This story is part of CNBC’s “Transmission Troubles” series, an inside look at why the aging electrical grid in the U.S. is struggling to keep up, how it’s being improved, and why it’s so vital to fighting climate change.
Building large-scale transmission lines that carry electricity across the United States has the potential to be an extremely cost-effective way to reduce greenhouse gas emissions while also improving reliability of the country’s energy grid.
But the energy grid in the U.S. has developed over decades as a patchwork of thousands of individual utilities serving their own local regions. There is no incentive for energy companies to see the forest for the trees.
“The system we have for planning and paying for new transmission does not adequately value or promote the vital benefits of interregional transmission. Transmission planning does not sufficiently take into account the benefits of a holistic system over the long term,” Gregory Wetstone, CEO of the non-profit American Council on Renewable Energy, told CNBC.
The regulatory framework that has evolved surrounding those local utilities and their electricity transmission processes completely short-circuits when it comes to planning longer, bigger-scale transmission lines.
“Lines crossing multiple states have to receive permits from many local and state agencies, and a single county can block the construction of a new transmission line that would benefit the entire region,” Wetstone told CNBC. “Imagine trying to build the national highway system that we now have if any single county along the way could block the entire project. It simply wouldn’t have been possible.”
The Department of Energy is in the process of conducting a National Transmission Planning Study,to look into all of this. The government’s Pacific Northwest National Laboratory and its National Renewable Energy Laboratory are working on executing that work, but the results of that study will not be published for some time, a NREL researcher told CNBC.
Unless the U.S. can modernize its electric grid and update the regulatory processes surrounding construction of new lines, the country’s climate goals will be harder and more expensive to achieve.
Why a macro-grid is a cost-effective climate win
Currently, electricity generation results in 32 percent of carbon dioxide emissions in the United States .To mitigate the effects of global warming, electrical generation needs needs to move from burning fossil fuels, like oil and coal, to emissions-free sources of energy, like wind and solar.
One way of reducing emissions caused by electricity is to build as much clean energy generation as close as possible near to where the electricity is needed.
But building longer transmission lines, to carry wind and solar power from regions where those resources are abundant to the places where demand is highest, would actually be a cheaper way of reducing emissions.
“Multi-regional transmission designs enable the highest reduction in cost per unit of emissions reduction,” James McCalley, an electrical engineering professor at Iowa State University, told CNBC.
There are three reasons why:
Tapping into the most abundant resources. First, large-scale, multi-regional transmission lines — often called a “macro grid” — would connect the most powerful renewable energy sources with the highest demand centers, McCalley said.
“Many mid-U.S. states have excellent wind resources, and the southwest U.S. has excellent solar resources, but the population is insufficient to use them,” McCalley told CNBC. “Population density rises as you get closer to the coasts. Transmission lets you build rich resources and use them at the heaviest load centers.”
Balancing supply with demand over time zones and seasons. Second, transmission lines that span time zones would let the most effective power generating resources go to the region that needs the power when it needs it. “During the course of a 24 hour period, regions in different time zones peak at different times, and so the best resources in one non-peaking region and be used to supply demand at another peaking region,” McCalley told CNBC.
Similarly, large scale transmission would allow regions to share power generation to meet their annual capacity needs.
“Regions today require that they have total installed capacity equal to about 1.15 times their annual peak load. But the annual peak load occurs at different times of the year for different regions. So multi-regional transmission would enable sharing of capacity,” McCalley told CNBC.
For example, the Pacific Northwest peaks in energy demand in early spring and the Midwest peaks during summer months. They could, if connected, borrow from each other, “enabling each region to avoid constructing new capacity,” McCalley said.
Better reliability. Finally, improved energy sharing would also lead to a more reliable energy grid for consumers.
“After decades of underinvestment, our current grid is ill-equipped to handle the energy transition or increasingly frequent severe weather events,” Wetstone told CNBC. So in addition to making clean energy available cheaply, “a macro grid would also allow for the transfer of energy to prevent blackouts and price spikes during extreme weather events,” Wetstone said.
A 2021 NREL study, “Interconnections Seam Study,” found benefit-to-cost ratios that reach as high as 2.5, meaning for each dollar invested in transmission that connects the major components of the U.S. power grid — the Western Interconnection, the Eastern Interconnection, and the Electric Reliability Council of Texas — would return up to $2.50.
Why the US does not have a macro, cross-regional grid
“Who pays for transmission I think is the biggest problem,” Rob Gramlich, the founder of the transmission policy company Grid Strategies, told CNBC. “It’s a freaking mess,” he said.
Currently, transmission lines that are constructed in the U.S. have to go through a years-long planning, approval and regulatory process where all of the utilities, regulators and landowners determine who benefits and how much each beneficiary should pay.
“Figuring out how to share costs among the many parties that would benefit from (and be impacted by) new transmission can be contentious, as can navigating permitting processes at the county, state, and federal levels along new routes,” explains Patrick Brown, a researcher working on transmission issues at the NREL.
In addition, local stakeholders often dig in their heels in when a new transmission line has the potential to undercut their existing business.
“The majority of new transmission is built for local needs and disconnected from any regional or interregional planning. Not surprisingly, the owners of these local projects seek to protect their transmission and generation earnings from being reduced by less expensive renewable resources that would be brought onto the grid as a result of interregional transmission,” Wetstone told CNBC. ”So the broader societal benefits of a larger and more resilient grid are often ignored.”
It will be especially challenging to determine exactly who benefits exactly how much for a transmission line that spans the entire country.
“The system in and of itself is a benefit to the nation,” McCalley told CNBC. “The principle of ‘beneficiaries pay’ is harder to implement in that case.” So there’s no clear answer yet on how a macrogrid line would be paid for.
“My view has been the federal government, in concert with state government, in concert with developers — that it’s got to be a coordinated, complementary division of funds somehow, between those three, and whether it’s 95-5, or 30-30-40 percentage, I don’t know,” McCalley said.
For example, the larger utility companies in the US (like PG&E, American Electric Power Company, Duke Energy, or Dominion) could partner with the companies that make this kind of transmission technology, and with federal power authorities (like the Bonneville Power Administration, Western Area Power Administration, Southeastern Power Administration and Southwestern Power Administration) to coordinate a macro-grid construction project, McCalley said.
‘Get them in one room’
Despite the current morass of planning and building transmission lines in the U.S., “there are also many ways to overcome these barriers,” Brown at NREL told CNBC.
“Existing rights-of-way can be reused; new federal guidelines could encourage proactive interregional planning and coordination and help identify the highest-priority expansion options; and public engagement and community ownership can help get local stakeholders onboard.”
Regulators ought to be forced to work together, according to Konstantin Staschus, who has been working with transmission for his entire career, both in the U.S. and in Europe.
When the Midcontinent Independent System Operator, one of seven regional planning agencies in the United States, plans transmission line construction plans, it starts with a massive meeting. At the kickoff for its next round of transmission planning, MISO had a three hour planning meeting with 377 people in the meeting.
In the same way all of those stakeholders are pushed together to hash out their differences, so too should that happen for larger scale planning, according to Staschus, who was the Secretary-General of Europe’s transmission planning body, the European Network of Transmission System Operators for Electricity, for the first eight years of the regulatory body’s existence, from 2009 to early 2017.
“Get them in one room. Make them plan nationally. Make them redo it every year,” Staschus told CNBC.
“If they do that and if they’re experts — scratch their heads for months, figure out all the data and argue about the assumptions and the cost allocation, and they come with a proposal to their own management and convince them and then the management goes together to the various regulators and convinced them,” then the U.S. will be on a better path, Staschus told CNBC.
“But if you don’t treat it like a countrywide system, you won’t start this process.”
For Johnson of MISO, though, these kinds of idealistic discussions of building a national system come from people who don’t truly understand the challenge of getting a transmission line built even on a regional basis. For instance, the lines might run through entire states that don’t pull energy from that system.
“Those things are going to be far more complicated than what people are aware,” Johnson said. The challenge is not designing a transmission line, Johnson says, the challenge is determining who benefits how much and how much they have to pay.
What Johnson sees as more likely is stronger connections at the seams from one planning region to another. “I think of it kind of like a bucket brigade,” Johnson said, where one region can more seamlessly share power with its next door neighbor.
Jesse Jenkins, who is Princeton professor and a macro-scale energy systems engineer, says that while national-level grids are attractive, these interregional grids are essential.
“I don’t think we necessarily need a continent-scale macro grid, although there are plenty of studies showing the benefits of a such a ‘interstate highways’ system for transmission, so it would be nice to have,” Jenkins said. “What we absolutely need is a substantial increase in key inter-regional long-distance transmission routes. So it’s not all local lines (e.g. within single states). We need a lot of new or expanded/reconductored multi-state corridors as well.”
If the US can’t get national lines built, then interregional lines are better than nothing, agrees McCalley. But emissions reductions will remain more expensive than if we built a national grid.
“If we rely on what we have done in the past, it would be really hard because every state weighs in, and every state gets veto power, essentially. And so that won’t work,” McCalley said.