SAN DIEGO — Transmission industry owners, operators, generators, regulators, financiers and other key players from the Western U.S. attended Infocast’s 8th annual Transmission Summit West last week. They discussed the strategic, regulatory, investment and technology issues facing the industry.

Western Regionalization

CAISO’s Stacy Crowley, vice president of regional and federal affairs, pushed the benefits of ISO participation in her solo presentation, saying, “Utilities and stakeholders have found these ISOs to be valuable, as far as providing cost-effective power.

“We know in the Midwest, states like Iowa could not have reached their renewable standards without an ISO. We’ve seen entities around the Northwest asking if there are efficiencies with a larger market. Clearly, a board appointed by the California governor and approved by the State Senate would not fly in a regional ISO. California clearly has the largest load of any state in the West, but a regional ISO must speak for everyone and their policies.”

ColumbiaGrid CEO Patrick Damiano agreed, but he made the case that coordinating planning doesn’t require a centralized market.

ColumbiaGrid conducts transmission planning and other coordination for its eight members: Avista, Bonneville Power Administration, Chelan County Public Utility District, Grant County PUD, Seattle City Light, Snohomish County PUD, Tacoma Power and Puget Sound Energy, which joined the Western Energy Imbalance Market on Oct. 1.

“The Northwest has always been an active bilateral market,” Damiano said.

“We’ve been very excited about the creation of the EIM,” said Gerald Deaver, manager of regional transmission policy for Xcel Energy. “Our first baby step was FERC’s approval of a joint dispatch area in Colorado [with Platte River Power Authority]. We’ll be the market operator, but we look at it as a way to more efficiently use generation resources in the balancing area. Our ultimate goal is to develop a larger geographic footprint to better integrate renewables. Our hope is that entities will become more comfortable operating in that environment.”

“I can’t imagine all of the West as we know it today would be one RTO. It’s too big. I see two or three RTOs with seams agreements,” SouthWestern Power Group’s Tom Wray said. “For resource management and market efficiency, [RTOs] are clearly a good policy move for the country. One of the motivating factors for expansion of the regional market we know as Cal-ISO is largely coming from regulatory pressure.”

Tanya Bodell, executive director of Energyzt, called for “market-based solutions” to cope with too much generation on the Western system. “West Texas retailers are selling energy for free on nights and weekends. FERC Order 745 has opened up an opportunity for demand to come into the market. I can see 745 creating a mechanism through which system operations encourage people and pay people to use more energy. Generators have a different bid price to operate, versus a bid price to curtail. You may end up getting a curtailment market, where the ISO asks for bids from generators.”

Renewable Integration Remains Sticky Issue

“We’ve done pretty well so far in integrating renewables. We didn’t think 20% would be that easy, but it turned out to be not so much of a challenge,” said Carl Zichella, director of Western transmission for the Natural Resources Defense Council. “We have 38 different balancing authorities in the West. It’s one big grid operating in discrete chunks, rather than an integrated system. While that’s worked so far, we’re going to need to do much better to integrate deeper penetration of wind.

“The worst-case scenario for renewables is what we have now … [balancing authorities] complicating the use of transmission with bilateral contracts and artificial congestion. The biggest hurdle to regionalization is the governmental structure.”

Jay Caspary, SPP’s director of research, development and Tariff studies, said America’s best renewable resources straddle the seam between the Western and Eastern interconnections. While SPP, MISO and ERCOT have built and continue to build transmission to access those resources, the abundance does create a dilemma.

“ERCOT is harvesting thousands of megawatts in SPP’s backyard and pulling them into ERCOT,” he said. “We have two separate independent networks in the Texas Panhandle. At some point, we’ll probably have to integrate those two, but there are a lot of jurisdictional issues.”

In California, rooftop solar is the oncoming train. Jack Moore, director of market analysis for Energy + Environmental Economics, said his company is projecting the state will enjoy 17 to 23 GW of the sunshine resource by 2025. “The big driver we see is in certain hours, California has more solar than it can use. That does set up a reason for [increased] transmission to be able to bring more flexibility to the system.”

“Our experience in Texas is that you build these [interconnection] ties and they get oversubscribed,” said Bill Bojorquez, vice president for Hunt Power. “There are great stranded resources in New Mexico. Sharyland Utilities has over 11 [GW] of generator-interconnection requests. We are literally over-subscribed. It’s one of those stories where if you build it, they’ll be oversubscribed.”

Getting Utilities to Embrace Alternative Technologies

Several speakers complained about the industry’s conservatism.

William White, director of public affairs for CTC Global, said his company has found it difficult winning acceptance of its high-temperature, low-sag, composite core conductors. “We’re in the odd position of having a proven product that works,” he said. “We know it works, our customers know it works, but old habits die hard. Most of [today’s] conductors are literally 100-year-old technology.”

“Some of the biggest resistance to regionalization is the cost,” said Gregg Rotenberg, president of Smart Wires, which provides “grid optimization solutions.”

“If we’re having a conversation about regionalization and we’re only using existing infrastructure, that means we’re using the grid inefficiently,” Rotenberg said. “The hardest group to get involved is the transmission groups at these utilities. When we get them on an equal playing field and we’re spending less on new technologies, we’ll have a new grid.”

Byron Woertz Jr., the Western Electricity Coordinating Council’s manager of system adequacy planning, preferred to see his glass half full. “This a country that put a man on the moon with 20th century technology, so I think we can improve the grid,” he said.

Battery Storage Ready for Prime Time

Asked whether battery storage needs tax credits similar to wind and solar resources, Kiran Kumaraswamy, market development director for AES Energy Storage, said storage is “absolutely ready for prime time.”

“What we really need is a framework to value this class of resources. Four to five years ago, we started talking about the value of solar in a way in which you could bring all those benefits to the table and compare them with all the other options. The gap right now is being able to evaluate [storage] resources on an apples-to-apples basis.”

“I think energy storage works best when paired with other grid assets, to increase the value of the electricity being generated,” said John Jung, CEO of Greensmith Energy Management Systems. “You can do a lot more with electricity when you have the ability to shape the nature of it and the quality of it.”

John Fernandes, RES Americas’ director of policy and market development, said he is not worried about customer migration from the grid. “I’ve been announcing the death spiral of the utility death spiral for years now.”

Non-utilities “are not dealing with NERC violations worth millions of dollars a day,” he said. “When you’re talking about megawatts, [reliability] matters. We’re so highly dependent on this super-reliable service.”

Making FERC Order 1000 Work

A panel sharing their experiences with FERC Order 1000’s directive on competitive transmission projects agreed that CAISO continues to put space between itself and other RTOs with its implementation of the order.

“The evaluation process is certainly evolving. Cal-ISO maybe puts more emphasis on costs and less emphasis on [operations and maintenance], but it’s gotten much better,” said Charlie Adamson, principal manager of major transmission and distribution projects for Southern California Edison. “Every evaluation, they’ve gotten better at it. Things like the EIM or the ultimate experience of an ISO … opens up market availabilities for that energy transfer to make sense. Over time, that could enable long-haul lines that bring in energy from where it’s cheap to where it’s necessary.”

Josh Burkholder, director of transmission asset strategy and grid development for AEP Transmission and Transource Energy, relayed his experiences in SPP’s first competitive process, which resulted in one project being awarded — and then canceled as unneeded. “There were some real head scratchers [in how an industry expert panel graded the projects]. A notch difference in your parent company’s credit rating was a five-point difference [in the scoring]. In a $10 million project, [the credit rating is] pretty irrelevant. Be careful what you wish for a little bit, when it comes to clarity and understanding with how the decision is made.”

“From my standpoint, a lot of things that may not be apparent may become a reliability issues when it’s too late to solve the issue with transmission,” said Bob Smith, vice president of transmission development for TransCanyon, a joint venture of Pinnacle West Capital and Berkshire Hathaway Energy. “This is the second year we’ve had laws in California that are going to require a 50% [renewable portfolio standard], maybe higher, to comply with greenhouse gas laws. Yet, Cal-ISO is relying on a 20% portfolio? It doesn’t make sense for Cal-ISO to be planning when you don’t know where the resources are. By the time Cal-ISO gets clarity on where resources are, we’re coming pretty close to 12 years from the 2030 policy deadline, and you don’t develop transmission in three or four years.”

Speaking of transmission projects in general, Chris Jones, a vice president with Duke-American Transmission Co., said delays in the permitting process “that can happen over the decades-long process” remains “the biggest risk in each of our projects.”

“One of the things that’s changed since I started doing this work is the sensationalism of these projects and the media coverage you get and the protests that come with that. It’s usually local groups, but we’re seeing more and more groups outside the [non-governmental organizations] get media coverage. You’re seeing that now with the North Dakota pipeline project.”

Ali Amirali, a senior vice president with the Starwood Energy Group, called transmission development “a giant game of economic chicken.” He said, “The generation developers are waiting for the transmission to be built. The transmission developers want the generation to be built before getting into the heavy capitalization of transmission.”

– Tom Kleckner