USA - Investment in transmission key to clean and reliable U.S. electricity supply

The U.S. Senate Energy & Natural Resources Committee will hold its first-ever hearing focused exclusively on renewable energy and transmission, inviting renewable industry, utility, and government leaders to discuss ways to invest in new transmission that will tap the nation’s vast – but currently stranded –renewable energy resources.

“Like any infrastructure, the U.S. transmission grid is aging and needs upgrading to function reliably and to meet future load requirements,” said Don Furman, Senior Vice President at Iberdrola Renewables, President-elect of the American Wind Energy Association (AWEA) and Chair of AWEA’s Transmission Committee. “At the same time, the nation has tremendous renewable energy reserves, but the existing electric transmission system was not designed to tap these new kinds of generation. The good news is that we have the opportunity to solve both problems at once, while strengthening our economy, the environment, and energy security.”

Transmission limitations are among the biggest constraints on wind and renewable energy's growth in the U.S. A recent U.S. Department of Energy (www.20percentwind.org) study found that wind alone could provide 20% of U.S. electricity – the same amount currently provided by nuclear power - by 2030, but that one of the keys to achieving that level is investment in new transmission.

In testimony prepared for the Senate committee, T. Boone Pickens noted, “It is clear that renewable energy sources are an essential national security strategy. We need a national electricity transmission system to carry this electricity, be it wind, solar, biofuels or other alternatives.”

Furman testified on behalf of the wind power industry. The following are some of the key considerations and points of his testimony:

• Investment in transmission for renewable energy makes economic sense. New transmission capacity typically enables a utility to access lower-cost generation. The Midwest Independent System Operator (MISO) recently determined that adding 5,000 miles of new 765-kV transmission lines to enable the transmission of wind energy generated in North and South Dakota to the New York City area would result in substantial savings for consumers. Even though the generation and transmission costs would amount to approximately $13 billion, the MISO study found that, on a net basis, consumers would save approximately $600 million per year because the new transmission would enable utilities to acquire lower cost electricity. In all, according to a report released last month by the U.S. Department of Energy (DOE), the transmission investment needed for wind to provide 20% of U.S. electricity by 2030 would be about $60 billion, or about $3 billion per year—a modest amount compared to the $8 billion spent annually in recent years on transmission infrastructure.

• Expanded transmission will increase reliability and reduce costly congestion. The lack of sufficient transmission capacity is a threat to reliability, according to the North American Electric Reliability Corporation (NERC). What’s more, the lack of sufficient transmission capacity also increases the price of electricity. Transmission congestion limits the ability of utilities to access cheaper sources that may be further away, and forces them to rely increasingly on gas-fired electric generation facilities that are closer to load centers.

• Investment in transmission for renewable energy will provide a variety of additional benefits. According to DOE, if wind were to provide 20% of U.S. electricity -- for which more transmission would be needed -- the benefits would include:
o reducing electric sector greenhouse gas emissions by 25% - a reduction that almost single-handedly keeps emissions in the electric sector at today’s level while meeting growing electricity demand;
o reducing the amount of natural gas used for electricity generation by 50% and helping limit reliance on natural gas imports while reducing costs;
o reducing water consumption by 4 trillion gallons by 2030 (water is not required to operate wind farms);
o increasing annual revenues to local communities to more than $1.5 billion; and
o creating approximately 500,000 jobs.

• Congress and the Federal government should help promote a more robust and effectively functioning grid. The current regulatory structure for transmission is not well suited to the challenges of the future. It is incumbent upon the federal government to help ensure that the nation builds the transmission necessary to access our vast supply of renewable resources, reduce our greenhouse gas emissions, enhance our energy security, and provide reasonably priced electricity for consumers and for the economy.