Call it the "trillion dollar conundrum." Really big money is needed to equip the U.S. transmission system to handle a variety of new requirements and increased load, but it isn’t clear how to raise it, spend it, or recover it. Expect new renewables projects to die on the vine until the gridlock loosens.
A trillion dollars is the amount that electric transmission grid mavens meeting in Baltimore in mid-September suggested will be needed to upgrade the U.S. electric transmission system; build and integrate new (often nondispatchable) renewable electric generation (see figure); cope with carbon emissions reductions that comply with state and, likely, national requirements; and fold new nuclear and clean coal resources into the grid.
Renewables' path to success. The future ability to move anticipated new capacity from renewable energy sources to power demand centers depends on new and improved transmission infrastructure. This map illustrates the location of existing wind resources and transmission lines. Source: National Renewable Energy Laboratory
The grid investment alone, say the experts, is more than $50 billion, the minimal cost of overlaying a high-voltage (HV) AC and DC transmission system on the existing transmission grid. The aim is to create an interregional, perhaps national, high-voltage (765-kV AC and HVDC) highway to link into the lower-voltage local transmission grids, and then into the distribution network. It’s a mighty difficult proposition, and mighty expensive.
The ultimate result of that staggering investment, grid gurus said at the Platts Transmission Planning and Development Forum, could be a nationwide, integrated, interoperable grid. In short, a national electric transmission system, which the U.S. lacks and, the panelists agreed, needs desperately. It may not happen.
Patchwork grid
The whole proposition is made much more difficult in the environment of the credit meltdown that struck just before and as the grid meeting was taking place. Ironically, two days after the Platts conference, Baltimore-based Constellation Energy, a Fortune 500 company, agreed to be sold to Warren Buffet’s Omaha-based MidAmerican Energy Holdings for $4.7 billion, a fraction of Constellation’s market capitalization at the beginning of the summer. Also, in early October, Exelon offered $6.2 billion for NRG. On Nov. 10, NRG’s Board of Directors rejected the offer, saying it "significantly undervalues NRG." Had the merger happened, it would have created the largest U.S. utility, with 47 GW of capacity.
When the Northeast transmission system collapsed in August 2003, former energy secretary Bill Richardson commented that the U.S. has a "Third World grid." He was wrong (most Third World countries have no grid at all). But Richardson highlighted a real problem. The U.S. electricity grid is fractured along utility and regional lines, minimally interconnected, and mostly isolated from its larger neighbors, even when they are next door. It’s an antiquated, creaky system for moving power around, according to many observers.
A rational, planned grid would be an integrated neural network (similar to the Internet) that could overcome the shortcomings of the existing electric transmission infrastructure. It would, among other qualities, trump the geographically bifurcated East-West nature of the U.S. grid and its propensity to collapse in the face of unanticipated challenges. The failure of the grid in 2003, said panelists at the Baltimore conference, was a precursor of what could happen in the future if major investments aren’t made.
Maryland Public Service Commissioner (PSC) Allen Friefeld warned that his state could be short 5,000 MW of generating capacity by 2011. "The lights will begin to flicker" in the Eastern Interconnection, he said, unless new power supplies become available to the PJM Interconnection that supplies Maryland. Particularly troubling for Maryland and other PJM member states, noted Freifeld, is that many PJM transmission projects are aimed at moving power from New Jersey into power-short New York. At the same time, New Jersey and the eastern coastal region are facing future capacity shortages.
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