More Renewables? Not So Fast!

Wind energy displaces nearly 100 million metric tons of carbon dioxide annually. Though impressive, that is only a fraction of the six billion metric tons of carbon dioxide produced annually in the U.S. Much of this is a result of electricity generation, the largest source of greenhouse gases nationwide.

By replacing the dirtiest, least efficient, and oldest fossil-fired power plants, wind energy can play an outsized role in achieving reductions in greenhouse gas emissions economy wide. But to do so, it’s imperative that transmission constraints—the biggest impediment to a growing wind energy industry – are removed. Right now almost 300,000 MW of wind energy projects are simply waiting for an opportunity to connect to the grid.

Dozens of transmission proposals are in various stages of development. Each proposed project faces significant hurdles, rooted in reasonable concerns about fair treatment, equitable compensation, and effective planning. Getting the right lines in the right places depends on engaging stakeholders—including landowners, rural communities, and other rural leaders – in every step of the process.

Why Transmission?
Any effort to significantly reduce greenhouse gas emissions will require a dramatic expansion of our renewable energy systems. While this is roundly understood, the critical role played by our transmission system is often overlooked.

The National Renewable Energy Laboratory estimates that 120 million “‘megawatt-miles” of new transmission will be needed to reach 80 percent renewable integration by 2050. This equates to an investment of $6.5 billion each year. The Midcontinent Independent System Operator (MISO) estimates that up to $6.5 billion in transmission expansion investment will be needed by 2021 in that region alone. In the West, estimates range as high as $200 billion over the next 20 years.

These numbers aren’t surprising. For years utilities systematically ignored our aging transmission infrastructure. The Department of Energy (DOE) estimates that up to 70 percent of our transmission lines and transformers are at least 25 years old. Substantial portions of our electric grid were constructed before the Kennedy administration.

New Lines, New Locations
An emerging challenge is to site these brand new projects in brand new places – places that didn’t need transmission before.

Historically transmission lines were built and managed by a regional utility seeking to connect a large, fossil-fueled generator to a demand center. New lines were built exclusively to serve a growing population. Today population growth is no longer the sole determining factor in the decision to expand the transmission system. And transmission lines are no longer owned and managed by the utilities that built them.

Transmission lines are now needed to access the rich renewable energy resources located in the most rural, remote regions of the country. High capacity transmission projects, typically 400 kV or greater, are needed here to bring the most efficient, cost-effective resources online.

The Federal Energy Regulatory Commission estimates that of the 37,736 miles of lines greater than 400 kV, only 2,348 – 6 percent – are located in the top 10 states for wind energy potential. Astonishingly, of the 3,710 miles of lines capable of carrying capacity greater than 600 kV, only nine miles are located in states that lead the nation in capacity potential. This disparity helps explain why only 2 of the 10 states boasting the greatest wind resource potential are included among those states with the highest installed wind energy capacity.

Do Developers Need Best Practices? (Yes, they do. )
Putting a new generation of clean energy transmission in place will allow high-resource regions to reach their potential. The obvious danger is that public opposition, environmental concerns, and bureaucratic inefficiency could combine to prevent needed investment.

How can clean energy transmission providers avoid the conflicts that often delay projects?

Part of the answer lies within ensuring the fair treatment of landowners. So does the early and meaningful engagement of stakeholders. We have identified several steps utilities and developers can take to improve their relationship with affected landowners. (Look for a new white paper on this topic later this month.)

At a minimum, each utility or developer should engage landowners early and often. They should improve their online presence, explain the regulatory processes, and use agricultural mitigation agreements.

Opening cultural and environmental resource databases to the community would help, as would increasing setback distances from homes, and exploring alternative compensation models.

Do Developers Need Eminent Domain? (Yes, they do. )
While stakeholder engagement plays a critical role in avoiding project-delaying conflicts, transmission providers often find any advantage gained can be quickly lost through the contentious process of easement negotiation. Trust, open communication, and full information can together be the difference between a cost effective conversation and a protracted public relations disaster.

For some utilities, the latter is of little concern. If easement negotiations break down, the transmission provider can almost always fall back on eminent domain. But this approach has faults.

  • It doesn’t account for the value each landowner places on a parcel of land, nor does it compensate landowners based on the heightened land values that come from land assembly and potential development.
  • It fails to account for the decrease in value of each landowner’s remaining land.
  • Its use can have a dramatic effect on the cost of siting as project developers pay millions for litigation and state agency administrative costs. Just one holdout can delay development for years.

While eminent domain is important as a necessary last resort, providing viable alternatives will accelerate siting of the infrastructure needed to deliver renewable energy. Options include:

  • Special Purpose Development Corporations allow the landowner to choose between receiving the traditional fair market value for the parcel and electing to receive shares in the project.
  • Tender Offer Taking enables developers to test landowner interest in several corridors by drawing proposed boundaries for a given project, and offering an above-market price for all landowners within the boundary.
  • Self-assessment enables landowners to report the value of their land once a plan to condemn is announced. The landowner’s tax liability is then adjusted to the reported value.
  • Annual payments allow landowners directly impacted by transmission projects to receive compensation tied to the amount of power transmitted on the line each year the project is in service.

Closing Thoughts
Wind power can and will play an important role in our energy portfolio moving forward. The obvious benefits to our communities, our environment, our economic well being are too numerous to ignore. Our ability to use these benefits depends on putting the right infrastructure in the right places.

Like the railroad tracks credited for transforming the agricultural economy of the Great Plains decades ago, this technology has little value unless we can efficiently and effectively find a way to move the energy we produce here at home to the markets that depend on it.

More on this topic can be found in “Siting: Finding a Home for Renewable Energy and Transmission” in the October 2013 edition of The Electricity Journal (Volume 26, Issue 8).