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United States

On Reflection: Policy must build a grid fit for a clean energy future

Almost five years ago, the American Wind Energy Association and the Solar Energy Industries Association released Green Power Superhighways, a policy blueprint for revitalising the US's electricity grid.

(pic:Alamy)
(pic:Alamy)

We explained that a weak, congested power grid posed a major hurdle to putting the US's wind and solar energy resources to use, a problem that could be solved with fairly simple and cost-effective policy updates.

Over the past five years, progress has been made in many parts of the country. Across a wide swath of the Midwest wind belt, workable transmission cost allocation policies are now in place. This has allowed private investors to step in and build new high-voltage transmission lines, and now billions of dollars in wind energy investment is following suit.

In other regions much more work remains to be done, especially in creating suitable cost-allocation policies to pay for transmission - the main obstacle to grid investment. Allocating the cost of transmission to consumers is the best policy, as it recognises that the benefits of transmission, such as increased reliability and lower electricity costs, are broadly spread across all electricity consumers. Without such a policy, no one has the incentive to make needed grid upgrades.

Unfortunately, many regions still lack workable cost allocation policies, and no regions have policies to allocate the cost of inter-regional transmission lines. The Federal Energy Regulatory Commission is currently pushing regions to develop policies for transmission planning and cost-allocation. Continued progress in this area will be critical for reaching a clean energy future.

Stick to basics

On the path to a stronger, cleaner grid, we must not be distracted by purported solutions that sound attractive but do little or nothing to solve the challenge. Much money and attention have been lavished on high-tech solutions that fall under the umbrella of "smart grid", such as smart meters, smart appliances and microgrids.

Smart meters and appliances have potential for making the grid as a whole more efficient by shifting electricity use to times of lower demand. But they will provide little benefit until the wider adoption of real-time retail electricity pricing creates incentives for customers to change their electricity use patterns. Microgrids lack the efficiencies and economies of scale for reliably producing and transmitting electricity the bulk electric system has built up over the past 100 years.

More importantly, neither does anything to solve the fundamental problem that large amounts of energy must be transported from regions rich in renewable-energy resources to population centres. The only solution is building more transmission infrastructure, and the only way to do that is with policy updates.

The road ahead

Addressing the urgent threat of climate change will require a huge effort to transition the electric sector to clean sources. High-voltage transmission is essential, both to provide access to the most productive renewable resources and to transport that energy efficiently and cost-effectively. A single 765kv transmission line can carry as much power as six 345kv transmission lines, at a fraction of the cost, land use and transmission losses.

Regions that want to be leaders in a clean-energy future, and also want to lower the cost and improve the reliability of their consumers' electricity, must develop workable methods to pay for transmission. The success of transmission operators in Texas and the Midwest in getting those policies right offers a roadmap forward.

Michael Goggin is senior electric industry analyst at the American Wind Energy Association

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