Congress should give the federal government jurisdiction over “regionally significant” transmission lines, and provide them a 30% investment tax credit, according to Americans for a Clean Energy Grid, or ACEG.
The advocacy group is also calling for a streamlined siting and permitting process that includes a five-year limit for a single federal agency to review and make a decision on proposed regionally significant transmission projects, the advocacy group said in “legislative principles,” released Monday.
Regionally significant transmission is at least 750 MW or 345-kV, crosses at least two states, or one state and the outer continental shelf, or 150 miles long, according to ACEG.
Communities affected by transmission projects should receive funding to participate in regional and interregional planning and project-specific processes, according to ACEG. Congress should also put in place revenue sharing with communities for regional transmission projects.
Congress should direct the Federal Energy Regulatory Commission to issue a proposed rule requiring minimum amounts of transmission capacity between regions, a move the agency is considering, ACEG said.
Permitting reform appears possible despite the divided Congress, Brett White, Pine Gate Renewables vice president for regulatory affairs, said Tuesday during a webinar hosted by ACEG.
“You hear a lot of confidence that they can really get some movement on this issue in the near future,” he said about meetings last week with Democratic and Republican lawmakers. “I am particularly confident that we can make significant progress in the next year or two.”
HB 1, an energy bill that includes permitting reform, passed the House on March 30 and the Senate is taking up the issue, with the Senate Environment and Public Works Committee holding a hearing on permitting on April 26.
Major transmission projects have faced challenges. It took PacifiCorp a decade to receive federal approval for a $1.9 billion project between Wyoming and Utah, according to Megan Vetula, vice president for federal regulatory affairs at Berkshire Hathaway Energy. The project is part of PacifiCorp’s $11 billion, 2,365-mile Energy Gateway transmission initiative.
“Pursuing new transmission-build entails time, risk and an awful lot of money and from the financial perspective, there aren’t a lot of organizations that are financed in a way that they can sustain 10 to 15 years of siting, permitting and building costs before they have the ability to actually recoup those costs,” she said.
A 30% ITC for significant transmission would incentivize regional projects and avoid incentives for local transmission projects or routine asset replacements, Vetula said. It would provide access to the grid for about 30,000 MW, attract $15 billion in private capital and produce $2.3 billion in savings, Vetula said, citing estimates from the American Council on Renewable Energy.
Building transmission would ease interconnection gridlock and costs, the main barrier to renewable energy development, according to White.
More headroom on the system and more certainty in the planning process will lead to fewer withdrawals from interconnection queues and more clean energy coming online, he said.
Merchant transmission, which earns revenue from its customers instead of utility ratepayers, will likely be the only interregional transmission built this decade, according to Nicole Luckey, senior vice president of regulatory affairs for Invenergy, a renewable energy and transmission developer.
“Merchant transmission projects are probably the only game in town for the foreseeable future,” she said. “They can come together very quickly because they don't need to go through the RTO approval processes.”
In a change from the current paradigm, the ACEG principles call for compensating merchant projects for the benefits they bring to regions, such as reliability and resiliency values, Luckey said.
