I'm late for the funeral! Ran across this article yesterday when searching for something totally unrelated, but it speaks so much truth, I couldn't dismiss it. Back in September of last year, utility rag Fortnightly ran an article headlined, "The Rise and Fall of Big Transmission: The alternatives may make more sense." Author Steve Huntoon chronicles the big transmission building phase that was created by Congressional action to provide incredible financial incentives for Big Transmission. In the Energy Policy Act of 2005, Congress tasked the Federal Energy Regulatory Commission with creating a system to award incentives to transmission builders, such as double digit returns, the ability to collect project costs in rates during construction, guaranteed recovery in the event a Big Transmission project was abandoned, and many more (I'm not going to list them all here because only utility rate geeks would understand them all without lengthy explanation). Creating incentives to build more transmission was a Congressional knee-jerk to the 2003 northeast blackout. Nevermind that a complicated, expansive transmission system was to blame for the blackout, industry lobbyists spun the blackout its clients created through mismanagement into a huge financial windfall. And the Big Transmission building boom began.
Huntoon walks the reader through the bad ideas that sprang from utility greed, analyzes why many of them failed, and applies his analysis to the remaining Big Transmission bad ideas to demonstrate why they, too, must fail.
And he does it in an entertaining and easily understood fashion. Big Transmission becomes a proper noun, a name for an entity that took on a life of its own for a brief period in utility history. But, in the end, Big Transmission had to die.
Huntoon walks the reader through the bad ideas that sprang from utility greed, analyzes why many of them failed, and applies his analysis to the remaining Big Transmission bad ideas to demonstrate why they, too, must fail.
And he does it in an entertaining and easily understood fashion. Big Transmission becomes a proper noun, a name for an entity that took on a life of its own for a brief period in utility history. But, in the end, Big Transmission had to die.
The author explains six points that make Big Transmission fail:
Big Transmission never did and never will make sense. Let’s look at a half-dozen reasons why: 1) the laws of physics, 2) higher reliability risk, 3) stricter contingency limits, 4) lumpiness and investment risk, 5) rigidity of source and sink, and 6) better alternatives.
Concise explanation of each point is in the article, so I won't belabor them here.
But the purist in me simply can't overlook a couple of glaring errors. First, the Figure 2 national transmission overlay map is mislabeled. Existing and New 765kV transmission have their colors reversed. The Existing 765 system is red on the map, and the New 765 system is green (the legend in the upper right is incorrect). It makes a great, big difference when studying the map to figure out which lines are new Big Transmission and which lines are incremental existing builds. Second, the author places the PATH project on the wrong line in the Figure 1 Project Mountaineer Map. He says, "PATH was essentially the western half of the #2 project in the overall Project Mountaineer plan." No, PATH was the western half of the #3 project in the Project Mountaineer map. PJM's original Project Mountaineer called for a Big Transmission line from the John Amos power station to the Deans substation in New Jersey. PJM combined several proposals into the Frankenstein monster that became PATH, and then cut it off at Kemptown, with plans to build a separate Big Transmission project from Kemptown to Deans at a later date.
But, other than those two mapping boo-boos, the article gets the demise of the PATH project exactly right. The demise of PATH has been wrongly portrayed by many people, with claims covering everything from reduced demand to coal plant retirements. In his note 29, the author correctly notes that the demise of PATH was a combination of factors:
But the purist in me simply can't overlook a couple of glaring errors. First, the Figure 2 national transmission overlay map is mislabeled. Existing and New 765kV transmission have their colors reversed. The Existing 765 system is red on the map, and the New 765 system is green (the legend in the upper right is incorrect). It makes a great, big difference when studying the map to figure out which lines are new Big Transmission and which lines are incremental existing builds. Second, the author places the PATH project on the wrong line in the Figure 1 Project Mountaineer Map. He says, "PATH was essentially the western half of the #2 project in the overall Project Mountaineer plan." No, PATH was the western half of the #3 project in the Project Mountaineer map. PJM's original Project Mountaineer called for a Big Transmission line from the John Amos power station to the Deans substation in New Jersey. PJM combined several proposals into the Frankenstein monster that became PATH, and then cut it off at Kemptown, with plans to build a separate Big Transmission project from Kemptown to Deans at a later date.
But, other than those two mapping boo-boos, the article gets the demise of the PATH project exactly right. The demise of PATH has been wrongly portrayed by many people, with claims covering everything from reduced demand to coal plant retirements. In his note 29, the author correctly notes that the demise of PATH was a combination of factors:
It is difficult to apportion the demise of PATH among reduced load growth, the Mt. Storm-Doubs alternative, new generation, and sophisticated statelevel opposition. However, it is fair to observe that reduced load growth had only postponed PATH in the past (three times). What was different in 2010 was the emergence of the Mt. Storm-Doubs alternative, and the focus of a state regulator on that alternative.
That's right... every factor, except Mt. Storm-Doubs, simply delayed the PATH project. Mt. Storm-Doubs, and the "sophisticated statelevel opposition's" overwhelming support of this alternative to change the political climate supporting the PATH project, is what killed PATH. Better, cheaper alternative that the people support? It's the winning PATH of least resistance!
The realities of the "need" for PATH, and its opposition, merely delayed the project long enough for Dominion Virginia Power to step onto the stage with its proposed rebuild. But even that wasn't simply about a better idea... the Mt. Storm Doubs line's existing towers were built out of a certain kind of steel that had not stood the test of time. The tower bases were deteriorating and patchwork fixes were no longer effective. The towers needed to be replaced before they started falling down. And while they were replacing the towers, everything else got an upgrade that increased the line's thermal capacity 65% (allowing it to carry more power). Dominion smartly took advantage of the PATH debacle to get its line rebuilt with minimal opposition, and even the outright support of affected landowners.
Would this situation repeat itself to kill other Big Transmission proposals? Probably not. But it does support the idea that incremental transmission projects and rebuilds are much easier to build than Big Transmission. So, why does the utility industry continue to propose and/or support Big Transmission? Because it comes with Big Profits and they're willing to risk protracted planning and permitting processes in order to increase their profits. It's not about building reliability, economic benefits for consumers, or even "cleaner" power... and all the risk of Big Transmission ends up on the backs of consumers. What's not to like for them? The facts in this article -- Big Transmission must fail.
There's even some hard truth about the last of the Big Transmission projects that have yet to realize they're dead. Clean Line Energy came up with its idea to build thousands of miles of Big Transmission to ship renewables from coast to coast in 2009, when Big Transmission was in its heyday. But, unlike utility proposals where risk and cost is shouldered by ratepayers, Clean Line has spent millions of dollars of private investment cash to keep its idea alive. Once Clean Line gives up, its investors lose everything. There is no federal guarantee to recover sunk costs on speculative, market based Big Transmission. And Clean Line, itself, will die along with its projects, and its executives currently living high on the hog of private investor cash, will be in the unemployment line. This is what keeps Clean Line on life support long after it's been pronounced brain dead. And here's why Clean Line will never happen:
The realities of the "need" for PATH, and its opposition, merely delayed the project long enough for Dominion Virginia Power to step onto the stage with its proposed rebuild. But even that wasn't simply about a better idea... the Mt. Storm Doubs line's existing towers were built out of a certain kind of steel that had not stood the test of time. The tower bases were deteriorating and patchwork fixes were no longer effective. The towers needed to be replaced before they started falling down. And while they were replacing the towers, everything else got an upgrade that increased the line's thermal capacity 65% (allowing it to carry more power). Dominion smartly took advantage of the PATH debacle to get its line rebuilt with minimal opposition, and even the outright support of affected landowners.
Would this situation repeat itself to kill other Big Transmission proposals? Probably not. But it does support the idea that incremental transmission projects and rebuilds are much easier to build than Big Transmission. So, why does the utility industry continue to propose and/or support Big Transmission? Because it comes with Big Profits and they're willing to risk protracted planning and permitting processes in order to increase their profits. It's not about building reliability, economic benefits for consumers, or even "cleaner" power... and all the risk of Big Transmission ends up on the backs of consumers. What's not to like for them? The facts in this article -- Big Transmission must fail.
There's even some hard truth about the last of the Big Transmission projects that have yet to realize they're dead. Clean Line Energy came up with its idea to build thousands of miles of Big Transmission to ship renewables from coast to coast in 2009, when Big Transmission was in its heyday. But, unlike utility proposals where risk and cost is shouldered by ratepayers, Clean Line has spent millions of dollars of private investment cash to keep its idea alive. Once Clean Line gives up, its investors lose everything. There is no federal guarantee to recover sunk costs on speculative, market based Big Transmission. And Clean Line, itself, will die along with its projects, and its executives currently living high on the hog of private investor cash, will be in the unemployment line. This is what keeps Clean Line on life support long after it's been pronounced brain dead. And here's why Clean Line will never happen:
But certainly when Big Transmission is dependent upon market conditions the lumpiness and risk factors are all the more daunting. Big Transmission somehow needs to bring together generation resources and market demand – to the exclusion of alternatives – to forge a level of commitment that will last for many years. That’s a prerequisite for financing. So the entities at each end need to perceive such a compelling business proposition that they will forego other alternatives and cast their fate with Big Transmission. That’s a tough sell.
FERC requires that utilities interconnect all new generation. So a new generator is assured of being able to interconnect its project to the utility serving the territory it is located in; the issue is solely how much money and time it will take for the interconnection. Given this legally assured ability to access the grid through the resident utility, market-based Big Transmission is effectively competing with that utility and thus must offer substantial value added.
And there is no value added by a Clean Line. Clean Line stupidly demonstrated just this point to the City of Hannibal, Missouri, earlier this year with its chart of wind options for the city. The Clean Line prepared (and tweaked) chart showed that wind delivered over the existing incremental transmission system was just as cheap as wind delivered over a "clean" line.
Why would any company buy capacity from a risky new transmission line when existing lines are just as cheap? This probably explains why Clean Line has no customers. And without customers, Clean Line's Big Transmission will also fail.
Why would any company buy capacity from a risky new transmission line when existing lines are just as cheap? This probably explains why Clean Line has no customers. And without customers, Clean Line's Big Transmission will also fail.
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