ARLINGTON, Va. — Despite growing fears about the spread of the COVID-19 coronavirus, Infocast’s annual Transmission Summit East once again drew about 100 industry professionals last week to the top floor of the Key Bridge Marriott, with its grand view of D.C. from across the Potomac River.
There were only a handful of cancellations because of health concerns, including a few that led to the scuttling of a panel. Aside from some awkward elbow bumps instead of handshakes, there were few signs that the virus was a source of stress for attendees.
Rather, the chit-chat between panels indicated there was more concern about the direction of FERC than a potential pandemic. The consensus among both panelists and attendees was that FERC — and the U.S. in general — lack a clear vision of what the grid of the future should look like and, therefore, how to plan for it.
As is always discussed at any conference when transmission is a subject, the difficulty developing interregional transmission and the ineffectiveness of Order 1000 — even as demand for renewable power increases — was top of mind for many speakers. But as Congress discusses several energy policy bills, and Election Day draws closer, many speakers seemed to be in wait-and-see mode; unlike last year, no one suggested any ideas or proposals for how to solve the problem. (See “Hoecker, Demarest Propose Interstate Tx Siting Bill,” Overheard at Transmission Summit East 2019.)
“One of the key things is that FERC needs to adopt a clear and consistent policy of supporting needed transmission,” Larry Gasteiger, former FERC chief of staff and now executive director of WIRES, said in a keynote address opening the summit. “It needs to get off the bench; it needs to get into the game and become a loud, vocal, consistent promoter of getting transmission built. … Frankly, in the last decade or so, FERC’s gotten wobbly on transmission. … There’s a very inconsistent track record of their decisions.”
‘What are we truly planning for?’
Gasteiger concluded his remarks by saying that FERC shouldn’t roll back return on equity adders established to incent transmission investment.
That naturally set up the topic of the first panel of the summit: the commission’s inquiry into whether it should continue to grant adders based on transmission projects’ risks and challenges or their benefits (PL19-3, PL19-4). (See Stakeholders Spar in FERC Tx Incentives Docket.)
But panelists generally agreed the current incentive structure was fine; it’s transmission planning processes that need to be updated to match the changing resource mix, they said.
“To date there’s only been one way of building transmission, and it really hasn’t changed over the last 75 years,” said Hudson Gilmer, CEO of LineVision, which provides transmission line monitoring equipment. “It’s either building new towers and wires, or upgrading and reconductoring existing lines. … The traditional way is out of step with the variability and dynamism of our grid given the new generation profile we see. …
“Right now, we have perverse incentives that really almost put the transmission owners in a regulatory straitjacket that says in order to serve their shareholders, they have to deploy capital and [build] major projects.”
“The issue is, in PJM at least, it’s … very contentious. It is also very litigious at this point, with lots of lawsuits being filed at each other,” said Mike Kormos, senior vice president for wholesale markets and transmission policy at Exelon, and former PJM COO. “And therefore, it really has put the planning process in a bind.”
Advanced technology cannot compete because of its costs, he said. “It’s very hard in a competitive process [to choose] a project that is more expensive than something else simply for the fact that it’s neat, [unless] we get clearer direction from FERC about how the RTOs should value those technologies.” He gave the example of a more expensive battery solution versus the traditional solution of reconductoring.
“Everybody wants transmission, but they want someone else to pay for it,” Kormos said later in the discussion. “Everybody’s fine with what comes out of the planning process as long as they’re not footing the bill for it. So I think that’s where we need to get more certainty: What are we truly planning for? How are we valuing it?”
Some of these sentiments were echoed later in a panel on reforms to regional and interregional planning processes.
“What ends up happening is sort of this lowest-common-denominator approach, where stakeholders agree on near-term issues that have the least amount of uncertainty,” said Nathan Benedict, manager of regulatory strategy for ITC Holdings. “We’re not looking for a holistic, proactive approach to planning that’s needed to cost-effectively address these new challenges on the system.”
He pointed to MISO’s and SPP’s massive generation interconnection queues. “Now granted, a lot of this is speculative generation that will not come to pass, but then the question becomes, how do you cost-effectively interconnect this generation in a way that makes sense for customers? Right now what’s happening are piecemeal interconnections with generators bearing substantial costs to get this generation interconnected.”
No Need for Interregional Projects?
On a panel of RTO representatives, Craig Glazer, PJM vice president of federal government policy, acknowledged complaints about the lack of interregional projects. “But a lot of things have happened” since FERC issued Order 1000, he said. “No. 1 is congestion on the system is way down. No. 2 is we’ve had significant buildouts on the MISO system [and] … on the PJM system. As a result of that, we don’t see the need for big interregional projects across our respective footprints.”
Glazer also rebutted the common argument that long interstate lines are needed to move power from renewable-saturated regions of the U.S. — wind in the Midwest and solar in California, for example — to load centers where states and municipalities have set ambitious emission-reduction goals.
“In our footprint, where we’ve got a lot of load, people don’t want it,” he said. Governors in coastal states want to develop their own in-state renewable resources, especially offshore wind, “even though it might be cheaper to import from MISO or SPP. … Until we figure out that issue, some of that wind is going to stay bottled up in SPP.”
Challenges of Interconnecting Offshore Wind
One panel discussed the need for more transmission specifically to interconnect the coming influx of offshore wind generation.
“If the U.S. follows the trend in Europe, we’re going to have so much wind; there is so much capacity and potential here, both for fixed-bottom and floating, that it would be ill-informed of us as an industry to not want to consider a coordinated, planned approach in the future,” said Kirsty Townsend, head of special projects in the U.S. for Ørsted. “I would encourage all relevant bodies within the states to initiate that process now.”
A native of the U.K., Townsend was able to provide the lessons learned from the European offshore wind industry. “This is not just a flash in the pan,” she said. “The whole of Europe is talking about connecting countries with wind farms to expand into the European grid, something that wasn’t even on the radar. So if this industry is going to be as big as we need it to be for our climate goals, then we need to start thinking now about how to deliver that massive-scale vision.
Fellow panelist Joshua Gange, renewable energy program transmission specialist for the U.S. Bureau of Ocean Energy Management, asked Townsend to compare working across RTOs to working across countries.
“I think it’s easier to work across countries in Europe,” she replied, prompting laughter from the audience. Not only do countries work more closely together, European ratepayers do not subsidize transmission projects as occurs in the U.S. “How can you ensure that the advantages of connecting a grid between New York and New Jersey is equally shared across PJM and NYISO? You can’t. But that’s the issue you’re going to have to face that Europe doesn’t have to.”
– Michael Brooks
