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The Biden administration has pledged to achieve a carbon-free power sector by 2035. Meeting this goal will require not only enormous growth in U.S. clean power generation but also a significant expansion in transmission capacity to connect clean power to the grid and move it from renewable-rich areas to places where people live. The Federal Energy Regulatory Commission (FERC) will be pivotal to facilitating this transition and the overall effort to confront climate change. Over the coming months, FERC is expected to examine or finalize a number of rule changes that could expedite grid connections for renewable sources, incentivize transmission planning, and nudge markets to procure clean power.
On June 30th EPIC hosted a conversation on the challenges facing the electric grid today, and the steps the Biden administration is taking—and could take—to protect and grow it. The event was part of a series discussing timely energy and climate policy challenges with government and industry leaders, and other experts on topics that stem from EPIC’s U.S. Energy & Climate Roadmap. This event drew from a chapter by EPIC Non-Resident Scholar Steve Cicala on Decarbonizing the U.S. Economy with a National Grid. Cicala joined FERC Chairman Richard Glick for a conversation led by The Atlantic’s Rob Meyer, EPIC’s journalism fellow. The event was moderated by Lindsay Iversen, the Roadmap‘s editorial director.
Congressman Sean Casten (IL-6) opened the event, pointing out that FERC is the single most impactful agency to address carbon emissions right now.
“If we are going to electrify everything, and if we are going to get to zero CO2 at the pace that science says we must, then we’re going to have to build probably about at least a thousand gigawatts of new generation, which is about as much as we already have. We’re going to have to install several hundred billion dollars of transmission, which is huge,” Casten said.
EPIC’s Cicala outlined one impediment to building that transmission, beginning with the vertically integrated nature of utilities that own the generation plant, distribution system and the transmission. They have little incentive for this set-up to change.
“We don’t really have a grid so much as many different service areas that are connected for reliability, but not really for the mass transportation of energy,” Cicala said. “Instead, the mass transportation of energy for our electrical system is really largely based on our rail and pipeline system.”
That’s because in a “fossil grid,” as Cicala termed it, fuel comes out of the ground from a few select places, is transported to power plants near population centers and sent to be used over transmission lines.
“That is quite different from what you need for renewables for it to work, because generation has to occur in the exact moment that it’s being consumed. And sometimes…the wind is blowing better in one place than another,” Cicala said. “We also have just very different renewable resources across the country. And so, you need to be able to move that power instead of on a rail car and a pipeline on a transmission line. We don’t have the transmission lines to do that.”
One of the major roadblocks is that permitting new transmission lines happens at the state level. But when building across different states to population centers, states in the middle not using the electricity actively oppose the building of the lines.
FERC Chairman Glick also cited cost allocation as a significant barrier. FERC is responsible for allocating interstate transmission costs and is required to do so in a way that the costs are roughly commensurate with the benefits.
“In the past, we’ve been looking at beneficiaries in a very narrow way. So, for instance if you get power from a particular line, you’re considered a beneficiary. But if you don’t, you’re not,” Glick said. “But the fact is people are benefiting greatly when transmission is built, even if they’re not necessarily accessing directly the power that’s transported along those lines.”
Glick explained that transmission lines reduce congestion on the grid, increasing reliability and allowing consumers to access cheaper sources of power during congested times.
“So one of the things we need to do is figure out, is there a better approach to how we allocate cost of transmission,” Glick said.
Cicala provide one idea: Instead of making ratepayers who narrowly benefit from the added transmission pay through higher electric bills, federal tax dollars could be used to build transmission lines just like they are used to build highways.
“We talk about decarbonizing the economy. We’re ultimately thinking about what is the cost of driving in a fossil based car versus driving an electric based car or heating your house with gas versus with electricity. And in that decision, the price of electricity is going to be extremely important,” Cicala says. “So the more we can get the cost of electricity to only reflect the marginal cost of generating electricity instead of these large fixed capital costs…the more level playing field we’ll have between electricity and these other forms of energy in the other sectors of our economy.”
Still, Glick said, a lot rides on whether the states are willing to approve the transmission to begin with. Cicala says a single, national entity governing the siting process would streamline and reduce the costs of building the transmission. FERC would be a natural entity to take this governing authority, as it already has this authority over pipelines.
To that, Glick said, “I think it’s going to be difficult to get something like that through Congress. I think there are people on the left and people on the right, both opposed to giving the federal government additional siting authority. But if we did have that authority, there is no doubt in my mind, it would be a more efficient process.”
Even as FERC policy seeks to address the looming challenge of severe climate change, it must begin to plan for the changes that have already arrived. Extreme weather events crashed the Texas and California grids earlier this year, and severe and unpredictable weather events are now expected to grow in frequency and intensity. Federal policymakers need to ensure that America’s decentralized grid is prepared to withstand these shocks and continue delivering reliable, affordable electricity to customers.
“One of the things we need to do is I think facilitate greater intraregional transmission development,” Glick said. “Because it might be really hot or really cold in one state. In a couple of states to the east or to the west they might not be suffering the same extreme weather at that particular time. So they might have extra power they could transport to [for instance] Texas.”