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Released May 13, 2022 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Federal Energy Regulatory Commission (FERC), an independent branch of the Department of Energy (DOE), voted 4-1 on April 21 to issue a 475-page draft Notice of Proposed Rulemaking (NOPR) that was aimed at improving the resilience and reliability of the nation's electric grid, while also achieving cost savings for consumers and expediting electric transmission planning, cost allocation and construction.
The nation's transmission system has been overwhelmed by the closure of so many coal-fired generators as well as the construction or proposed construction of an enormous number of renewable energy generators. Developers of transmission and electric generation have experienced years-long backlogs in securing approval from state utility regulatory commissions or multi-state agencies charged with coordinating transmission planning, cost allocation and construction.
The proposed NOPR follows nine months of workshops and staff efforts to find a way to accelerate electric transmission construction without stepping on the toes of state regulatory commissions, who have a role in approving or rejecting transmission projects that are scheduled to be built in their jurisdictions.
Comments on the draft NOPR are due 75 days after it is published in the Federal Register, which occurred May 4. After the public-comment period, FERC will make whatever revisions it deems in the public interest. A final rule is expected by the end of 2022.
Industrial Info is tracking nearly 900 active transmission projects under development in the U.S., with aggregate value exceeding $46 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Industry Project Database can click here for a list of detailed project reports.
Regions experiencing the greatest level of transmission and distribution (T&D) project activity include the Midwest, Southwest and West Coast.
For years, clean-energy developers and transmission companies have complained of ever-lengthening queues for their projects to be considered by regional transmission organizations (RTOs) or independent system operators (ISOs), which were created under FERC authority years ago to better coordinate transmission planning across multi-state areas. Multi-state transmission groups, state regulatory bodies and utilities that will be served or affected by a proposed transmission project must approve that project before construction can begin. Delays of five years or more in securing all required approvals is not uncommon.
Proposed transmission projects that cross state lines have long been a source of concern for transmission developers and clean-energy advocates. In a case that has become a rallying cry for those stakeholders, the Missouri Public Service Commission in 2015 blocked the proposed Grain Belt Express transmission project, a 775-mile, high-voltage, direct-current (HVDC) transmission project that would bring up to 4,000 megawatts (MW) of wind-derived energy from western Kansas to Missouri, Illinois, Indiana and beyond. That project remains stuck in litigation, a decade after it was first proposed. For more on the Grain Belt Express project, see July 13, 2015, article - Grain Belt Express Transmission Project Blocked by Missouri Regulators and April 18, 2016, article - Energy Department Supports Interstate Power Transmission Project, Clearing a Path Forward.
If finalized as drafted, the NOPR "would facilitate much-needed transmission investment, improving the resilience of the grid, enhancing reliability and reducing power costs," Chair Richard Glick said April 21. "It's also going to address our nation's changing resource mix and the changing role of electricity in our society," he added.
"Transmission facilities provide a broad range of benefits," continued Glick, a Democrat. "Planning for those facilities with a longer-term, forward-looking approach, in addition to fairly allocating their costs, is essential to ensuring we are developing energy infrastructure in a manner that reduces costs and enhances reliability."
In briefing the commissioners April 21, FERC staff said the proposed rulemaking would require public utility transmission planners to:
Another aspect of the draft NOPR would address federal rights of first refusal for transmission projects, amending the commission's Order 1000, issued July 2011. The proposed amendment would give federal authorities the option of first refusal for "transmission facilities selected in a regional transmission plan for purposes of cost allocation, conditioned on the incumbent transmission provider establishing joint ownership of the transmission facilities."
FERC staff acknowledged that the proposed rule would "remedy deficiencies in the Commission's existing regional transmission planning and cost allocation requirements." If adopted as drafted, the new rule would require public utility transmission providers to revise their existing interregional transmission coordination procedures to reflect the long-term regional transmission planning reforms proposed in this draft NOPR.
Speaking at an industry conference two weeks after the draft NOPR was issued, Glick said the commission also is looking beyond the NOPR at other ways to "promote an expedited process" for connecting new projects to the power grid. Interconnection delays "are getting worse and stunting growth of the generation resources many people are looking for," he said. He said one idea was to create a national electric grid monitor, but that was not contained in the NOPR.
During the commission's April 21 meeting, Commissioner Allison Clements said, "Americans pay billions of dollars annually extra due to transmission congestion. Extreme weather and disasters are testing a system not planned for these emerging conditions." She estimated that about 1.4 terawatts of renewable energy and energy storage projects are "stuck in queues around the country, unable to provide largely lower-cost electricity."
The commission's lone dissent came from Commissioner James Danly, a Republican, who said the NOPR is "designed to encourage the buildout of transmission specifically to encourage the development of certain types of resources," such as renewable energy, and that the draft rule would "socialize costs" on states and utilities that haven't set their own clean energy policies, a charge denied by the agency's Democratic commissioners.
Separate from the FERC action, Industrial Info held a webcast in late April on the ongoing buildout of the nation's transmission & distribution system. On that webcast, Brock Ramey, IIR's North American power specialist, said many of the proposed T&D projects that are scheduled to kick off construction during 2022 and 2023 are "mid-range" projects with 230 kilovolts (kV) or less of capacity. Many of those projects have been proposed to debottleneck the existing grid and integrate new renewable generation into the grid.
"The magnitude of backlog in the generation interconnection queues is due to the sheer magnitude of the push for the ongoing renewable energy buildout," Ramey said. "Other factors that have lengthened the interconnection queues are the RTO/ISO approval process, state permitting approval processes, challenges by special interest groups, and ongoing supply chain issues, among other things."
"It's going to take a combination of legislative and regulative to start to improve this process; this NOPR is one of many that FERC, states, and RTOs/ISOs are working on," he commented.
"There's a lot of spending being proposed to bring renewable energy from where it is generated to where it is needed, and also to dissolve planning bottlenecks," Ramey said. For related information, see April 28, 2022, article - IIR Webinar: As North American Grid Changes, Need for Further Transmission & Distribution Spending Emerges.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The nation's transmission system has been overwhelmed by the closure of so many coal-fired generators as well as the construction or proposed construction of an enormous number of renewable energy generators. Developers of transmission and electric generation have experienced years-long backlogs in securing approval from state utility regulatory commissions or multi-state agencies charged with coordinating transmission planning, cost allocation and construction.
The proposed NOPR follows nine months of workshops and staff efforts to find a way to accelerate electric transmission construction without stepping on the toes of state regulatory commissions, who have a role in approving or rejecting transmission projects that are scheduled to be built in their jurisdictions.
Comments on the draft NOPR are due 75 days after it is published in the Federal Register, which occurred May 4. After the public-comment period, FERC will make whatever revisions it deems in the public interest. A final rule is expected by the end of 2022.
Industrial Info is tracking nearly 900 active transmission projects under development in the U.S., with aggregate value exceeding $46 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Industry Project Database can click here for a list of detailed project reports.
Regions experiencing the greatest level of transmission and distribution (T&D) project activity include the Midwest, Southwest and West Coast.
For years, clean-energy developers and transmission companies have complained of ever-lengthening queues for their projects to be considered by regional transmission organizations (RTOs) or independent system operators (ISOs), which were created under FERC authority years ago to better coordinate transmission planning across multi-state areas. Multi-state transmission groups, state regulatory bodies and utilities that will be served or affected by a proposed transmission project must approve that project before construction can begin. Delays of five years or more in securing all required approvals is not uncommon.
Proposed transmission projects that cross state lines have long been a source of concern for transmission developers and clean-energy advocates. In a case that has become a rallying cry for those stakeholders, the Missouri Public Service Commission in 2015 blocked the proposed Grain Belt Express transmission project, a 775-mile, high-voltage, direct-current (HVDC) transmission project that would bring up to 4,000 megawatts (MW) of wind-derived energy from western Kansas to Missouri, Illinois, Indiana and beyond. That project remains stuck in litigation, a decade after it was first proposed. For more on the Grain Belt Express project, see July 13, 2015, article - Grain Belt Express Transmission Project Blocked by Missouri Regulators and April 18, 2016, article - Energy Department Supports Interstate Power Transmission Project, Clearing a Path Forward.
If finalized as drafted, the NOPR "would facilitate much-needed transmission investment, improving the resilience of the grid, enhancing reliability and reducing power costs," Chair Richard Glick said April 21. "It's also going to address our nation's changing resource mix and the changing role of electricity in our society," he added.
"Transmission facilities provide a broad range of benefits," continued Glick, a Democrat. "Planning for those facilities with a longer-term, forward-looking approach, in addition to fairly allocating their costs, is essential to ensuring we are developing energy infrastructure in a manner that reduces costs and enhances reliability."
In briefing the commissioners April 21, FERC staff said the proposed rulemaking would require public utility transmission planners to:
- Identify transmission needs driven by changes in the resource mix and demand through the development of long-term scenarios, including accounting for high-impact, low-frequency events such as extreme weather,
- Evaluate the benefits of regional transmission facilities to meet these needs over a time horizon that covers, at a minimum, 20 years starting from the estimated in-service date of the transmission facilities, and,
- Establish transparent and not unduly discriminatory criteria to select transmission facilities in the regional transmission plan for purposes of cost allocation that more efficiently or cost-effectively address these transmission needs.
Another aspect of the draft NOPR would address federal rights of first refusal for transmission projects, amending the commission's Order 1000, issued July 2011. The proposed amendment would give federal authorities the option of first refusal for "transmission facilities selected in a regional transmission plan for purposes of cost allocation, conditioned on the incumbent transmission provider establishing joint ownership of the transmission facilities."
FERC staff acknowledged that the proposed rule would "remedy deficiencies in the Commission's existing regional transmission planning and cost allocation requirements." If adopted as drafted, the new rule would require public utility transmission providers to revise their existing interregional transmission coordination procedures to reflect the long-term regional transmission planning reforms proposed in this draft NOPR.
Speaking at an industry conference two weeks after the draft NOPR was issued, Glick said the commission also is looking beyond the NOPR at other ways to "promote an expedited process" for connecting new projects to the power grid. Interconnection delays "are getting worse and stunting growth of the generation resources many people are looking for," he said. He said one idea was to create a national electric grid monitor, but that was not contained in the NOPR.
During the commission's April 21 meeting, Commissioner Allison Clements said, "Americans pay billions of dollars annually extra due to transmission congestion. Extreme weather and disasters are testing a system not planned for these emerging conditions." She estimated that about 1.4 terawatts of renewable energy and energy storage projects are "stuck in queues around the country, unable to provide largely lower-cost electricity."
The commission's lone dissent came from Commissioner James Danly, a Republican, who said the NOPR is "designed to encourage the buildout of transmission specifically to encourage the development of certain types of resources," such as renewable energy, and that the draft rule would "socialize costs" on states and utilities that haven't set their own clean energy policies, a charge denied by the agency's Democratic commissioners.
Separate from the FERC action, Industrial Info held a webcast in late April on the ongoing buildout of the nation's transmission & distribution system. On that webcast, Brock Ramey, IIR's North American power specialist, said many of the proposed T&D projects that are scheduled to kick off construction during 2022 and 2023 are "mid-range" projects with 230 kilovolts (kV) or less of capacity. Many of those projects have been proposed to debottleneck the existing grid and integrate new renewable generation into the grid.
"The magnitude of backlog in the generation interconnection queues is due to the sheer magnitude of the push for the ongoing renewable energy buildout," Ramey said. "Other factors that have lengthened the interconnection queues are the RTO/ISO approval process, state permitting approval processes, challenges by special interest groups, and ongoing supply chain issues, among other things."
"It's going to take a combination of legislative and regulative to start to improve this process; this NOPR is one of many that FERC, states, and RTOs/ISOs are working on," he commented.
"There's a lot of spending being proposed to bring renewable energy from where it is generated to where it is needed, and also to dissolve planning bottlenecks," Ramey said. For related information, see April 28, 2022, article - IIR Webinar: As North American Grid Changes, Need for Further Transmission & Distribution Spending Emerges.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
