(Source: Investopedia, Madelyn Goodnight)
The April 23rd blog ended with the following paragraph:
I will wait until I read the new FERC report on the issue and start next week’s blog addressing the international aspects of these issues. Specifically, how developing countries hope to generate the resources to finance the transition. Without their cooperation, the energy transition is bound to fail and all of us will suffer the consequences.
As promised, the report came out on time, last week. Below is the fact sheet of its findings:
Fact Sheet |Building for the Future Through Electric Regional Transmission Planning and Cost Allocation
FERC’s new transmission and cost allocation rule, Order No. 1920, continues the essential work of the Commission – ensuring a reliable grid – by requiring the nation’s transmission providers to plan for the transmission we know we will need in the future.
This rule adopts specific requirements addressing how transmission providers must conduct long-term planning for regional transmission facilities and determine how to pay for them, so needed transmission is built. The final rule reflects more than 15,000 pages of comments from nearly 200 stakeholders representing all sectors of the electric power industry; environmental, consumer and other advocacy groups; and state and other government entities.
The grid rule contains these major elements:
- Requirement to conduct and periodically update long-term transmission planning to anticipate future needs.
- Requirement to consider a broad set of benefits when planning new facilities.
- Requirement to identify opportunities to modify in-kind replacement of existing transmission facilities to increase their transfer capability, known as “right-sizing.”
- Customers pay only for projects from which they benefit.
- Expands states’ pivotal role throughout the process of planning, selecting, and determining how to pay for transmission facilities.
Long-Term Regional Transmission Planning
More specifically, the rule requires each transmission operator to:
- Produce a regional transmission plan of at least 20 years to identify long-term needs and the facilities to meet them.
- Conduct this long-term planning at least once every five years using a plausible and diverse set of at least three scenarios that incorporate specific factors and use best available data.
- Apply seven specific benefits to determine whether any identified regional proposals will efficiently and cost-effectively address long-term transmission needs.
- Include an evaluation process to identify long-term regional transmission facilities for potential selection in the regional plan.
- Include a process giving states and interconnection customers the opportunity to fund all, or a portion, of the cost of a long-term regional transmission facilities that otherwise would not meet the transmission provider’s selection criteria.
- In the event of delays or cost overruns, reevaluate long-term regional transmission facilities that previously were selected in a regional transmission plan.
- Consider transmission facilities that address interconnection-related needs identified multiple times in existing generator interconnection processes, but that have not been built.
- Consider the use of Grid Enhancing Technologies such as dynamic line ratings, advanced power flow control devices, advanced conductors and transmission switching.
How to Pay for Transmission
The grid rule contains these cost-allocation provisions:
- Before applicants submit compliance filings, they must open a six-month engagement period with relevant state entities.
- Applicants must propose a default method of cost allocation to pay for selected long-term regional transmission facilities.
- Applicants may propose, a state agreement process that lasts for up to six months after a project is selected for participants to determine, and transmission providers to file, a cost allocation method for the selected facilities.
Enhanced Transparency, “Right-Sizing” and Interregional Transmission Coordination
The grid rule requires transmission providers to:
- Be transparent regarding local transmission planning information and conduct stakeholder meetings during the regional transmission planning cycle about the local process.
- Identify opportunities to modify in-kind replacement of existing transmission facilities to increase their transfer capability, known as “right-sizing,” when needed.
- Give incumbent transmission owners a right of first refusal to develop these “right-sized” replacement facilities.
- Revise existing interregional transmission coordination processes to reflect the new long-term regional transmission planning reforms.
Order No. 1920 takes effect 60 days after publication in the Federal Register. Compliance filings with respect to most of the rule’s requirements are due within 10 months of the effective date, while filings to comply with the interregional transmission coordination requirements are due within 12 months of the effective date.
The media response was immediate. I am including two examples: one from the NYT and one from Forbes:
NYT: New Rules to Overhaul Electric Grids Could Boost Wind and Solar Power
The Federal Energy Regulatory Commission approved the biggest changes in more than a decade to the way U.S. power lines are planned and funded.
Federal regulators on Monday approved sweeping changes to how America’s electric grids are planned and funded, in a move that supporters hope could spur thousands of miles of new high-voltage power lines and make it easier to add more wind and solar energy.
The new rule by the Federal Energy Regulatory Commission, which oversees interstate electricity transmission, is the most significant attempt in years to upgrade and expand the country’s creaking electricity network. Experts have warned that there aren’t nearly enough high-voltage power lines being built today, putting the country at greater risk of blackouts from extreme weather while making it harder to shift to renewable sources of energy and cope with rising electricity demand.
A big reason for the slow pace of grid expansion is that operators rarely plan for the long term, the commission said.
The nation’s New Rules to Overhaul Electric Grids Could Boost Wind and Solar Power are overseen by a patchwork of utilities and regional grid operators that mainly focus on ensuring the reliability of electricity to homes and businesses. When it comes to building new transmission lines, grid operators tend to be reactive, responding after a wind-farm developer asks to connect to the existing network or once a reliability problem is spotted.
The new federal rule, which was two years in the making, requires grid operators around the country to identify needs 20 years into the future, taking into account factors like changes in the energy mix, the growing number of states that require wind and solar power and the risks of extreme weather.
Grid planners would have to evaluate the benefits of new transmission lines, such as whether they would lower electricity costs or reduce the risk of blackouts, and develop methods for splitting the costs of those lines among customers and businesses.
“We must plan our nation’s grid for the long term,” said Willie Phillips, a Democrat who chairs the energy commission. “Our country’s aging grid is being tested in ways that we’ve never seen before. Without significant action now, we won’t be able to keep the lights on in the face of increasing demand, extreme weather, and new technologies.”
Forbes: Renewables Will Skyrocket Under New Transmission Policies
The transmission system must modernize and expand to meet the demands of the 21st Century. Indeed, the growth of artificial intelligence, data centers, and electric vehicles — powered by green energy — means the country must at least double regional transmission capacity.
That’s why the Federal Energy Regulatory Commission (FERC) voted 2-to-1 Monday to modernize the nation’s long-distance high-powered transmission policies — geared to meeting the Biden Administration’s decarbonization goals and to harden the grid to withstand extreme weather that could wreak havoc on local economies.
The changes have multiple ramifications: It will help with backstop authority—or the ability to build transmission when progress slows. Over the next decade, it will lead to considerably more renewable energy and noticeably less coal-fired power. For both reasons, litigation will abound, although the regulatory commissioners considered that before approving the new policies.
FERC also revised its backstop authority. That means the feds can intervene if the states fail to push through vital — log-jammed — projects. “FERC’s backstop siting rule will help ensure that no one state can veto transmission lines that are in the general interest of the nation,” says Cullen Howe, senior advocate for the Natural Resources Defense Council.
The Energy Department will play a key role in the implementation:
The Biden administration on Thursday finalized a rule meant to speed up federal permits for major transmission lines, part of a broader push to expand America’s electric grids.
Administration officials are increasingly worried that their plans to fight climate change could falter unless the nation can quickly add vast amounts of grid capacity to handle more wind and solar power and to better tolerate extreme weather. The pace of construction for high-voltage power lines has sharply slowed since 2013, and building new lines can take a decade or more because of permitting delays and local opposition.
The Energy Department is trying to use the limited tools at its disposal to pour roughly $20 billion into grid upgrades and to streamline approvals for new lines. But experts say a rapid, large-scale grid expansion may ultimately depend on Congress.
Under the rule announced on Thursday, the Energy Department would take over as the lead agency in charge of federal environmental reviews for certain interstate power lines and would aim to issue necessary permits within two years. Currently, the federal approval process can take four years or more and often involves multiple agencies each conducting their own separate reviews.
At approximately the same time, news came from Florida, focusing our thinking on the immediate future. In six months, depending on the results of the national election, all of this progress may evaporate into thin air and we may again find ourselves powerless to fight climate change:
Florida’s state government will no longer be required to consider climate change when crafting energy policy under legislation signed Wednesday by Gov. Ron DeSantis, a Republican.
The new law, which passed the Florida Legislature in March and takes effect on July 1, will also prohibit the construction of offshore wind turbines in state waters and will repeal state grant programs that encourage energy conservation and renewable energy.
The legislation also deletes requirements that state agencies use climate-friendly products and purchase fuel-efficient vehicles. And it prevents any municipality from restricting the type of fuel that can be used in an appliance, such as a gas stove.
The legislation, along with two other bills Mr. DeSantis signed on Wednesday, “will keep windmills off our beaches, gas in our tanks, and China out of our state,” the governor wrote on the social media platform X. “We’re restoring sanity in our approach to energy and rejecting the agenda of the radical green zealots.”
It all depends on us, whether we lose the ability to fight our contribution to global climate change (remember our “self-inflicted genocide”), or we are able to amplify our efforts to mitigate and adapt to the changes. I will try in future blogs to record our efforts on all levels, including describing where we are now and what are we at risk of losing. This blog started with FERC; the next one will proceed to the US Department of Energy.
