Details emerge about DOE, FERC grid plans for clean energy

By Peter Behr, Miranda Willson | 01/13/2022 07:22 AM EST

Transmission lines run through the hills of New Hampshire in 2011.

Transmission lines run through the hills of New Hampshire. AP Photo/Jim Cole

The Biden administration’s plan announced yesterday to pump $20 billion into expansion of the nation’s transmission networks will target “shovel ready” projects that deliver clean energy, at the same time a nationwide grid expansion is planned and advanced, according to an administration official.

The official, who spoke on background to E&E News, said the Energy Department would seek partnerships with utilities, transmission developers and state government in creating routes for new power line projects that could overcome traditional siting roadblocks. The transmission plan was announced alongside other clean energy initiatives, including an offshore wind sale off the coast of New York (Greenwire, Jan. 12).

“This is going to be a collaborative process from the beginning to the end. You get better projects … that way too,” the official said of the transmission plan. “We don’t think it’s about shortcutting the questions you’re asking or trying to rush through a process that needs time to figure out answers. It is about thinking about it in the right way from the beginning.”

The $1.2 trillion Infrastructure Investment and Jobs Act authorizes a federal role in siting national priority power lines, but the administration official said the goal was to use this authority to support states that want new projects.

"The idea is not to steamroll other permitting processes,” the administration official said. “There are states that do want these projects. There aren’t just blue states that realize they need transmission to meet clean energy goals” but also states that hope to use carbon capture to export clean energy from fossil fuel generation, the official said.

The comments come as the National Association of Regulatory Utility Commissioners, remains “strongly opposed” to attempts by DOE or the Federal Energy Regulatory Commission to override state regulators’ decisions on transmission siting, a spokesperson said.

Various studies of the nation’s aging transmission infrastructure have also found that construction of large multistate lines have been held up by narrow planning objectives, public opposition and parochial state and utility interests. The agenda outlined yesterday by the Energy Department in a notice of intent tied to the administration’s plan attacks the transmission challenge on three fronts — planning, siting and funding.

It includes a new $2.5 billion revolving fund created by the infrastructure legislation, which will support construction of high-capacity transmission lines that strengthen grid resilience and reliability, increase interregional power flows and reduce greenhouse gas emissions from the power sector. Loan guarantees and a range of grant programs will be allocated on separate timetables, with announcements of some initial funding opportunities beginning in several months, the official said.

The department may play a lead role in some high priority projects, serving as an anchor customer on new and upgraded transmission lines in order to facilitate private financing and construction of the projects. DOE said it could make an upfront commitment in some cases to buy up to 50 percent of planned capacity from a transmission developer for up to 40 years. Once the project’s long-term financing was in place, DOE would market its power purchase rights, according to the official.

According to the outlined agenda, DOE will conduct a study to identify where new or upgraded transmission lines are needed to help meet short- and long-range clean energy goals, increase power supplies for vehicle and building electrification, and expand power flows among the three major synchronized U.S. grids — the east and west interconnections separated by the Rocky Mountains, and Texas’s independent network.

As part of the study, DOE will work with other federal agencies and utilities to find new paths for major transmission projects that serve decarbonization goals, including existing rail and highway rights of way, federal lands and utility rights of way.

“It’s getting the stakeholders to talk about lines on the map. Where are the corridors on the map where that they feel they need transmission helps, and areas that are going to work best to get a project sited,” the official said.

Several analysts and advocates favoring grid expansion praised the DOE agenda as a comprehensive strategy, although its ultimate impact could not be known for years.

Rob Gramlich, executive director of Americans for a Clean Energy Grid, said the plan was “necessary to meet the challenge. Despite the difficulties of building multistate lines, it actually can be done, but only with the kind of federal support included in this initiative.”

“We have a long way to go,” Gramlich added. “Not all of this money is for new lines, and we probably need over $200 billion for a national macro grid.”

“This is the kind of nuanced federal leadership that could make a difference in helping to move some real projects along,” added Arne Olson, senior partner with Energy and Environmental and Economics (E3), whose firm has produced computer analyses of grid futures in California, New England, the mid-Atlantic and Pacific Northwest.

“The initiative may seem a bit like a ‘grab bag,’ but it looks like a thoughtful list of potential federal actions that could provide incremental help to real projects,” Olson said.

Hannes Pfeifenberger, a principal with the Brattle Group, said states “still will need to be persuaded that they will benefit [net of costs] from whatever project they are being asked to support and approve.”

Justin Gundlach, senior attorney with the Institute for Project Integrity at New York University, also noted that the outcome depends not just on DOE but on “the speed, ambition, and success of parallel efforts by FERC [overseeing wholesale power markets], as well as the state-level politics of specific transmission project proposals.”

What is FERC’s role?

The initiative comes at the same time that FERC is developing new rules that could address challenges and barriers holding back the development of large-scale transmission projects.

In particular, the commission is considering reforms to the planning processes for developing regional and interregional transmission lines, as well as ways to change the existing system for determining who pays for transmission facilities and upgrades.

Historically, DOE and FERC have not partnered extensively on energy issues, said Larry Gasteiger, executive director of the Wires Group, a trade association that promotes transmission investments. But it appears that DOE’s efforts could complement FERC’s analyses and pending reforms, according to Gasteiger, who previously held various roles at the latter agency.

“I think with the current administration, we’re seeing a higher level of coordination than we’ve seen in the past,” Gasteiger said. “I think that reduces or minimizes potential for there to be stepping on toes for FERC and DOE as they move forward on their initiative.”

For its part, DOE stressed in its notice yesterday that it will coordinate with FERC on issues affecting the siting of nationally significant electric transmission lines as well as transmission planning for offshore wind projects. This year, for example, the department will hold a series of workshops with the Bureau of Ocean Energy Management “in consultation with” FERC and other agencies to help resolve challenges associated with connecting offshore wind projects to the transmission system.

As for siting of power lines, FERC has not authorized the construction of a high-voltage transmission project in recent years — that power is typically vested to state utility commissions. The Infrastructure Investment and Jobs Act, however, clarified that the independent agency has the authority to sign off on high-voltage transmission lines that are located in national interest transmission corridors as designated by DOE if state regulators decline to permit them.

The national corridors will be developed based on applications DOE receives, with a preference for proposed corridors that make use of existing rights of way for highways, trains, utility infrastructure and other projects, according to the department. From there, the department will work with FERC to share information and expedite reviews of the proposed new projects.

“By harmonizing, to the greatest extent practicable, pre-filing and application processes, DOE and FERC can work with applicants to identify and resolve issues as quickly as possible; share information in a timely fashion; and expedite reviews conducted pursuant to these authorities, the National Environmental Policy Act, and other requirements,” the department said in the notice.

DOE’s initiative could also inform FERC’s potential transmission reforms by providing additional, informed research and analyses on transmission needs, said Ari Peskoe, director of the Electricity Law Initiative at Harvard University. Typically, FERC has relied on industry players to identify transmission solutions, even though the independent agency and others have argued that the industry has “underinvested in large-scale projects,” Peskoe said.

“DOE can provide the technical capacity that FERC doesn’t have. The needs study, national planning analysis, and offshore wind transmission analysis can — at the very least — inform industry planning efforts,” Peskoe said in an email, referring to various analyses outlined in the notice.