Transmission Investments & a Changing Resource Mix
Shifts In Power Flow And Renewable Energy Utilization To Meet Environmental Objectives Require Transmission Enhancements
In research from Enerknol, transmission investments are becoming increasingly important to deliver electricity from new renewable generators. Since the most productive areas for wind, solar, and geothermal locations are often located far from population centers, the need for flexible transmission is a growing concern. In addition, the retirement of coal and nuclear plants also contribute to shifts in power flows across the transmission system.
However, new transmission lines and upgrades to existing ones face lengthy, complicated, and costly siting and permitting processes. Such delays can affect investor confidence, slowing the funds needed to keep our energy infrastructure viable. However, some recent utility decisions are aimed at making long-term investments and investors' decisions to commit capital to facilitate such investments by providing a more stable environment with predictable regulations. Recent policies influencing transmission expansion:
On December 22, 2015, Federal Energy Regulatory Commission (FERC) issued an initial decision to reduce the Base ROE (return on investment) for transmission investments in the Midcontinent Independent System Operator (MISO) region to 10.32 percent from the current 12.38 percent rate.
On December 17, 2015, the New York State Public Service Commission (NY PSC) voted to proceed with improvements proposed for 156 miles of high-voltage transmission lines to reduce grid congestion and allow lower-cost electricity and renewable electricity produced in upstate New York to flow to downstate customers.
The Texas Competitive Renewable Energy Zones (CREZ) program stands as an example where wind investments followed transmission capacity expansions.
The location of large-scale wind farms in remote areas creates a need for additional transmission capacity, which has been difficult to achieve due to planning and permitting hurdles that can cause delays and cost increases for new transmission projects.