Transmission Access for Renewables

WIRES states the case

Bill Opalka | May 16, 2011


The transmission build-out wouldn’t just give renewable energy to markets, but would be an economic engine of its own, according to a new study. And there’s the little mater of jobs, which should get some attention, even among those who aren’t sold on clean energy.

A new analysis commissioned by WIRES (Working group for Investment in Reliable and Economic electric Systems) shows that annual investment in new electric transmission facilities could soon reach $12 billion to $16 billion in the United States, resulting in $30-$40 billion in annual economic activity.  This translates into support for 150,000-200,000 new full-time jobs in the U.S. in each of the next 20 years and between 20,000 and 50,000 new jobs each year in Canada.
As reported here regularly, solving cost sharing for the build-out is one of the most vexing issues confronting the transmission space.

The study, conducted for WIRES by the consulting firm The Brattle Group, says that expanding and upgrading the grid to meet identifiable economic and reliability needs, as well as state renewable energy mandates, will help drive economic recovery and set the stage for the electric economy of the 21st century. 

The study says that not just construction, but the downstream activities in manufacturing, investment in needed transmission will annually support 130,000-250,000 full-time U.S. jobs in the emerging renewable energy industry to which transmission capacity is so critical.
"This report provides strong evidence that meeting the grid's challenges - including delivery of power from remote renewable generation to load centers far away - is good for the economy and will help create jobs," said WIRES President Jolly Hayden, Vice President of Transmission Development at NextEra Energy Resources.  "Strengthening the transmission grid will also address major reliability issues, reduce production costs, enhance competition for customers in wholesale power markets, contribute to fuel diversity, and help reduce wholesale power prices.  Brattle's analysis should give policy makers confidence that the benefits will exceed the costs."
The Brattle Group analysis suggests that total U.S. transmission investment could reach $240 billion to $320 billion (in 2011 U.S. dollars) between 2010 and 2030 and that Canadian transmission investments could total C$45 billion through 2030.  
“It is fair to assume that, because many of our best renewable energy resources are ‘location constrained’ (i.e., tied to certain climatic, geologic, or topographic features that are not near major concentrations of electricity consumers), a great many wind, solar, geothermal, and other clean electric generation facilities will not be developed unless transmission capacity capable of delivering that energy to market – in sufficient quantities and in a way that mitigates the variability of those resources – is also developed,” the organization said.

WIRES acknowledges the utility industry is on an up-cycle for infrastructure investment, but the level needed to sustain this type of growth is uncertain. In short, the massive investments won’t occur all at once.

There’s also the “regulatory risk” part, one that seems apparent in the controversies revolving around large scale investment associated with the smart grid.

And for good measure, policy uncertainty at the state and federal levels will continue to hamstring the energy industry for some time.

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Forced investment will not create economic stimulus

People can live without electricity, but not very well.  More people would die from heat related illnesses, getting ill from colds and flu without climate control would probably lead to more deaths from pneumonia type illnesses, education would be affected as people would have less time and ability to study there lessons.  In short, electricity has become a virtual necessity.

When it comes to paying for necessities, there is a strong drive to control costs; therefore, ECONOMIES ARE NOT BUILT ON SUPPLYING NECESSITIES.  They are built on supplying what people want because it is the things that people want for which they are willing to pay a premium.  Once entrepeneurs see or create a niche for a product  or service people want, they start making the product or supplying the service.  Competitors see a chance to get into the action and a whole industry sprouts and grows.  There are people who want renewable generated power.  If they are willing to pay more for it, the industry will grow--if not, it will not.  Forcing that function by governmental action changes the cost of green energy from a willing premium to a burden that can, and likely will, destroy economies.  Those who are on the upside of the economical scale then end up paying more taxes to involuntarily pay for the increased cost of energy for those on the lower side of the scale.  The middle class gets squeezed and becomes smaller as a few move upscale but most move down the scale because the expense of living gets higher so they buy less, or none, of what they want.  The economy shrinks and withers.