Wednesday, September 17, 2014

White House Says Transmission Key Pillar In Second Term Energy Agenda

Posted: October 18, 2012

White House energy adviser Heather Zichal says that if President Obama is re-elected, officials hope to use his second term to revive so-far unsuccessful efforts to advance a transmission policy as a main pillar in the administration's strategy to advance both renewable energy and natural gas as an interconnected resource.

Utility representatives and trade group sources have simultaneously been reasserting the need for fundamental changes in transmission policy in order to take advantage of cheaper clean energy resources while building out advanced grid technologies needed to integrate larger numbers of wind and solar plants onto the grid to account for the intermittent nature of renewables.

Speaking to the plenary session of a conference sponsored by the American Council on Renewable Energy (ACORE), Zichal laid out four pillars that need to be pursued should the president win a second term to achieve the goal of increased natural gas and renewable development.

The first pillar is developing the "right regulatory framework" for natural gas; the second is better incentives structure for renewables to avoid the "boom bust" cycle of production tax credits (PTCs) expiring and being extended; the third pillar is "transmission policy"; and the final pillar is a better research and development policy.

Transmission policy has been a key hurdle in building out new generation, but many of the policies put into statute to spur development have been marred by intense controversy, which has ultimately led to court action that severely hobbled the federal government's ability to site transmission lines and override state siting proceedings if it is determined the siting process is moving too slowly or stalls.

The White House attempted to re-fashion the Department of Energy's authority under the 2005 energy law to designate transmission corridors, but the process was abandoned after the White House felt it would only lead to legal opposition from the states. The White House later created an inter-agency transmission rapid response team to assist states in spurring the development of key transmission projects. The rapid response team efforts resulted in the creation of a transmission tracking system, but no substantive changes to spur development.

But Zichal said natural gas is a "game changer" and has a role to play in integrating more wind and solar because it is the only power resource that can rapidly respond to drops in electricity production when wind patterns change, or when the sun is no longer shining on solar arrays. Utility industry experts and consultants say more transmission lines will also be needed to make up for renewable energy power fluctuations, and enable more renewables access to the power grid.

Zichal said the power sector will increase gas-fired electricity production 22 percent this year "because of the cost advantage" -- gas prices are currently at historic, record lows -- while at the same time renewables are"becoming more competitive" with fossil fuels and the U.S. is the home of the world's largest wind farms.

She said wind and solar are benefiting from economic recovery spending that has lead to the creation of a vast components manufacturing industry for wind turbines and other renewables, which has brought down cost and made the nation less dependent on imports.

Although natural gas prices are low, Zichal said renewables provide a hedge against price fluctuations, and are necessary in pursuing an all-of-the-above strategy.

Zichal's focus on transmission issues comes as many key players in the sector are also seeking to advance policy to ease concerns.

Industry's Transmission Focus

For example, Glenn English, the president and CEO of the National Rural Electric Cooperative Association (NRECA), told the ACORE event that transmission concerns are the single most important issue for his members.

And the National Electrical Manufacturers Association (NEMA), representing General Electric and other large manufacturers, has renewed its so-called "Chutes and Ladders" campaign, urging lawmakers to examine constraints in building new transmission and the need for comprehensive transmission policy reform.

English said because of the not-for-profit status of cooperatives his members do not benefit directly from renewable energy PTCs as the investor-owned utilities do. Nevertheless, cooperatives are becoming leaders in renewable energy. He said cooperatives have achieved 13-percent renewable energy without incentives and without being required to meet state renewable portfolio standards (RPSs), placing cooperatives on par with the rest of the country.

He said cooperatives' success is based on renewable energy's cost competitiveness with coal. Renewables have "grown up" and are a resource that can compete with fossil energy, and cooperatives are responding to this market change. English said cooperatives have the land resources and other attributes to make the sector a leader on renewables. In order to take advantage of these resources and the low competitive cost "we need transmission" and to resolve the issues that cause slow transmission builds and siting, he said.

English anticipates a "settling down" period on Capitol Hill after the elections where the debate over renewables and transmission policy can start and the polarization between the parties will subside.

Investor owned utilities NRG Energy and Duke Energy -- which are heavily invested in renewables -- concurred with English on Congress opening up to energy policy after the presidential election in November. Steve Corneli, NRG vice president for sustainability and policy, anticipates a "breathing space" opening on the Hill after the elections to examine the gains being made by renewables with an eye to bolster support for the resources, he told ACORE during an Oct. 17 panel with English.

Gregory Wolf, president of Duke Energy's renewable energy division, also told the panel that he sees room for an energy debate emerging after the elections. He said Duke is primarily concerned with the PTC incentives and will be urging Congress to examine an extension of the tax credits with a mechanism to phase out the credit over four years. He said the phase out would help utility companies plan for long-term expansions of renewables in tandem with the cost reductions the industry is experiencing in solar and wind components.

ACORE is a large umbrella group representing the broadest spectrum of renewable energy players, including internet giant Google that is heavily invested in a first-of-a-kind transmission project off the East Coast to deliver offshore wind energy to heavily populated city centers.

ACORE also held the second forum on renewable energy and infrastructure on the sidelines of the conference Oct. 17-19 as part of an initiative to spur utility industry investment in renewables. The next forum will be held in November in Texas. -- John Siciliano (This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

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