Ambitious Clean Line Energy 'wrapping up'

Did Clean Line's HVDC plan push for too much too soon? How the political climate and seemingly unsurmountable barriers for multi-state HVDC lines led to the demise of the independent developer's ambitious plans.

Michael Skelly… “We didn’t win the World Cup of transmission, which is what we were trying to do.” (pic: Clean Line Energy)

It’s the end of the line for Clean Line Energy, the private developer with ambitious plans for five long-distance high-voltage transmission lines to carry 16.5GW of wind energy across the US.  

"We’re wrapping up," said chairman and founder Michael Skelly.

The Houston-based firm now has no employees and will close down for good once the sale of the Grain Belt Express assets to Invenergy is completed.

That sale, announced in November, is expected to go through once regulators in Missouri decide on approving the state’s portion of the 1,255km project, probably within the next few months, said Skelly, who now works as a senior adviser on renewable energy at investment bank Lazard.

Indeed, Clean Line could be history by the end of the first quarter, he admitted.

New owners

Clean Line has divested three of its five transmission projects. The Oklahoma portion of the Plains and Eastern line — the most advanced project — was sold to NextEra Energy, which develops wind projects in the Oklahoma Panhandle.

Pattern Development bought Clean Line’s interests in the 600MW Mesa Canyons wind project in New Mexico, as well as the Western Spirit line, which could proceed in the nearer-term, according to Anthony Logan, a wind research analyst for Wood Mackenzie.

Clean Line’s other New Mexico project, the Centennial West line, has been halted.

As for the Rock Island project in the upper Midwest, Skelly said: "Rock Island was killed by the Iowa legislature, which basically made above-ground HVDC illegal."

Investors had poured more than $100 million into the firm, including $40 million from the US arm of the UK’s National Grid.

Other major contributors included a subsidiary of venture-capital firm Ziff Brothers Investments and Bluescape Resources, a Texan private-equity firm.

"Our investors had spent many years [backing us] — after that long, they were ready to hand the keys to other people ready to move the projects along," Skelly said.

Clean Line was founded in 2009 by Skelly, a former Democratic candidate for Congress in Texas, who had previously helped grow Horizon Wind Energy into the US’s third largest wind developer/operator before it was sold to EDP Renováveis.

At one point in late 2014, when hopes were high for the Obama-era Clean Power Plan (CPP), Clean Line had about 45 staff. The CPP would have forced utilities lagging behind on buying clean energy to catch up with front-runners.

"We didn’t win the World Cup of transmission, which is what we were trying to do, but we put together great projects and [three of them] are [now] in the hands of people who can hopefully do them," said Skelly.

"It made sense to have fresh legs and fresh investment for the projects."

Clean Line had originally planned five transmission lines

Rob Gramlich, the American Wind Energy Association’s former head of policy and public affairs and founder of consultancy Grid Strategies, said: "The lines, or lines close to theirs, may ultimately be developed. The fundamentals of low-cost remote [wind] resources with growing demand for affordable clean energy are not going away."

Skelly drew parallels with the US offshore wind sector, which is now thriving, despite the failure of early projects, such as the large Cape Wind site off Massachusetts.

Victim of circumstances

Skelly said that Clean Line failed to anticipate just how much the US would change politically.

Since Donald Trump took up the presidency two years ago, the CPP has been wound down, and hopes for a federal renewable portfolio standard have been crushed.

Trump’s campaign promise to focus on conventional infrastructure —including electricity transmission — has not come to pass either.

Clean Line’s business model had been ambitious. Developing long-distance transmission is notoriously difficult for non-utility firms in the US, especially if the line is to cross more than one state.

"States need to figure out how to solve the multi-state permitting problem," said Gramlich.

Multi-state transmission projects can take more than a decade to complete, noted Logan, adding that the change in the national political landscape and the CPP’s demise were key to Clean Line’s fate.