Building a Smarter Grid:

Transcription

1 Building a Smarter Grid: Challenges and Opportunities for the U.S and Canada Remarks of James Hoecker Husch Blackwell Sanders LLP Hoecker Energy Law & Policy PLLC Former Chairman, Federal Energy Regulatory Commission Woodrow Wilson International Center for Scholars Washington, DC March 18,

2 Challenges to The Transmission System Aging and deteriorating infrastructure More dispersed resources of generation Wholesale competition among generators Complex bulk power markets Arrival of the digital economy Electricity consumption doubled Shifts of public policy (e.g., RPS, efficiency, demand response) 2

3 Obstacles to New Transmission Upgrades/Expansion Not in my backyard or not in my term of office Conflicts between local, state and regional interests Inconsistent state and local regulation Uncoordinated environmental reviews Federal land authorization, esp. in the West Lack of timing coordination among siting entities Varying GHG restrictions and RPS s Difficulty right-sizing for short and long-term needs Uncoordinated siting of lines and generators Timing of need determinations 3

4 Will We Build More Transmission? NERC: Transmission additions will triple to 3100 miles/year Project proposals abound: 90 planned projects each greater than $100 million (totaling $120 Billion) Prospects for a clean energy economy RPS, climate legislation, smart grid; renewable energy projects mean jobs and will drive major transmission expansions and upgrades; 20-30% wind penetration in the East = > $100 Billion for transmission (NREL) Other drivers: reliability, cyber security, replacements, new technologies, load growth PROBLEM: approval processes are out of sync with the realities of multi-state, multi-system, multipurpose transmission 4

5 Q. Who Decides If A Line Is Needed? A. Everybody Siting Location, Location...and Need States consider need for facilities when siting them Cost allocation Who Pays? Who Benefits? States are influenced by the rate impacts on citizens when considering need; FERC defers to states and stakeholders Planning Which Projects Are Needed? Stakeholders & regional planners determine whether projects satisfy reliability, economic, environmental, or public policy needs 5

6 Embedding Smart Tech Helps Beat the Old Technology Rap Two-way Communication of Data and Control of Supply and Demand; Demand Responsiveness Automation Enables A Self-Healing Grid New Visualization Tools Promote Reliability Enabling State and Federal Regulatory Policies A Critical Link To A Low-Carbon Future Access To Renewable Resources Other Benefits of A Strong Transmission Network Fuel Diversity Competitive and Liquid Wholesale Markets Market Power Mitigation Risk Mitigation and Price Stability 6

7 SynchroPhasor Example: Florida Blackout of February 26, 2008

8 Additional Obstacles Economic Regulatory Conflicts Regulation versus Entrepreneurialism Public Utility Business Model Policy Opposition to cost socialization Opposition to federal oversight of planning Interconnectivity and Standardization Rate Recovery Not a Panacea for Aging Infrastructure 8

9 Trends & Prognosis Positive Investment Trends in All Regions: quadruple the 1990s Interconnection-wide planning efforts (ARRA-funded) More FERC leadership in cost allocation and planning Pending transmission legislation could address planning, siting, and cost allocation to varying degrees S.1462 American Clean Energy Leadership Act (E&NR Comm.) Climate Bill H.R American Clean Energy & Security Act (Waxman-Markey) Speculation of a political nature 9

10 James J. Hoecker, JD, Ph.D Husch Blackwell Sanders LLP Hoecker Energy Law & Policy PLLC