Too many hurdles could kill off US's first HVDC line in 20 years

UNITED STATES: It looks like the end of the line for Clean Line Energy's most advanced project -- the Plains & Eastern transmission line.

Opposition to the line was particularly strong in Arkansas, fuelling resentment against federal intervention (pic: Daniel Schwen/Wikimedia)

The company’s portion of the $2.5-billion project, a 1,130km HVDC line to ship wind power from the Oklahoma Panhandle through Arkansas to Tennessee and elsewhere in the south and south-east, has been put on ice after hitting political and logistical hurdles, especially in Arkansas. Clean Line also found it harder to sell the power than expected.

"For the time being, the project is on hold," confirmed Mike Skelly, president of Clean Line. He said the line would not be rerouted around Arkansas, where it has been most controversial.

Clean Line had hoped to start construction this year, with completion in 2021. The project has been fully permitted since April 2016. In Arkansas, 50% of the land rights have already been purchased, although Clean Line is now no longer pursuing land rights in the state, said Skelly. In his estimate, Clean Line had invested $100 million in the project.

The Oklahoma portion of the line, bought by NextEra Energy in December, is still a long-term development opportunity, a spokesman for the utility said. It would be premature to comment on whether Clean Line’s move will affect NextEra’s segment, he added. But it is hard to see how it could not.

NextEra owns 1.7 GW of operating wind capacity in Oklahoma, with more in the pipeline. There may be an opportunity to bring solar energy, in addition to wind, from western Oklahoma to load centres in the east of the state, the spokesman said. American Electric Power’s 2GW Wind Catcher project, due online in 2020 in the Oklahoma Panhandle, "may be more cost-effective if it utilised the transmission corridor we acquired from Clean Line", he added.

Currently, Wind Catcher includes its own 765kV power line to a substation near Tulsa, eastern Oklahoma. Development of the 580km route began in summer 2017.

Clean Line’s privately built project was to be the first HVDC line in the US in more than 20 years. The US Department of Energy (DOE) had selected the project as its first public-private partnership on a transmission line under the US Energy Policy Act of 2005. It had even been on a preliminary list of projects circulated some months ago as part of the president’s infrastructure plan.

State vs federal objectives

The fate of the Plains & Eastern highlights the difficulty private developers face in building multi-state transmission lines.

Local and state-level opposition can be strong, and in this case Arkansas lawmakers saw the project as a case of "federal overreach" because of the DOE’s involvement. Arkansas lawmakers had tried — and failed — to kill the project legislatively in congress in 2016.

On the regulatory front, the Arkansas Public Service Commission (PSC) initially denied approval, but was overruled by the DOE, which found that the line met the provisions of federal law. A group of landowners then sued, saying the project must have the PSC’s approval, but they lost their case in federal court in December 2017.

The Plains & Eastern line however hit another hurdle when Bill Johnson, president of federal utility Tennessee Valley Authority (TVA), which had signed a memorandum of understanding with Clean Line in 2011 to consider a power purchase agreement for some of its 4GW in wind, said in late 2017 that the project no longer made financial sense, given flat or declining future electricity demand.

Skelly said Clean Line had offered wind power to TVA for less than $0.02/kWh, plus access to its vast transmission system.

Clean Line is not currently talking to other potential customers for the power. "I think it’s a wait for the market to come our way," Skelly said. "I think that over time, the south-east utilities will want more renewables; they’re just not there yet."