Monday Study: Ideas For Fixing The U.S. Big Grid

Macro Grids in the Mainstream: An International Survey of Plans and Progress

James McCalley and Qian Zhang, November 2020 (Americans for a Clean Energy Grid/Macro Grid Initiative)

Executive Summary

This report addresses interregional transmission and Macro Grids, to illuminate the value of developing transmission systems of this kind in the US. By interregional transmission, we mean transmission between two or more distinct geographical regions that are otherwise planned and operated separately, or between two or more distinct geographical regions that are separated by significant distance. By Macro Grids, we mean a network of interregional transmission lines, generally expansive in geographical scope. People have also used supergrids as an alternative to Macro Grids, both of which are used interchangeably throughout this report. The interest in interregional transmission and Macro Grids has grown worldwide, on every continent, because there is strong perception the benefits it provides are of high economic value and significantly outweigh the costs of providing it. The fact that interregional transmission and Macro Grids are of worldwide interest leads to the purpose of this report, which is to inform the US energy policy and engineering communities of answers to the following four questions:

(i) Worldwide summary: To what extent are the various regions of the world studying, planning, and building interregional transmission and Macro Grids?

(ii) Benefits, costs, and characteristics for successful implementation: What is the perception of interregional transmission and Macro Grids around the globe in terms of perceived benefits, costs, and characteristics for successful implementation?

(iii) Engineering design: What basic steps are necessary in order to motivate and perform an engineering design of interregional transmission or a Macro Grid?

(iv) Consolidating and coordinating mechanism: What potential consolidating and coordinating mechanisms are necessary to accomplish an interregional transmission project in the U.S.?

In the US, the power industry evolved with hundreds of utilities that were vertical siloes of local generation serving local load. Regional institutions have only been added in this century and have barely begun to pursue interregional transmission between them. Interregional transmission was a job that was never clearly assigned to FERC, DOE, or any other entity. It is time for the change.

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The following are some key messages resulting from this report:

• Macro Grids and high-voltage interregional transmission connections are either already in place, under development or being considered almost everywhere in the world.

• China has recently completed five times more high-voltage interregional transmission than Europe, and over 80 times more than the U.S.

• The European Union is planning and building high-voltage transmission to support the development of offshore wind in the northern seas.

• The U.S. should review its policies to address current challenges to interregional transmission and Macro Grid development.

• The same physics and economics generally apply everywhere, so Macro Grid development is a natural and unsurprising next stage of electric industry evolution. Reserve sharing and diversity has always been a feature of power systems but it is becoming much more pronounced given weather-driven (wind/solar) resource reliance.

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Worldwide Summary

The worldwide interest is indicated in Figure 1, which shows for each area of the world the amount of interregional transmission capacity that has been built since 2014 or is likely to be built in the near future based on the extent to which permitting and land acquisition is underway. These numbers are also visualized in the bar chart below. As Figure 1 demonstrates, significant interregional lines are planned or under development in Asia and Europe, which are expected to result in significant economic growth, job creation, and carbon emission reductions. In contrast, North America lags behind all other regions, with the exception of Australia and Africa, in developing interregional lines to integrate the lowest cost clear energy resources. Several groups in the US have recently conducted studies to explore the benefits of interregional transmission and Macro Grids. Of these, the US Interconnections Seam Study, led by the National Renewable Energy Laboratory, has generated significant interest by proposing a Macro Grid that spans most of the US, but if extended into Canada and Mexico would be continental. Groups around the globe have conducted continental studies for other areas. Figure 2 illustrates an aggregation of the topologies resulting from many of these studies. Most of these studies represent visions rather than projects in advanced stages of development.

Salient features of some of the worldwide designs are summarized in what follows…

North America…Europe…China and Northeast Asia…India and South Asia, Southeast Asia, and Australia…Russia…Africa…Central and South America…

Benefits and Costs

Benefits associated with interregional transmission and Macro Grids include cost reduction via sharing; economic development; improved reliability; enhanced resilience and adaptability; increased renewable levels; and lowered cost of reducing emissions. Of these, the first and second represent direct economic benefits. The first benefit, cost reduction via sharing, results from the ability to share energy, flexibility services (i.e., reserves related to regulation, contingency, and ramping), and peaking capacity between regions.

The second benefit, economic development, occurs because cost reductions are reflected in savings ultimately passed on to electricity consumers raising the competitiveness of the commercial and industrial sectors while enabling increased household spending. In addition, interregional transmission stimulates infrastructure development in the form of new supply resources. This infrastructure development provides lease payments to landowners, increases property tax revenues, and creates jobs, all of which are significant for both local and national economies. Economic development of this nature is will be increasingly important as nations around the globe grapple with ways to offset the economic impacts of the COVID-19 pandemic.

The third and fourth benefits, improved reliability, resilience, and adaptability, enhance the grid’s ability to continue performing well under conditions where the power system is exposed to unexpected conditions. The fifth benefit results in the ability to integrate increased levels of renewable resources. The last benefit, lowered cost of reducing emissions, applies to the socalled criteria pollutants (carbon monoxide, lead, ground-level ozone, particular matter, nitrogen dioxide, and sulfur dioxide) and carbon dioxide (CO2).

The main costs associated with developing interregional transmission and Macro Grids are transmission line costs (including public outreach, regulatory approval, and permitting) and substation costs (including the cost of converter stations for HVDC). Of these costs, it is typical for interregional transmission to incur more line costs per GW-mile for public outreach, regulatory approval, and land owner negotiations. In the US, the amount of time required to plan and build interregional transmission is long, ranging from 7.5 years to as much as 13 years, and the overall process is complex, with many uncertainties that create high risk of increased project cost and of premature termination. This increased risk creates disincentives for organizations to initiate interregional transmission projects; such risk can be reduced by simplifying and shortening these processes.

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Characteristics for Successful Implementation

There are three overriding characteristics that facilitate the successful development interregional transmission: (1) consensus to develop; (2) approach to fund; and (3) public support.

A consensus to develop requires establishing a consensus strategy while defining the strategic values of the project to each participant and identifying those who will likely support the project and those likely to oppose it. There are at least five ways to fund interregional transmission projects: a merchantdriven investment; utility-group approach; a government initiative; a multiregional coordination; and a hybrid approach. The third characteristic for successful implementation is public support, which requires intentional and dedicated outreach to stakeholders using various communication and engagement methods to facilitate two-way participatory dialogue about the need for and impacts of a proposed transmission project.

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Engineering Design

An interregional transmission design should take advantage of the strengths of both AC and DC technologies, combining AC in doing what AC does best with DC in doing what DC does best. AC excels in local collection of resources because it provides what might be called “on-ramps” within an AC transmission network at relatively low cost via AC substations. DC transmission is capable of moving power very long distances with low losses, making it economically attractive to move energy, ancillary services, and capacity from a region where it is low-priced to other regions where they are high-priced. Ultimately, technology choices for interregional transmission focus on four main issues: (1) whether the line needs to be underground or underwater; (2) the transmission distance; (3) the effect of losses; and (4) whether the transmission will span two or more asynchronous grids. There are four central steps to take in designing interregional transmission or Macro Grids: techno-economic design; resource adequacy evaluation; contingency analysis and control design; and resilience and adaptability evaluation. Although additional steps are necessary before construction, these four steps enable quantification of a project’s benefits.

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A 21st Century Vision

We provide a hypothetical vision of a potential option; this vision has not been studied and is offered to provide a sense of what a Macro Grid network might look like for the US. Further study is needed.

We imagine an HVDC Macro Grid spanning the continental US from the Atlantic seaboard to the Pacific coast, and from Florida, the Gulf coast, and Southern California northwards to Canadian border, with the easternmost north-south link in the Atlantic serving the region’s offshore wind. Figure 3 illustrates this vision.

The overall HVDC grid could offer an attractive benefit-tocost ratio for an eventual integration of over large amount of renewable capacity. Much of the benefit is driven by annual load diversity which allows shared capacity and significantly reduces what individual regions would have to build otherwise. CO2 emissions in the power sector are a small fraction of their 2020 levels. Retail electricity prices will drop by several percent throughout the country.

In our hypothetical scenario, the Macro Grid was designed by a multiregional collaborative stakeholder group comprised mainly of experts from the RTOs with vendors and consultants hired where appropriate; a sister organization consisted of representatives from each state’s regulatory body. Development and construction of this system was funded by merchants, utilities, state governments, and the Federal government.

Merchant and utility developers were incentivized to build consistent with design and competed for links based on long-term planning auctions. Federal government supported what merchant developers would not build while intimately coordinating with local government and industry. Routes utilized existing rail, highway, and transmission line rights-of-way as much as possible, but where siting issues arose, underground designs were used.

The HVDC national grid operator controls the HVDC network. RTOs retain regional control of the AC network. Power generally flows west-to-east and south-to-north during daytime hours and reverses these directions during nighttime hours. The system is self-contingent, i.e., its operational rules provide flow limits in each link which enable operating within all limits while safely withstanding loss of any one link…

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