Democratic losses in the Virginia, the defeat of a transmission project in Maine and the still uncertain fate of the bipartisan infrastructure package and $1.75-trillion budget reconciliation bill in Congress were top of mind in the opening sessions of the American Council on Renewable Energy (ACORE) Grid Forum on Wednesday.

Speaking with ACORE CEO Greg Wetstone, Rep. Kathy Castor (D-Fla.), chair of the House Select Committee on the Climate Crisis, called the election results a “wake-up call” as potent as the UN’s recent “code red” climate assessment report. Released in August, the report warned the world is running out of time to avoid the worst impacts of climate change. (See Too Late to Stop Climate Change, UN Report Says.)

Castor acknowledged the clock may also be ticking on congressional Democrats. “I think there’s a great frustration all across the country with the fact that this negotiation has gone on too long. They don’t really understand the vagaries of a 50-50 Senate,” she said, referring to ongoing tensions between progressive and moderate Democrats in both the Senate and House of Representatives.

At the same time, she remained optimistic that both bills will be passed, saying the House Democratic Caucus is “100% united on the need to move to clean energy and do it swiftly.”

Castor also stressed the importance of bill provisions that will support better grid planning, encouraging “power markets to do better on cooperating on resilience” and “the DOE and FERC to be much more forward-leaning to avoid congestion and political roadblocks.”

While the central role transmission must play in grid decarbonization and economy-wide emissions reduction is the key theme at the two-day event, politics were a constant, tangential concern. Industry hopes for passage of the bills were reflected in a pragmatic panel discussion on infrastructure priorities, which focused on the incremental process of implementation that will lie ahead — and the problems neither bill may be able to solve, as the U.S. seeks to decarbonize its grid by President Joe Biden’s target of 2035.

“What’s at the forefront of my mind right now is how are all pieces fitting together, and what are the policies beyond just at a congressional level, when we get to [the] regulatory or even state level,” said Kevin Gresham, senior vice president of government relations for developer RWE Renewables America. “Where do we need to focus our intentions and work over the next really short period of time to get this underway.”

For Alex Daberko, managing director at infrastructure investor Starwood Energy, obstacles to what he called project “feasibility” are now the biggest challenge.

“Developing utility-scale, renewables has gotten more challenging, not less,” Daberko said, pointing to the three-year timeline for project development that “is sort of a rule of thumb” for wind and solar projects.

“When you can’t count on the timeline or the results from the interconnection study process, then that makes it that much harder,” he said. “And then when you’re juggling tax policies that changed four times during that three-year window and also face inflation and other things, it’s really hard to keep all the balls in the air, which is the key to successful development.”

Procuring clean energy for Walmart’s 5,300 U.S. stores is all about the three Rs, said Steve Chriss, the discount retailer’s director of energy services. “How does it benefit renewables? How does it benefit reliability? How does it benefit resilience?”

He sees expansion of transmission and distribution systems as essential for Walmart to hit its own target of running its stores on 100% renewable energy by 2035.

“We’re going to require more electricity,” Chriss said. “That electricity needs to be carbon free, and really the power quality needs to be extremely high. So that means that we need reliability when things are going well. We need resilience when things aren’t going well. And the infrastructure buildout is really critical to meet all of these needs.”

And, he added, “It’s not only about interconnection, it’s about driving deliverability to load.”

The ITC Compromise

With the Clean Electricity Performance Program — that would have paid utilities for cutting their emissions — forced out of the reconciliation bill, industry attention has turned to exactly what kind of tax credits will be in the final package and what they can accomplish.

Daberko said a stable 10-year extension of the solar ITC could unleash pent-up demand and market growth for projects that may have stalled due to the COVID-19 pandemic.

“There are a lot of people that have had to go back to offtakers with PPAs [power purchase agreements] that were negotiated a year or two ago, and the world looked a lot different,” he said. “This 10-year extension could be the bridge that makes those projects whole again. So, I think from our side and from the OEMs perspective, they expect 2022-2023 to be pretty monumental years for deployment if this passes.”

But Christina Hayes, vice president at Berkshire Hathaway Energy, said the transmission investment tax credits in the reconciliation package may have limited impact. They are “really targeted to projects that need a little bit more to kind of get over the hump,” she said, referring to an ACORE report identifying 22 shovel-ready projects that would benefit from a transmission ITC. (See Transmission ITC Could Add 20 GW of New Capacity to Grid.)

She was more positive about a prospective compromise between the House and Senate, which would set up a two-phase approach to tax credits. If enacted, clean energy ITCs would remain technology-specific — separate ITCs for solar, standalone storage and transmission, among others — for five years, the House approach. Credits would then become technology-neutral, based on emission reductions, an approach supported by Sen. Ron Wyden (D-Ore.).

“They got the order correct,” Hayes said. “Get everything started in kind of a full-throated way with the House approach, and then transition to Sen. Wyden’s approach to make sure that the incentives go on until the goal is met … to make sure that we are truly keeping an eye toward what the goal is. We’re not deploying resources so we can trade RECs [renewable energy credits]. We’re deploying resources so that we can serve customers with clean energy and retire the less-clean energy.”

Filling the Gaps

But beyond the transmission ITC and other transmission supports in the reconciliation and infrastructure bills, crucial gaps remain in the development of transmission planning and buildout, according to Castor and others at the forum.

Castor pointed to the Efficient Grid Interconnection Act that she introduced in June, which would have required FERC to allocate costs for transmission upgrades more broadly.

“Many of the network upgrades required to connect new renewable energy and storage projects benefit all customers,” Castor said. “So cost allocation should reflect that consideration of environmental benefits, including reduced carbon pollution. Conventional air pollution should be considered, and we want to encourage the use of grid-enhancing technologies to reduce the cost of network upgrades.”

While the bill did not make it into either the infrastructure or reconciliation bill, Castor sees FERC’s current proceeding on grid planning and cost allocation, the Advanced Notice on Proposed Rule Making, as another avenue to address these issues. (See Transmission Industry Hoping for Landmark Order(s) out of FERC ANOPR.)

“Our view has to be broader and more forward-looking in order to really put [transmission planning] together in a way that makes sense so we can more efficiently expand the grid … which benefits customers because it is the efficient way to do it,” said Bill Parsons of ACORE, who moderated the panel.

Gresham and Daberko cautioned that stakeholder buy-in at multiple levels will be needed to develop and execute any new processes.

At the state level, getting projects approved remains a major challenge, Gresham said. “How do you get it through local commissions and by landowners? Because ultimately, regardless of the policy and player who has authority, you still have to do a really good job of stakeholder engagement,” he said. “You still have to get local buy-in and figure out ways to really build that community support for a project.”

Daberko cautioned that big rule changes or new compliance requirements tend “to hit the brakes on deployment, because you know, every bank, every potential investor has to get comfortable with those rules and making sure that they don’t have a discontinuity in returns if they miss on some new requirement that’s not fully understood.”

For Walmart’s Chriss, another gap that needs to be addressed is the role of co-ops and municipal utilities in grid planning. Walmart gets its power from just under 1,000 utilities, with a majority of it coming from big investor-owned utilities. But, he said, “There are a lot of munis and co-ops [that] don’t actually own or are indirectly responsible for the procurement of generation.”

Small public and cooperative utilities are more sensitive to the price impacts of transitioning to clean energy because they have fewer customers, Chriss said. “There needs to be concerted efforts to find paths forward to help transition these organizations.

“It’s really about transitioning the entire grid to be decarbonized, and transmission is just a piece of that,” he said. “At the end of the day, we all want to be served by clean energy around the clock, all the time and that’s everybody; so, it just becomes the new normal. The goal of corporate procurement should be to get everyone to a point where we no longer need to do corporate procurement because the steady state of the system is clean.”