In a major push towards modernizing America’s ageing grid infrastructure, the Biden administration, in partnership with 21 states, has launched the Federal-State Fashionable Grid Deployment Initiative. The measure marks the most recent triumph for transmission and distribution (T&D), which has seen “lumpy” progress in current a long time.
The initiative unveiled on Could 28 primarily seeks to ascertain a partnership between the federal authorities and accomplice states to realize and speed up progress in resolving shared grid challenges and alternatives. These embody “elevated load development, a quickly altering vitality panorama, ageing infrastructure, and new grid-enhancing applied sciences,” whereas prioritizing energy reliability and affordability, the White Home mentioned on Tuesday.
The White Home mentioned it has thus far secured commitments from Arizona, California, Colorado, Connecticut, Delaware, Hawai‘i, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington, and Wisconsin.
Underneath mutual federal-state commitments, the federal authorities and states will search to discover methods to speed up near-term deployment of extra superior commercially out there grid applied sciences to modernize the grid and broaden its capabilities on new and current T&D strains. As well as, the joint commitments will search to extend state and federal cooperation for each interregional and intraregional transmission planning efforts throughout areas, together with through Regional Transmission Organizations (RTOs) and Impartial Service Operators (ISOs). State and federal governments additionally pledged to “work collaboratively with resolution suppliers, business, labor organizers, and trusted validators to construct a various workforce.
Whereas the joint commitments spearhead a “holistic vitality technique,” in addition they acknowledge the various nature of grid challenges and alternatives throughout states. The initiative will permit states to discover govt and legislative cures for grid capability challenges, facilitate the usage of superior applied sciences via planning and incentives, maximize federal assist, assess and promote the advantages of recent applied sciences, and share insights throughout states. The versatile method seeks to make sure that every state can tailor their methods to their distinctive circumstances, the White Home mentioned.
The federal authorities’s position will relaxation on cultivating a nationwide give attention to grid innovation whereas “selling consciousness of energy challenges as a strategic and financial precedence nationwide.” As well as, the federal authorities will present technical and monetary help, promote fashionable applied sciences via Energy Advertising Administrations, foster ongoing dialogue amongst stakeholders, and repeatedly replace and share developments in grid know-how and coverage.
A Converging Storm of Drivers
The collaborative initiative is the latest measure in a rising checklist of aggressive measures to jumpstart grid modernization and enlargement. Whereas the ability business has known as for a holistic modernization of the majority energy system for many years to allow extra environment friendly and dependable energy era and supply, motion has typically been piecemeal and catered to altering market and coverage forces.
The grid’s capabilities have come into sharper focus within the final three years, given a converging storm of drivers. Amongst exterior pressures are local weather change impacts—and their ensuing and debilitating excessive climate occasions which have strained reliability. On the identical time, the ability business has marked a dramatic shift in its era profile. Grid operators throughout the nation have recognized billions in potential transmission investments that might facilitate an environment friendly shift towards renewables and distributed vitality assets (DERs) but in addition guarantee reliability as extra main assets are retired.
A more recent regarding driver is a projected surge in energy demand. The North American Electrical Reliability Corp. (NERC), in its most up-to-date (December 2023) Lengthy-Time period Reliability Evaluation (LTRA), mentioned its aggregated evaluation space summer season peak demand forecast is predicted to rise by over 79 GW, whereas its aggregated winter peak demand forecasts are rising by almost 91 GW. It famous the expansion charges have grown sharply because the 2022 LTRA, “reversing a decades-long development of falling or flat development charges.” NERC suggests the surge might be pushed by electrification and projections for electrical car development. In April, nonetheless, the reliability group warned of wildcard development from large-scale hundreds—together with knowledge facilities, synthetic intelligence (AI), and probably, investments in hydrogen gas manufacturing. Analysis institute EPRI on Could 28 warned knowledge facilities may devour as much as 9% of U.S. electrical energy era by 2030—“greater than double the quantity at the moment used.”
The demand development anticipated by RTOs is as gorgeous. PJM in January mentioned it expects its 13-state footprint’s vitality use will improve almost 40% by 2039, from 800 TWh to about 1,100 TWh. The Electrical Reliability Council of Texas (ERCOT) in April mentioned it’s bracing for a load development projection of about 152 GW by 2030—40 GW greater than the identical forecast a 12 months earlier than. General, grid planners forecast peak demand development of 38 GW via 2028, requiring fast planning and building of recent era and transmission, famous consulting group Grid Methods in December 2023. However, it warned: “That is doubtless an underestimate—a number of newer updates are including further GWs to that forecast. Subsequent 12 months’s forecast is more likely to present a fair greater nationwide development price.”
An Rising Holistic Strategy to T&D Modernization, Growth
For now, assuming even reasonable development and excessive clear vitality development, 54,500 GW-miles of recent transmission might be wanted nationwide by 2035—a 64% improve from right now’s transmission system—the Division of Vitality (DOE) estimates in its October 2023–issued Nationwide Transmission Wants Research. The triennial “state of the grid” report (previously a “congestion research” which in 2023 included forward-looking attributes) underscored a urgent want for extra transmission infrastructure in almost all U.S. areas for reliability and resilience.
Specifically, it emphasised the already “clogged interconnection queues,” which sat at 2,000 GW on the finish of 2022, in line with knowledge from Lawrence Berkeley Nationwide Laboratory (LBNL). In an April replace, LBNL mentioned the grid connection backlog surged a shocking 30% in 2023 to just about 2,600 GW—95% of which is photo voltaic, battery storage, and wind vitality. “Lively capability in U.S. interconnection queues elevated almost eight-fold during the last decade and is now greater than twice the entire put in capability of the prevailing U.S. energy plant fleet,” the lab underscored. “The massive backlogs, wait occasions, and withdrawal charges within the queues recommend persistent interconnection and transmission challenges and spotlight the necessity to enhance institutional processes, some examples of that are underway.”
Some enhancements are already underway. In July 2023, FERC adopted Order 2023, “which requires substantial reforms to interconnection procedures equivalent to using a cluster (first-ready, first-served) quite than a serial (first-come, first-served) method, greater deposits and readiness necessities to enter the queue, and stricter timelines and penalties,” the lab famous. However whereas “Order 2023 represents a major step in the proper path towards addressing these interconnection challenges,” implementation throughout the U.S. continues to be underway. “A number of regional grid operators equivalent to MISO, CAISO, PJM, and ERCOT have already carried out or proposed further reforms that transcend the necessities of Order 2023,” it mentioned.
An Evolving Authorized and Regulatory Panorama
Utilities have thus far struggled to maintain tempo with their large infrastructure calls for. In keeping with investor-owned utility (IOU) commerce group Edison Electrical Institute (EEI), utilities invested upwards of $168 billion throughout the U.S. electrical grid in 2023, with 18% spent on transmission infrastructure ($30.7 billion) and 34% spent on distribution infrastructure ($57.1 billion). Most went to capability expansions, standard alternative, and hardening. Solely about 7% of whole transmission and distribution CAPEX going in the direction of superior applied sciences.
Regardless of these supercharged investments, utilities nonetheless face substantial limitations. These vary from pervading financing points, which embody value restoration mechanisms that don’t all the time align with the fast deployment of progressive applied sciences. Provide chain limitations and rising prices additionally persist, posing dangers that might probably delay or derail initiatives. These points underscore a dire want for higher planning and procurement methods.
Extra intense inner pressures T&D modernization and enlargement meter is a large-scale push by states and the federal authorities. In its Pathways to Industrial Liftoff: Progressive Grid Deployment report issued earlier this month, the Division of Vitality (DOE) famous that state-level grid modernization regulation and legislative yearly actions have elevated “roughly 2-3x since 2017.”
States, notably, have lengthy been the arbiters of transmission allowing inside their boundaries, together with for siting, environmental evaluation, and eminent area. That has posed a considerable bottleneck for transmission strains crossing state strains. The Vitality Coverage Act of 2005, nonetheless, carved out a extra vital federal position in sure transmission siting selections, establishing a “backstop” siting authority for the Federal Vitality Regulatory Fee (FERC) that licensed the federal entity to concern permits for the development or modification of transmission services in sure circumstances in areas designated by the Secretary of Vitality as “Nationwide Curiosity Electrical Transmission Corridors” (NIETCs)—areas experiencing or going through capability constraints.
Whereas two federal appeals courts in 2009 and 2011 barred FERC and the DOE from leveraging the backstop siting authority, the 2021 Infrastructure Funding and Jobs Act (IIJA) amended Part 216 of the Federal Energy Act (FPA) to deal with points recognized within the selections. Over the previous two years, DOE and FERC proposed new guidelines to implement their amended authority, which has led to swift motion.
Tackling Siting, Allowing, Environmental Hurdles
The DOE, prominently, has set out formidable targets as a part of a “holistic, multifaceted method to grid enhancements.” One daring initiative seeks to improve 100,000 miles of transmission strains over the subsequent 5 years—by 2029. In October 2023, the DOE’s Grid Deployment Workplace (GDO) introduced three “shovel prepared” interregional transmission strains (a mixed 3.5 GW capability) that might obtain the primary $1.3 billion tranche of $2.5 billion in federal funding designated beneath the Transmission Facilitation Program (TFP), a revolving fund enacted by the 2021 IIJA. The federal funding and preliminary value restoration mechanism serves as “capability contracts,” the place the DOE serves as an “anchor buyer” to purchase as much as 50% of deliberate line score for as much as 40 years and to promote the contract to recuperate prices.
The initiatives embody TransCanyon’s Cross-Tie 500 kV line connecting Utah and Nevada; Nationwide Grid’s Twin States Clear Vitality Hyperlink between New England and Québec; and Southline’s double-circuit 345-kV line from Hidalgo County, New Mexico, to Pima County, Arizona. On April 25, the DOE added a $331 funding in one other conditional mission from the primary spherical of the TCP capability contract functions: the Southwest Intertie Mission, which is slated to deliver wind vitality from Idaho to Southern Nevada. Development of the 285-mile, 2-GW line is slated to start in 2025.
In late 2023, the DOE additionally doled out $3.5 billion in federal funding—marking the “largest single direct funding in crucial grid infrastructure ever”—to 58 initiatives spearheaded by main U.S. energy stakeholders to enhance grid flexibility and enhance energy system resiliency as the primary aggressive choices beneath the IIJA Grid Resilience and Innovation Partnerships (GRIP) Program. Sixteen initiatives, a complete of as much as $919 million in federal funding, garnered funding for “complete transformational transmission and distribution know-how options that can mitigate climate hazards throughout a area or inside a neighborhood, together with wildfires, floods, hurricanes, excessive warmth, excessive chilly, and excessive climate occasions that may trigger a disruption to the ability system,” it famous.
Extra just lately, on Could 8, the DOE recognized 10 preliminary NIETCs. The measure is historic, given no NIETCs at the moment exist. (Whereas the DOE designated two corridors within the Mid-Atlantic and Southwest NIETCs in 2007, the Ninth Circuit vacated the hassle in 2011.) The DOE’s preliminary designations—knowledgeable by the findings in DOE’s October 2023–issued Nationwide Transmission Wants Research—establish three areas within the East, 5 within the Central U.S., and one within the West.
If finalized, the preliminary NIETCs could possibly be prioritized for federal assist and regulatory streamlining to speed up important upgrades and expansions. As crucially, FERC can grant permits for transmission strains sited inside a NIETC if states don’t have the authority to website the road, haven’t acted on an utility in additional than a 12 months, or deny an utility. A NIETC designation can even critically unlock federal financing to spur the development of transmission infrastructure. That features the $2.5 billion designated by the Infrastructure Funding and Jobs Act (IIJA) beneath the Transmission Facilitation Program, in addition to direct loans via the Transmission Facility Financing Program beneath the Inflation Discount Act (IRA).
Whereas the DOE didn’t say when it intends to concern last designations, it famous that the motion initiates Section 2 of a four-phase nonbinding course of it unveiled in December 2023. (In Section 1, the DOE mentioned it actively sought public suggestions, together with from private and non-private entities, on explicit alternatives throughout the nation the place the necessity for transmission is within the nationwide curiosity. After a 45-day remark interval on the preliminary designations closes on June 24, 2024, the DOE will kick off Section 3, doubtless within the fall, and conduct an in-depth NIETC analysis and a complete research of environmental impacts pursuant to the Nationwide Environmental Coverage Act (NEPA). That section might slender the preliminary NIETC designation checklist.) Remaining designations, as a part of Section 4, could also be issued subsequent 12 months, although that timeframe is unclear given environmental evaluations, the DOE mentioned.
On the finish of April, in the meantime, the DOE issued a last rule that establishes the Coordinated Interagency Transmission Authorization and Permits (CITAP) program to instantly deal with allowing effectivity. “On common, federal allowing for a brand new electrical transmission line takes about 4 years,” and in “excessive circumstances,” over a decade, the company defined. “Many elements can contribute to prolonged transmission growth timelines, equivalent to extended and fractured planning processes, problem securing financing, and the necessity to navigate advanced environmental allowing processes.”
This system does primarily three issues, Vitality Secretary Jennifer Granholm defined to reporters on April 24. “DOE would be the essential level of contact because the lead company, coordinating between builders and federal businesses. It is a big enchancment from the established order as a result of builders routinely must navigate a number of unbiased allowing processes all through the federal authorities.”
CITAP, prominently can even “follow a two-year deadline,” Granholm mentioned. “It units a binding two-year schedule for federal businesses to concern authorizations and permits, and that’s going to chop in half the typical time builders spend buying permits.” Lastly, CITAP, for the primary time, DOE would require transmission builders to develop a public participation plan earlier than they apply for permits. “And that can guarantee a higher quantity of success within the allowing course of and within the acceptance of the transmission.”
To spice up the expediency of environmental evaluations, in the meantime, the DOE on April 30 finalized a categorical exclusion—the only of three sorts of evaluation established by the Nationwide Environmental Coverage Act (NEPA)—for upgrading and rebuilding T&D strains. (The rule additionally provides categorical exclusions for sure vitality storage techniques and photo voltaic PV techniques.) The measure removes mileage limitations (which beforehand utilized to energy strains of 20 miles in size or much less), provides choices for relocating inside an current right-of-way or beforehand disturbed or developed lands, and specifies circumstances for widening a right-of-way.
In keeping with the DOE, the rule bolsters prospects for T&D line upgrades and rebuilds, together with permitting the alternative of parts with extra environment friendly or resilient know-how, equivalent to reconductoring. Whereas many of the current grid makes use of conductors with a metal core, conductor designs with composite or carbon cores are being adopted. “Superior conductors present a wide range of advantages, together with elevated capability. By rising the capability of energy strains, it’s attainable to combine renewable vitality and different sources of electrical energy into the grid with out the necessity to construct new energy strains,” it famous.
FERC Spearheads Transmission Reforms
FERC has additionally taken on vital actions on grid modernization in recent times. In 2021, it finalized Order No. 881, which requires transmission house owners to make use of ambient-adjusted scores to enhance the accuracy of transmission line thermal scores. Orders No. 896 and 897, issued in June 2023, search to boost transmission planning for excessive climate occasions. FERC Order No. 2222, issued in September 2020, higher permits DERs to take part in energy markets run by regional grid operators. And, as mentioned above, FERC Order No. 2023, finalized in July 2023, entails vital reforms to the interconnection procedures for vitality initiatives.
However FERC’s most momentous effort got here earlier this month, with a 2–1 vote to finalize Order No. 1920, which marked “the primary time in additional than a decade that FERC has addressed regional transmission coverage—and the primary time the Fee has ever squarely addressed the necessity for long-term transmission planning.”
Order No. 1920, issued on Could 13, is a complete try to reform FERC’s insurance policies concerning regional transmission planning and price allocation. It mandates transmission suppliers to have interaction in long-term planning processes over a 20-year timeframe, considering the evolving assets and calls for. Whereas the ultimate rule didn’t embody a proposed measure to require transmission suppliers to acquire state settlement on a price allocation methodology, it does introduce a six-month engagement interval for negotiation with state entities. Transmission suppliers are nonetheless required to file a proactive ‘backstop’ value allocation methodology.
The rule additionally stipulates the mixing of dynamic line scores and superior energy circulate management units in regional transmission evaluations to boost effectivity and cost-effectiveness. Nevertheless, FERC selected to not limit the Development Work in Progress (CWIP) Incentive for long-term initiatives. It additionally selected to not undertake a federal Proper of First Refusal (ROFR) or any modifications to Order No. 1000’s nonincumbent transmission developer reforms, suggesting it should proceed to think about potential federal ROFR reforms sooner or later. It did, nonetheless, undertake ROFR for “sure ‘right-sized’” alternative services. Lastly, the ultimate rule requires enhanced transparency and coordination throughout regional and native planning processes are additionally mandated to make sure the optimum sizing of alternative transmission services.
The Tangled Currents of Public Opinion
Reactions to the Order 1920 had been swift—however, thus far, blended. The Nationwide Affiliation of Regulatory Utility Commissioners (NARUC) instructed the rule “considerably diminished” state roles with respect to transmission planning and price allocation.” NARUC Government Director Greg R. White famous the group has been working with FERC in a joint federal-state activity drive to formally discover transmission-related matters since 2021—with its final assembly held in February. A key concern has been that state and federal utility regulators are tasked with addressing points on the best way to plan and pay for brand new transmission growth and navigating associated jurisdictional points, it has mentioned. “We hope there might be future alternatives to make sure that state voices are heard,” White mentioned.
FERC’s sole dissenting commissioner Mark Christie, in the meantime, instructed the rule promotes a renewable agenda and would hurt shoppers. Chairman Willie Phillips and Allison Clements, nonetheless, argued that the price of “continued inaction is immeasurable.” They instructed that failure to behave now would hamper reliability and resilience to the grid “whereas leaving prospects holding the bag for the inevitably extra pricey upgrades sooner or later.”
Business, too, provided blended views. Many commerce teams applauded FERC’s work to reply to the altering era combine and shifting demand, however some instructed FERC’s stopping wanting adopting a proper of first refusal for collectively owned transmission firms poses points.
As EEI CEO Dan Brouillette famous: “Whereas we might have preferred to see FERC undertake a proper of first refusal for collectively owned transmission services, we’re inspired that the Fee created these rights for different initiatives and that they’ll proceed to think about the joint possession proposal going ahead.”
However Paul Cicio, chair of the Electrical energy Transmission Competitors Coalition, an business group dedicated to rising competitors in transmission infrastructure, mentioned the group was deeply involved concerning the potential impression of the right-sizing ROFR. “The Federal Energy Act is a client safety statute,” he mentioned. “FERC ought to hold that in thoughts because it continues to control transmission.”
WIRES, a commerce group that promotes funding in electrical transmission and whose members embody transmission house owners with investor-owned, public, and cooperative enterprise fashions, like EEI urged FERC “to proceed to think about different potential federal ROFR points that might facilitate collaboration and extra environment friendly and cost-effective transmission for the advantage of shoppers.” WIRES Government Director Larry Gasteiger additionally applauded FERC’s rejection of its proposed limitations of the CWIP incentive. “We agree with FERC that motion on incentives needs to be accomplished in a holistic method; in any other case, we threat sending the fallacious alerts to the funding neighborhood at exactly the fallacious time,” he mentioned.
Lastly, the Working for Superior Transmission Applied sciences (WATT) Coalition, a gaggle that advocates for coverage that helps broad deployment of Grid-Enhancing Applied sciences (GETs), in the meantime applauded FERC for requiring superior energy circulate management, dynamic line scores and transmission switching in regional transmission plans. “These applied sciences are sometimes cost-effective instruments to extend grid capability and enhance flexibility to handle outages and different contingencies.” GETs “might be important to reaching the seven financial and reliability advantages within the rule, particularly manufacturing value financial savings, decreasing grid congestion and enhancing efficiency in excessive climate,” it mentioned.
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
