Impact of Renewable Energy on Electric Transmission

Renewable Energy Impacts Transmission Grid

The anticipated increase in renewable electric power generation (particularly wind power) will most likely be satisfied by the trend toward non-utility companies building only transmission facilities.  These trends are:

• Largely driven by the advent of independent power producers (IPPs), vertically integrated electric utilities that build and own their own transmission systems to distribute power from their own generating facilities have broadened their services to allow for the interconnection of IPP-generated power to their transmission system.
• Accelerated by the introduction of alternative forms of energy (e.g. wind, solar and geothermal). There has been a substantial increase in the number of IPPs. Further, their remoteness relative to where the power is needed offers significant logistical challenges. The combined impact of these factors has rendered the “traditionally developed” transmission grid inadequate.

Regulation and Standardization in Transition

The Federal Energy Regulatory Commission (FERC) has addressed the regulations and procedures required to support interconnection of IPPs with the traditional transmission grid, but little, if any, progress is noted in providing a similar regulatory, contractual and/or legal framework for this new alliance of independent transmission facilities seeking interconnection, the owner of the established transmission grid, and the ISO, RTO.

Consequences and Challenges

This lack of an operating framework poses a number of consequences, namely:

• The evaluation of transmission interconnection requests is somewhat arbitrary with no objective criteria for prioritization and resulting uncertainty of when a given request will be studied.
• The process for applying is somewhat undefined, leaving to question the issue of prerequisite studies/procedures and costs for such application.
• The lack of any standard agreement introduces little protection of the rights and obligations of the relevant parties.

Though independent electric transmission projects will likely be critical to delivering power from alternative energy sources to major load centers, the consequences listed above lead to a number of significant challenges:

• Non-traditional requests to the appropriate ISO or RTO to interconnect with the existing transmission grid leave uncertainty with respect to format and content, rendering the process inefficient and difficult.
• The owner of the established transmission grid may be unwilling (or possibly unable) to permit the interconnection without the expending of significant financial and/or political capital.
• The combined impact of all these factors increases the financial risk of any transmission project, potentially impacting the ability of project sponsors to obtain financing, construction commitments and any other logistic requirements associated with the early stage of any project.

Dependent on Electric Transmission Solution

Regulatory and contractual certainty can best be addressed by FERC’s engagement to provide the necessary procedural framework and agreements to address these transmission interconnection requests. In this was, as was the case in allowing IPP access to the transmission grid, these non-utility companies building only transmission facilities will be provided non-discriminatory access and the viability for renewable energy to be part of a holistic energy program remains.