by George E. Johnson, Dickstein Shapiro LLP
The commitment of President Barack Obama to dramatically increase renewable energy resources, rebuild the aging American energy infrastructure and create millions of jobs has increased prospects for comprehensive renewable energy legislation in the 111th Congress.
Much attention has gone to setting emissions targets for greenhouse gases and implementing a cap-and-trade program. Attention also has focused on developing an interstate renewable energy superhighway system that would use extra-high voltage transmission lines to move location-constrained renewable energy resources—particularly wind and solar—from remote midcontinent locations to population centers along the coasts. Less attention has gone to the organizational infrastructure that would plan, construct and administer such a system.
Regional transmission organiza-tions (RTOs) have been set up during the past decade in the Northeast, Middle Atlantic, Midwest, Texas and California. These entities are responsible for safely and reliably planning and constructing the transmission systems within their respective areas in an integrated manner and for economically dispatching the generation and demand resources in such areas via a single system operator using advanced electronics. These regional entities already are implementing the system integration techniques necessary for a major shift to renewable resources.
RTOs, however, cover less than half of the United States, leaving large areas—many with abundant renewable resources—to be administered by numerous traditional and nonindepen-dent utilities. The absence of regional planning and system integration in these areas makes it difficult to link the entire country together into a coordinated network able to move wind generation from the upper plains to Chicago, or solar power from Nevada to Arkansas. In 2001, the Federal Energy Regulatory Commission (FERC) attempted to encourage voluntary implementation of a nationwide system of RTOs—one for each quadrant of the country. Lacking the authority to compel such a reorganization of the grid and facing widespread resistance to voluntary implementation, this initiative failed.
It is time to revive the best attributes of this initiative in comprehensive renewable energy legislation. The reason is that an independent regional entity can provide the organizational infrastructure for:
- Planning and allocating the costs of constructing new, long-distance transmission lines, and
- Integrating variable renewable energy supply sources with variable demand resources to serve the electric load in a reliable manner.
Regional and inter-regional transmission planning is critical. The Competitive Renewable Energy Zone (CREZ) legislation being implemented in Texas is an excellent example of how planning can promote renewable energy regions. The CREZ concept has three elements:
- Identification of geographic areas with high-capacity wind resources and high levels of wind developer interest,
- Identification of the capacity and configuration of the grid improvements needed to efficiently and cost-effectively collect the renewable capacity and deliver it to load centers, and
- Guarantees of cost recovery to those competitively selected to construct the transmission.
At the end of 2008, Texas was already two-thirds of the way to meeting its 2025 target of 10,000 MW. Elsewhere in the country, regional entities similarly could provide operational efficiencies to compensate for the peaks produced by variability in wind and solar power energy production and load consumption. A single system operator can see electronically all resources and loads as they vary in real time and to follow these loads as they move through the day by matching renewable resources to availability patterns (for example, by pairing wind generators that produce mainly at night with wind generators and solar generators that produce mainly during the day).
Similarly, system operators using metering and communications can dispatch price-responsive demand to shave peaks during daytime system peaks and provide real-time price signals to shift consumption to off-peak hours.
Regional entities, such as RTOs, will not solve every problem that will arise in implementing a national renewable energy policy. For example, they do not address local opposition to siting of long-distance power lines serving others. RTOs, however, would provide the institutional framework for cost-effective transmission planning, cost allocation and system integration, and they should be a core element of the 111th Congress’ renewable energy bill.
George E. Johnson has worked in administrative regulatory practice in energy, environmental and telecommunications areas more than 25 years, both in private practice and on behalf of the federal government. He joined Dickstein Shapiro LLP in 1995 as of counsel in the Energy Practice and has since been elected partner. Reach him at email@example.com.