Wind Power: Resource is Free, but Transmission Lines are Expensive

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--It would cost about $25 billion over the next 20 years to build enough high-voltage transmission lines to bring wind from the Upper Midwest to load centers in the Eastern U.S., according to a study released last week by Electric Transmission America (ETA), a transmission joint venture between units of American Electric Power (NYSE:AEP) (Columbus, Ohio) and MidAmerican Energy Holdings Company (Des Moines, Iowa), a subsidiary of Berkshire Hathaway (NYSE:BRK-A) (Omaha, Nebraska). The study also received funding from American Transmission Company, Exelon Corporation (NYSE:EXC) (Chicago, Illinois), NorthWestern Energy (NYSE:NWE) (Sioux Falls, South Dakota) and Xcel Energy (NYSE:XEL) (Minneapolis, Minnesota).

The Strategic Midwest Area Renewable Transmission Study was not commissioned by a government agency. Rather, it was undertaken to show the cost and magnitude of the investment needed to bring enough windpower from the Upper Midwest to load centers east of the Mississippi River to meet a national renewable electricity standard (RES) of 20%.

"Our goal in undertaking the study is to identify issues and options for regional transmission organizations to consider as they conduct their planning," AEP spokeswoman Melissa McHenry said. "To meet a 20% national RES, we need to move the wind energy out of the Upper Midwest, where it is abundant, to load centers located east of the resource, where it is needed."

Without getting into specific transmission projects or line routes, the ETA study identified three basic transmission-line construction options:

• Build nearly 8,000 miles of lines using primarily 765-kilovolt (kV) extra-high voltage (EHV) transmission lines
• Build more than 7,600 miles of lines that include both 765-kV and high-voltage, direct-current (HVDC) lines; or
• Build more than 8,600 miles of lines that include more than 4,400 miles of 345-kV and 3,900 miles of 765-kV transmission lines.

McHenry said the cost for all three options were "pretty comparable." The $25 billion price tag is in today's nominal dollars.

Although the ETA study did not identify or recommend specific transmission projects and routes, Industrial Info is tracking a number of large, active interstate transmission projects, including:

• $2.8 billion, 700-mile, 765-kV Lower Peninsula grassroot transmission line, which is being developed by American Electric Power in Michigan, extending to Ohio
• $280 million, 345-kV grassroot transmission line in North Dakota, for Minnkota Power Cooperative.

The report evaluated transmission options necessary to support the integration of about 57 gigawatts (GW) of nameplate wind generation from the Upper Midwest into the nation's transmission network for the purpose of having renewable energy constitute 20% of the nation's electricity. The study defined the Upper Midwest as including North Dakota, South Dakota, Minnesota, Iowa, Wisconsin, Illinois, Indiana, Nebraska, Missouri, Michigan and Ohio.

"Determining the level of transmission needed to achieve the renewable energy goals of the Midwest ISO states and their neighbors was the focus" of this study, Lisa Barton, ETA's president, said in a statement. The study was designed to incorporate a high level of stakeholder input, including representatives from investor-owned utilities, state utility commissions, the Federal Energy Regulatory Commission, municipalities and wind developers. "Throughout the study process, we've met with representatives from the regional transmission organizations ... to ensure they understood the intent and focus of the study," Barton said.

AEP is the only utility in the U.S. with "extensive" experience with 765-kV EHV transmission lines, AEP's McHenry said in an interview. AEP operates about 2,116 miles of these lines, she said. The New York Power Authority (New York) operates about 100 miles of 765-kV EHV lines, she said, adding that Hydro Quebec also has experience in operating these high-voltage lines.

ETA is a joint venture between subsidiaries of AEP and MidAmerican Energy Holdings to build and own electric high-voltage (345-kV and higher) transmission assets located in North America but outside of the Electric Reliability Council of Texas (ERCOT). The two companies also have an existing joint venture agreement to build transmission in ERCOT. ETA's current joint venture projects include Prairie Wind Transmission in Kansas and Tallgrass Transmission in Oklahoma.

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