permitting by requiring various agencies to complete reviews and consultations.
Private Property: Many transmission projects cross over thousands of acres of privately-owned land. Any landowner can object to granting a transmission project developer an easement or “right-of-way” through their land. If a project sponsor is unable to negotiate the right to use private land to construct a planned transmission project, they can seek eminent domain under state law (i.e., a legal right to use private land for a public benefit), which can result in years of litigation.
Cost Allocation Methodologies
Cost Allocation – determining who should pay for multi-state or regional transmission facilities – is also highly contentious. Cost allocation relies on a “beneficiary pays” principle in which costs are borne by those who caused the build-out and those who would enjoy the project’s economic or reliability benefits. However, with an increase in demand for wind and solar generated electricity that is not located near consumers, there is increased demand for larger, multi-regional transmission projects to move power across longer distances and regions. With multiple stakeholders, states, and differing electricity market structures, cost allocation is increasingly a more complex process, often delaying the build-out of transmission infrastructure.
Recent Federal Investments
In 2021, the Infrastructure Investment and Jobs Act (IIJA) was passed, and in 2022, and the Inflation Reduction Act (IRA) and CHIPS and Science Act were passed creating new programming as well as authorizing additional funds to existing programming aimed at improving the electric transmission system.
The IIJA and IRA included various provisions directly and indirectly related to the expansion and modernization of the domestic grid, including financial incentives. The CHIPS and Science Act authorized appropriations for grid modernization research, development and demonstration within the Department of Energy.
Easing Regulatory Burden
The IIJA amends the Federal Power Act to improve the Department of Energy’s and the Federal Energy Regulatory Commission’s authority and coordination efforts. It defines the factors the DOE considers when designating a National Interest Electric Transmission Corridor and improves the ability of FERC to issue permits for transmission sites by granting it primacy in project siting in certain circumstances. The IRA, on the other hand, includes $2 billion to remain available until September 30, 2030, for a direct loan program for certain transmission project development. To be eligible, a transmission project would need to be located in a National Interest Electric Transmission Corridor (NIETC).
By expanding the FERC primacy in siting processes, the IIJA helps to overcome challenges at the state level that would delay transmission projects, particularly with projects that cross multiple state lines. The act also creates a joint office between the Department of Energy and the Department of Transportation to help streamline policies regarding transmission lines in existing rights-of-way of the interstate system.
The IRA appropriates $100 million to remain available until September 30, 2031, for expenses for convening stakeholders and conducting analysis related to interregional transmission development and development of transmission for offshore wind energy.
IRA authorized grants aimed at facilitating the siting of certain onshore and offshore transmission lines would allow relevant siting authorities to receive funds for transmission project studies, examination of alternative siting corridors, hosting negotiations with project backers and opponents, participating in federal and state regulatory proceedings, and promoting economic development in affected communities. Grants are contingent on the authority agreeing to make a final decision on the transmission project within two years.
Financing Future Facilities
IIJA funds for improving and upgrading electric transmission are provided through the Transmission Facilitation program, a $2.5 billion program which offers loans. Another smaller program offers grants to entities that want to upgrade their infrastructure to be more efficient, resilient, and will contribute to lowering electricity sector greenhouse gas emissions.
IIJA also seeks to use advanced transmission technology alternatives to reduce the need to construct new transmission lines. The programs within the Infrastructure Act prioritize transmission upgrades that include, “reconductoring of an existing electric power transmission line with advanced conductors, hardware or software that enables dynamic line ratings, advanced power flow control, or grid topology optimization,” which will help increase the reliability and resiliency of the grid without creating new transmission lines.
The CHIPS and Science Act authorized $11.2 billion available through 2026 for grid modernization in the Office of Electricity, as well as 9 other applied energy offices within DOE.
Local Generation as a Transmission Alternative
Local generation can be an alternative to transmission and may be easier to authorize and site in certain instances. Also, FERC Order No. 1000 required transmission planners seek the most efficient and cost-effective ways to meet the transmission needs of regions. Sometimes, the optimal location of a power generation facility can ease congestion-related reliability issues and present a cost-effective solution with potential benefits to other regional transmission needs.
CRES Forum Policy Recommendations
While the legislation passed in recent years has dedicated additional resources to the development of transmission facilities, continued improvement will require further policymaking.
Transmission policy and funding should facilitate reliability and resilience in the long-term.
Regional and interregional transmission planning should be a coordinated effort and utilize the best available projections to plan for infrastructure not only where it is needed currently and in the near-term, but also to account for projections of future generation resource deployments and retirements.
Transmission infrastructure costs must align with benefits.
Transmission project cost allocation should be guided by quantifiable and verifiable metrics and costs should only be allocated commensurate with benefits that can be determined using those metrics. A misalignment between costs and benefits will increase public and subnational government resistance to transmission projects, potentially preventing them altogether. Cost allocation should also take into account market structure and should not reduce a state’s ability to meet reliability, affordability, or environmental goals.
Streamline transmission infrastructure permitting processes.
Large, multi-state transmission projects that meet certain criteria should be afforded a highly streamlined federal permitting process under NEPA and other federal requirements. Several case studies show that state-level siting issues and lengthy and duplicative federal permitting and siting laws are among the largest impediments to increased transmission infrastructure deployment.
Maintain federal financial incentives for needed transmission projects.
Beneficial transmission projects should be eligible for financial assistance, including projects that: further measurable regional or interregional economic, energy, congestion, or reliability needs; are more difficult to site due to size and/or multiple state crossings; utilize undergrounding and co-location along existing rights of way (e.g., highways, rail, transmission, fiber, etc.).
Utilize advanced transmission technology alternatives.
All regional or interregional transmission planning processes should evaluate the efficacy of advanced transmission technologies as alternatives to building new lines. In certain circumstances, improving existing transmission lines can satisfy the same needs as building an entirely new transmission line. Integrating new technologies in place of building new lines can often lower project costs. This would allow operating transmission lines at higher levels closer to their operational limits.