Michael Skelly, former wind developer and one-time Democratic candidate for US Congress, is a full-time cheerleader for transmission. His company, Clean Line Energy Partners, founded in 2009, is an independent merchant developer of wind-friendly long-haul high-voltage direct-current (HVDC) transmission lines, which are the express highways of moving electricity over distance.
Clean Line's goal is to uncork 16.5GW of wind energy over the next few years in the midand south-western US with five lines, a greater capacity of wind power than any competitor's. To put Clean Line's ambitions in context, Texas' much-praised CREZ lines can potentially deliver an extra 9GW of wind, while the lesser-known but vital Midcontinent ISO Multi-Value Projects (MVP), in the upper Midwest, are for 14GW.
On the face of it, developing transmission lines is less sexy and more complicated than wind projects. HVDC projects are typically hundreds of miles long and can cross land owned by hundreds of individuals. They also usually traverse several states, each with different laws and regulations, and, adding to the complexity, a line may also cross federal land.
Historically, transmission lines were built by utilities to support their own power plants and were confined to single states. But as wind sites near load centres have become built out, high-capacity wind projects in far-flung areas need large amounts of take-away capacity. In addition, the Federal Electricity Regulatory Commission's (Ferc) Order 1000, issued in July 2011, requires collaboration between regions, although this is still a work in progress.
Taking the risk
Explaining why he moved from developing wind projects to transmission, Skelly says: "Transmission is the biggest challenge in wind energy - building out the grid. And we wanted to tackle the biggest problem." Indeed much more wind transmission is needed if the US is to reach its informal goal of 20% wind power by 2030, let alone the goal of 35% by 2050, while reducing carbon emissions.
Skelly says that several years ago the benefits of major alternating-current (AC) projects, such as CREZ or MVP, were readily apparent. "Those projects begat new generation. And even with the new AC (lines) building out, we still needed more," recalls Skelly, 53, who arrived in the US onboard the SS America at the age of two with his Irish-born parents.
CREZ consists of $7 billion in "competitive renewable energy zone" lines in Texas, completed last year, and designed to streamline wind transmission and allocate costs state-wide. Similarly, MVP was established to ease the planning, financing and building of transmission. Currently under construction, MVP will serve as a hotbed of wind development.
Of his company's merchant model, Skelly says: "We take on development risk, and we'll take the operational risk." A mile of HVDC line costs about $1.5 million to $2 million to develop and build.
Foray into politics
Until 2008 Skelly was chief development officer for Horizon Wind Energy, which he helped grow into the US's third largest wind developer and operator (Horizon was eventually bought by EDP Renovaveis.) Then, in autumn 2008, Skelly unsuccessfully ran as Congressman for Texas' 7th district, in the Houston area. His ability to raise money was evident: his campaign attracted more contributions than any other race for the House of Representatives that year, even though he lost to the three-term incumbent by 42.3% to 55.9%.
In 2009 Skelly founded Houston-based Clean Line, which now has about 45 employees. Its first project was the Plains & Eastern line, an overhead 600kV line designed to connect 3.5GW of wind in the Oklahoma Panhandle region with utilities and customers in the Tennessee Valley Authority (TVA) territory and in the south-east. It will make possible more than $7 billion of new renewable energy investments, says Clean Line.
In early 2013, UK grid operator National Grid invested $40 million in Clean Line. Already a major player in the US, National Grid has experience of building, owning and operating HVDC transmission interconnectors and networks on both sides of the Atlantic. Skelly sees National Grid as helping to operate his company's lines.
Clean Line's other major investor is private-equity firm ZBI Ventures, a wholly-owned subsidiary of Ziff Brothers Investments, which focuses mostly on investments in energy. In the future, Skelly says he hopes that utilities, whose territories are crossed by the HVDC lines, could invest in Clean Line.
HVDC lines have few on and off "ramps", unlike AC lines, so local benefits can be harder to explain. Clean Line liaises with local stakeholders in dozens of meetings before settling on a route, which must be approved by regulators. "We get a lot of good information and input," says Skelly of meeting with private landowners, county and state officials, regulators, chambers of commerce and environmental groups. "Most importantly we come up with a route that makes sense," he adds. "It's a lot about identifying where not to go."
Landowners are offered 90-100% of the value of their land used for an easement, as well as $500 a year per monopole and $1,500 a year per lattice tower. Support is bolstered by supply-chain agreements. For the 750-mile Grain Belt Express line, for example, which will connect the high-capacity wind resources of Kansas to Missouri, Illinois, Indiana and eastwards, Clean Line has cut deals with companies such as ABB, General Cable and Hubbell to supply equipment specifically made in Missouri.
A line's contribution to state and local taxes is important too. In Missouri, property taxes for the Grain Belt project will be high — approximately $32,000 per mile of HVDC line in the first year.
Of the inevitable opposition, Skelly says: "Yes, sure there's opposition, and there's always support. Our job is to convince people there's a need." Many stakeholders understand the benefit of renewable energy, and finding local champions to advocate for a project is a vital method of combating opposition, he adds.
The Plains and Eastern Clean line is undergoing a federal environmental review led by the US Department of Energy (DoE), along with the Southwestern Power Administration. If the DoE decides to participate in the project, eminent domain (compulsory purchase) could eventually be used as a last resort to secure a right of way, For Clean Line's Centennial West, to move 3.5GW of wind from near the Texas Panhandle to the south-west, eminent domain could similarly be used.
Five years of negotiating and planning, and nothing has yet been built - transmission lines tend to take far longer to develop than wind farms. Skelly hopes Clean Line will start construction in the next two years or so, but declines to say which project is most likely. Right now the $2 billion Plains & Eastern project is the most advanced, with fifteen developers of 17GW potential responded to an open solicitation for the line this year.
Asked what he has learned from running Clean Line, Skelly says that it is especially helpful when a state has specific statutes, laws and timelines. "Kansas has fairly tight deadlines, and they decide (on transmission) quite quickly," he says. A more inter-regional view would also help, a direction that regional grid operators, or regional transmission organisations, are moving towards, especially with Ferc's Order 1000, he says.
Overall, the US's lack of energy policy is, of course, a major inhibitor. "It's harder to plan (transmission) when you do not know what the generation mix is," he says. And will he run for Congress again, having come so close? Not in the foreseeable future, Skelly says. Transmission is keeping him busy enough.