Connecting the Future: The Need for Transmission

Transmission investment is needed now. The United States will not be able to reach its carbon-reduction goals without building new, long-distance interstate, intraregional and interregional transmission across utility service territories. This is necessary to connect both remote renewable and clean energy resources to customers and to take advantage of the diversity of resources and customer usage between regions. Numerous recent studies conclude that transmission is essential not only to enable a carbon-free electricity system, but also to better manage the cost of the transition. As recent extreme weather events demonstrate, additional transmission investment can help ensure reliability, enhance resilience and avoid the costly consequences of extended outages.

The recent SEPA paper, Coordinating for Transmission Development: Delivering a Carbon-Free Energy Future, focuses on how coordination, collaboration and partnerships among transmission companies for the development of new projects can help get transmission built. Collaboration can improve the efficiency of the transmission development process, including permitting, regulatory approval and timely construction, and enable greater innovation in proposed projects.

Not surprisingly, themes in the Federal Energy Regulatory Commission’s (FERC) recent Notice of Proposed Rulemaking (NOPR) echo SEPA’s findings. Drawing from conversations with the broad range of companies and stakeholders involved in and affected by transmission development, SEPA found that:

• Aligning policy with local, regional and interregional needs, impacts and benefits supports the timely development of transmission that benefits customers and communities.
• Identifying portfolios of projects that together provide a broad range of benefits, including reliability, economic and public policy (carbon reduction, resilience and equity), is a proven approach to getting transmission projects constructed.
• Providing transparency through community engagement and processes such as competitive procurements is essential for securing transmission project support and approval.
• Coordinating, collaborating and partnering in the development of transmission can help to reduce project risks and costs.

These findings prompted the following parallel recommendations:

• Support and execute on policy alignment
• Identify transmission portfolios that provide value across and between regions
• Participate in processes to build confidence in transmission solutions
• Leverage policy, portfolios and processes for partnerships

Transmission planning and cost allocation are important precursors to transmission development, and coordination, collaboration and partnerships can help as well. FERC’s NOPR indicates that it may agree, or at least would like to explore the possibilities further, including proposals and soliciting comments on policy alignment, portfolio approaches, broad consideration of benefits, and transparency.

FERC also proposes what could be viewed as an incentive for development partnerships. FERC puts forward a proposal to condition a “federal right of first refusal” for incumbent utilities or transmission providers to build projects identified in regional plans on partnerships or joint ownership structures with unaffiliated non-incumbent transmission developers or other unaffiliated entities that meet certain requirements. This would mean that incumbent utilities would not have to participate in the competitive transmission development processes required in FERC Order 1000 (which have had a mixed record in leading project construction) if they partner with others. It will be interesting to see comments from utilities, independent transmission companies and merchant transmission developers on how such partnership models could facilitate transmission projects needed to achieve the nation’s carbon reduction goals, and at the same time preserve and enhance reliability and resilience in a timely and equitable manner.

Addressing the challenge of building transmission is critical to achieve the nation’s climate, resilience, economic and societal goals. The transition must also be expeditious. Delayed action limits solution options and raises costs. Coordination, collaboration and partnerships can facilitate the development of transmission projects that bring multiple benefits to all stakeholders.