NEW GRID & SMART GRID, GOOD IDEAS TO BUILD ON

There is an unlikely pairing of endorsements for the part of President Obama’s stimulus spending aimed at modernizing the nation’s power transmission grid: Both the engineers at WIRES (Working Group for Investment in Reliable and Economic Electric Systems) and the money mavens at the Financial Times of London like the plan.

Engineers and financiers dancing together? That doesn’t happen often. Usually they're at each others' throats. Engineers: "We need more money!" Financiers: "Design it better!"

Not about transmission.

Will Kaul, President, WIRES: “After a quarter century of declining transmission investment, growing demand for electricity and expanding power markets, the country needs substantial transmission investment…President Obama’s commitment to grid modernization is a powerful signal of the central importance of transmission to our clean energy future…”

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The Financial Times endorsement was even more enthusiastic: “A smart grid would be a national asset comparable to the interstate highways launched by President Dwight D. Eisenhower in the 1950s. It would make possible a huge increase in the use of renewable energy in the US, connecting up vast wind farms in South Dakota or solar arrays in New Mexico to the centres of population on the coasts. It would enable the network to manage the intermittency that is inherent to wind and solar power, balancing supply and demand when the wind does not blow and the sun does not shine. It would also cut the losses caused by transmitting electricity, and make the network more resilient to equipment failure, preventing blackouts.”

Engineers and financiers, more wires and smart wires, people transport and electron transport. Maybe there really is a new spirit of cooperation in Washington, D.C.

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The downside: WIRES’ engineers say the $11 billion allotted in the stimulus package passed by the U.S. House of Representatives January 28 is little more than a good start on the kind of system described by the Financial Times.

The upside: The stimulus bill is just the beginning for New Energy. An energy bill is coming later in the year to build on it. Among the many provisions to be fought out in that legislation will be full funding for a modern transmission system of 765 kV wires managed with sophisticated information technology and extending from the sources of power generation to the end users.

Aside: Also expected in the energy bill later this year – over which there will likely be one fine political donnybrook – are (1) a national Renewable Electricity Standard (RES) requiring U.S. utilities to obtain a specific portion of their power by a date certain (probably 10% by 2012 and 25% by 2025) and (2) climate change legislation putting the U.S. on track to cut its emissions to 1990 levels by 2020 and 80% by 2050 through a mandated cap-and-trade system.

Nobel prize-winning physicist Steven Chu, the new Secretary of Energy appointed by President Obama and a former member of the National Academies’ America’s Energy Future transmission subcommittee, estimates the cost for adequate new U.S. ”smart” transmission at $1 trillion.

Trials suggest “smart” transmission can make more use of New Energy sources from both large project generation (i.e., solar power plants, wind installations, hydrokinetic installations) and distributed generation (i.e., rooftop solar panels, small wind turbines, home geothermal systems) and cut 10-to-15% from the the $400 billion/year U.S. electricity bill. That is at least $40 billion/year in cost savings. A “smart” grid would therefore pay for itself in no more than 25 years.

A smart grid uses computer technology to manage the flow of transmission, integrating supplies and demands. It works with smart meters at the sites of consumption (homes and businesses) that monitor energy use and assist consumers in making more efficient choices.

Building more New Energy (large project generation and distributed generation) is a challenging but much simpler undertaking than expanding and renovating the transmission system to deliver it. Yet, in the absence of these improvements, New Energy cannot achieve its full potential. More importantly, without new transmission there may very well be interruptions of vital power supplies in the foreseeable future.

Vic Abate, head of renewable energy, General Electric Co.: "Our customers are telling us that they're already seeing transmission bottlenecks with their future plans…"

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There are 2 key obstacles to the building of new transmission. The first is cost. Once estimated at $1 million per mile, a recent California project ran to $16.5 million per mile. Over the breadth of the U.S., that’s big money. Such investment requires timely return. That cannot happen because of the second obstacle, regulatory complexity. Projects must be integrated into an existing web of wires as well as approved by a vast array of environmental overseers.

Jim Hoecker, former Chairman, Federal Energy Regulatory Commission(FERC)/ legal counsel, WIRES: “There are significant regulatory and operational barriers to entry…We have yet to figure out how to better plan, site, integrate and pay for major expansions and upgrades to the high-voltage system...Congress must focus on addressing today’s unnecessarily complicated and protracted regulatory processes.”

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The permitting process has been known to delay transmission projects a decade.

Lew Milford, Clean Energy States Alliance, on regulatory obstacles to new transmission: "It's one of those tricky good-versus-good problems -- trying to move more renewable energy but in an environmentally friendly way."

Perfect example: The U.S. Forest Service.

Robert Mitchell, chief executive, Trans-Elect: "If you are the chief forester and it is your responsibility to protect forest, probably the last thing you want to happen is to have transmission lines built through the forest…"

California Governor Arnold Schwarzenegger, whose advocacy for New Energy brought him into the struggle for new transmission, recently wrote to President Obama, asking for "… clear policy within the U.S. Bureau of Land Management and other federal agencies to prioritize renewable energy project development and transmission on federal lands."

Wyoming Governor Dave Freudenthal, who wants new transmission so his state can deliver its enormous wind energy resource to population centers in the southwest, also wrote to the new President: "For several years, transmission has been the recognized bottleneck…"

In conjunction with the benefits for new transmission included in the stimulus package, Governor Freudenthal pointed out something else: "There have been no incentives for the guys who want to take the transmission risk…Maybe the federal government has to step in ... to provide that help so that lines get built…"

It would appear that the engineers, the financiers and the new President agree with the Wyoming and California Governors. The question remaining: Do enough Republican Senators agree?

Take the time to click through Electric Transmission 101; How the Grid Works

Smart Grid: How Does It Work and Why Do We Need It? is a 2-hour video seminar on transmission and the "smart" grid.

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Smart idea for US energy policy
January 25, 2009 (Financial Times)
and
WIRES Expresses Support for Transmission Portions Stimulus Package, But Warns Congress Must Do More
January 28, 2009 (WIRES)
and
Alternative energy faces power line "bottleneck" in U.S. West
Jim Christie (w/Bernie Woodall, Scott Malone and Christian Wiessner), January 21, 2009 (Reuters)
and
Electric Transmission 101; How the Grid Works
January 15, 2009 (WIRES and EESI)

WHO
WIRES (Working Group for Investment in Reliable and Economic Electric Systems) (Will Kaul, President); EESI (Environmental and Energy Study Institute); Jim Hoecker, former Chairman, Federal Energy Regulatory Commission(FERC)/ legal counsel, WIRES; California Energy Commission (CEC); California Governor Arnold Schwarzenegger; Wyoming Governor Dave Freudenthal; President Barack Obama; Secretary of Energy Steven Chu

WHAT
WIRES, EESI and the Financial Times of London all endorsed the aspects of President Obama’s economic stimulus package aimed at transforming U.S. power transmission.

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WHEN
- WIRES says there are few ‘shovel-ready’ transmission infrastructure projects that
will create jobs tomorrow because financing and regulatory obstacles delay transmission development up to a decade.
- Rural electrification was one of the great and enduring achievements of President Roosevelt’s 1930s New Deal. The recession of the early 21st century offers President Obama the opportunity to update it.

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WHERE
- New transmission is needed to span the U.S. just as the EU is planning for a "Supergrid" to span Europeand the Mediterranean.
- California’s Sunrise Powerlink, a $1.9 billion, 120-mile long, 1,000-megawatt power line from the inland Imperial Valley to the San Diego Bay area planned by Sempra Energy, was recently approved by the CEC and awaits approval by the U.S. Forest Service and other federal agencies.
- Wyoming has even bigger transmission ambitions awaiting federal approvals streamlining.

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WHY
- The Obama stimulus plan passed by the House of Representatives January 28 allots $11+ billion for new, smart transmission.
- Obstacles to new transmission: (1) Cost; (2) Regulatory complexities.
- The purpose of a “smart”grid is the management instead of the mere transmission of electricity. Computer intelligence follows the use of electricity in 2 ways: (1) Supply and demand is managed between the sources of power generation and the grid, and (2) Consumption is managed between the grid and the end-users.
- According to newly–appointed Obama Secretary of Energy Steven Chu, a Nobel laureate in physics, the cost for a U.S. “smart” grid is estimated to be $1 trillion. A “smart” girid should save 10% of the $400 billion/year in electricity consumed. That is $40 billion. A “smart” grid would therefore pay for itself in 25 years.
- In some places in the U.S., new transmission will cost as much as $16.5 million a mile.
- T. Boone Pickens' Pickens Plan estimates the cost for the new transmission needed to generate 22% of U.S. from wind at $70 billion.
- Among the agencies with permitting/regulatory control over new transmission are those that manage natural resources, wildlife, parks and native populations.

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QUOTES
- Will Kaul, President, WIRES: “WIRES strongly endorses the steps being considered by Congress and the Obama Administration in this area…But this $11 billion represents just a small fraction of what is needed to build a 21st century transmission system. It will take a major infusion of private as well as government capital to do the job…”
- Jim Hoecker, former Chairman, Federal Energy Regulatory Commission(FERC)/ legal counsel, WIRES: “...Right now, the average lead time for transmission development will effectively delay the advent of the green energy economy for up to a decade or more...”
- George Given, head, Wood Mackenzie global power unit: "[New transmission is] all over the map…If you're building over Texas, which is relatively flat ... you don't have so many issues. But if you're building in mountains, it's monumentally different work."
- Rich Halvey, energy program director, Western Governors Association: "Nevada is, what, 90 percent federally owned? We're continually stymied because of how long it takes to get transmission projects approved and built."