High hurdles for Obama energy plan

President Barack Obama's call to double renewable energy resources in three years and build 3,000 miles of electrical transmission lines will strain key parts of the nation's energy, manufacturing and work force resources to the limit, some industry and economic experts warn.

While the economic stimulus bill that the House passed Wednesday contained record financial incentives to accelerate programs toward these climate-friendly goals, industry experts say stumbling blocks fill the path, starting with an ongoing credit freeze, regulatory hurdles and potential manufacturing and work force shortages.

Many of the most optimistic analysts talk more in terms of a five-year horizon for doubling the nation's production of alternative energy, unless additional polices are put into place. Leading Republicans also are questioning whether Obama's most ambitious energy goals are achievable.

"I'm told we don't have the capacity to address everything we are putting down on paper here," said Sen. Lisa Murkowski (R-Alaska), ranking Republican on the Senate Energy and Natural Resources Committee.

The White House and House leaders say that an admittedly long road toward a greener energy sector must start now, with the kind of long-term commitment that will create jobs and private investment. Many renewable companies consider passage of the package critical to alleviating a predicted downturn this year for many developers.

A daunting goal

The Senate will take up its version of Obama's package this week. The $819 billion recovery bill that passed the House included $72 billion to fund clean energy programs and $20 billion more for clean energy tax incentives, noted the Center for American Progress, the think tank headed by Obama's transition director, John Podesta.

"This huge investment in weatherization, efficiency, transmission, transit, and clean vehicles programs will create at least 459,000 jobs by the end of 2010, as well as reduce oil consumption and global warming pollution," the center said.

Experts say that parts of the program can be implemented quickly, particularly improved weatherization. That aspect of the congressional package alone boosts Obama's renewable goals by creating an incentive to put solar panels on roofs, said Bryan Hannegan, vice president of environment and generation at the Electric Power Research Institute.

But the goal of rapidly expanding the nation's 260,000-mile transmission grid appears far more daunting, and a doubling of renewable energy can't occur without a larger transmission grid, experts say.

Realistically, five years is the shortest period in which 3,000 miles of new electricity infrastructure could get up and running, and getting the job done in that time frame would require a ready flow of money, according to Bob Mitchell, CEO of Trans-Elect. He and other experts said it takes three years alone just to go through the permitting and planning process for new lines.

"I am not saying we can't do it. But it is hard to see how we can do it," said Jose Delgado, president of American Transmission Co. in Milwaukee, one of the nation's leading independent transmission builders. The effort will face shortages of people and equipment, he said.

"The problem is starting to occur now," said James Spellane, a spokesman for the International Brotherhood of Electrical Workers.

The nation has about 100,000 transmission line workers today but little capacity to expand that work force quickly, he added. "Most of them are working now," he said, and they are in great demand to repair damages from severe winter and summer storms. "There have been few people entering those trades in recent years, and the real crunch starts in about five years, when retirements pick up."


Stimulus not 'super helpful' in the short term?

Many renewable businesses say enactment of the stimulus package is critical to getting new projects going in the midst of a harsh recession. Without congressional action, the wind industry, for example, expects a decline of as much as 50 percent in installations this year compared to 2008, said Julie Clendenin, a spokeswoman for the American Wind Energy Association (AWEA).

Even more daunting for the industry, the Senate version of the package currently doesn't contain a provision that the association considers essential. That measure, which passed the House, would allow developers to convert an investment tax credit into direct cash from the Department of Energy. The mechanism would provide ready money to many businesses no longer eligible for the federal benefit.

But even with potential help from Congress, a rapid acceleration of renewables in three years is problematic because of the credit crisis and strong local opposition to projects in heavily populated areas.

"I don't know that there's anything in [the stimulus package] that's super helpful, especially in the short term," said Frank Maisano, a spokesman for wind developers. "These projects are harder to do than many politicians think."

In recent media interviews, businessmen like Mike Morris, the CEO of utility giant American Electric Power, questioned whether the supply chain was capable of handling a ramp-up in wind, solar and other alternative energy sources in 36 months, considering past waits for components such as turbines.

Rob Gramlich, a policy director at AWEA, called that notion "ridiculous," because the recession has eased supply constraints. Other analysts agreed that renewable sectors such as wind have grown exponentially in recent years and can do so again without a problem, creating new jobs in the process.

Yet an analyst at the Brookings Institution who also has built wind projects, Charles Ebinger, said it's still tough to get wind supplies. For solar, a shortage of silicon for solar panels also could be an issue with a major scale-up in renewables over a short period of time, noted Hannegan.

W.Va. highs and lows

A case study of economic benefits and hurdles is the 210-mile-long high-voltage transmission line that will run from West Virginia through a corner of Pennsylvania and into Loudoun County, Va., in Washington, D.C.'s outer suburbs.

Construction of the line is set to begin next month, assuming that the final expected regulatory approval arrives, said John Smatlak, vice president for transmission at Dominion, Virginia's largest utility and one of two sponsors of the line. It is scheduled for completion in June 2011, when the mid-Atlantic region will be in urgent need of more power from states to the west, grid monitors say.

The project's West Virginia portion, about two-thirds the total length, will generate $437 million in direct economic benefits through payrolls and purchases, said Thomas Witt, a University of West Virginia economist who testified about the project before his state's regulators. Another $241 million in indirect benefits would flow into the state in meals and lodging expenses, purchased supplies and other spillover benefits, he said. Salaries and wages would account for $200 million of the $678 million in estimated direct and indirect benefits, Witt said. The total benefits come to more than $3 million a mile, according to his calculations.

Holly Kauffman, director of Allegheny Energy's section of the line, says the project will create jobs and work for 700 to 1,000 people of all sorts -- among them, cement truck operators, steel workers, security guards, hydrologists, archaeologists, biologists, real estate appraisers, accountants and helicopter pilots. More than 400 will be transmission line workers, and the companies have lined them up well in advance.

"When we started on this path, there were enough resources out there," Smatlak said. "Once you start building thousands of miles of transmission lines, it may become very difficult."

"These are highly skilled craftsmen; you just don't pump them out from short-term training programs," Witt said.

Avoiding bottlenecks

You can't take drywall finishers working on condos and send them up 200-foot transmission towers to string high-voltage lines, he added. The International Brotherhood of Electrical Workers and utility company partners are setting up four regional training centers for line workers, to try to fill a pipeline they expect will steadily grow.

Plans for grid expansion -- and the entire new energy strategy -- must be carefully thought through to avoid critical bottlenecks, said Delgado, whose company has erected $2.2 billion in new transmission lines in the past eight years.

The manufacturing base to support such projects is stretched to the limit, and key parts of it are offshore, he said. "If you think you can get 400 transformers, good luck," said Delgado.

"We used to have a powerful [transformer manufacturing] industry in the United States in the late '70s, and we destroyed it. Manufacturers are leery at throwing more money at it now. They have to see there is a potential of a higher level of need."



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