Smart Transmission Investment is Critical to Clean Energy Goals
June 28, 2021
by Sarah Mathias
June 28, 2021
In a recent blog, Joy Ditto, our president and CEO, highlighted how public power is innovating to reduce emissions, increase reliability, and safeguard affordability for electricity customers. These exciting efforts represent a wide range of activities — including building new generation, increasing energy efficiency, deploying advanced technologies, and electrifying transportation — that will be necessary to achieve net-zero emissions from the electric sector.
Another challenge to reducing emissions, and one that is admittedly not as groundbreaking as small modular nuclear reactors or as headline-grabbing as an electric Ford Mustang, is transmission.
Transmission is what makes the electric grid, well, “the grid.” It is what allows electricity, whether generated up the road or states away, to reliably get from point A to point B to power our homes and businesses. In addition to moving power to where it is most needed, transmission is also important for reliability. The right transmission can ensure that the grid has the redundancy and appropriate interconnection to help keep the power flowing during severe weather, maintenance, and other unpredictable situations, including times when wind and solar power are unavailable.
With the Biden Administration and congressional Democrats proposing large-scale climate goals, there is a lot of discussion on the importance of transmission to deliver zero-emitting electricity, including in some recent infrastructure proposals (which are subject to change, of course). Transmission has a key role to play in transporting electricity generated from renewable and other zero-emitting sources, which tend to be in rural areas where land is plentiful, to electricity-using consumers in more densely populated areas.
Just how much new transmission will be needed for a net-zero future? The estimates vary – one recent study, from researchers at Princeton University said we could need as much as triple what we have today by 2050. The consensus seems to be that we will need significantly more transmission to incorporate new, more remote generating resources and ensure reliability. And yes, if you’re doing the math, the Princeton team is estimating that we could need to rebuild the current grid twice over in the next 30 years!
What does this mean for energy customers? Foremost, transmission costs are ultimately borne by utility customers. For most of us who live “on the grid,” this is the cost we pay to ensure that electricity gets to us and for the peace of mind of knowing that the lights will turn on when we flip the switch. This cost is currently an average of about 13% of the monthly electric bill – but has been growing. In many parts of the country, transmission costs have been rising steadily and significantly in recent years. In some cases, we’re talking about a tripling of the cost that customers are paying for transmission just in the last decade! Add in not only the cost of new transmission but also the costs associated with upkeep and maintenance to ensure our existing grid is resilient and reliable.
Also, this new transmission must be built somewhere. There is a new emphasis on siting transmission along existing federal rights-of-way – such as train tracks and highways. Ultimately, however, the siting and permitting of transmission, unless it is built entirely on federal lands, will be a state and local decision. Like building any major infrastructure today, developing new transmission is an expensive, contentious, and time-consuming process, often taking more than 10 years and filled with political and regulatory hurdles.
We find ourselves in a situation of needing new transmission—and potentially needing it fast—but facing major political and regulatory barriers that make the process slow and expensive. And, even if we overcome the barriers to getting all this transmission planned, sited, permitted, and built, how can we do it without making it unaffordable for customers?
Like so many of the questions that public power faces in this transition, there are no easy answers or silver bullets.
Smart transmission policy can make or break whether these costs remain affordable for customers. We outlined what policies would help keep costs down for public power customers in our issue brief on the topic and highlight some of the key pieces below.
One way to help with some of these challenges is to increase the opportunities for public power to jointly own transmission projects. This is commonplace in some parts of the country, while joint ownership faces significant obstacles in others. The benefits of public power having an ownership stake in transmission projects are numerous. For one, public power owners have a seat at the table in planning the projects and can help ensure that the “right” kind of transmission is built. In other words, public power can help ensure that transmission projects undertaken will truly benefit their local communities, whether by increasing reliability or achieving environmental goals. Second, ownership by public power utilities can help bolster local support for projects, which is vital in the siting and permitting process.
Finally, as community-owned not-for-profit power providers, public power utilities can help keep transmission project costs fair and reasonable. As joint owners, public power can receive some of that financial benefit to share with their customers and offset some of the transmission cost increases they experience. I’d liken it to the difference between renting a house picked out by someone else versus choosing and co-owning a house with others. In the latter example, your fellow buyers would have to consider your opinions on the location, amenities, and overall price of the house, plus you’d be paying a share of the monthly mortgage and be entitled to a share of the long-term equity. I won’t speak for everyone, but I know which option I’d prefer!
While the situation is difficult and complex, it’s not impossible. Joint ownership of new transmission projects is one answer to provide a path forward for building the additional transmission needed for clean energy.