COLUMN-Clean Line would bring wind power to Tennessee: Kemp

Fri Jan 4, 2013 9:24am EST

By John Kemp

LONDON Jan 4 (Reuters) - Clean Line Energy Partners has taken the first steps towards developing a long-distance transmission network to bring abundant wind power from the U.S. Great Plains to customers in the Tennessee Valley and the rest of the Southeast.

On Dec. 21, the U.S. Department of Energy announced it would prepare an environmental impact statement for the Plains and Eastern Clean Line Transmission Project - the most advanced of four projects Clean Line is developing to take wind power from the plains toward the coasts. ().

If it is eventually approved, a single high-voltage direct current (HVDC) transmission line with capacity to deliver 3,500 megawatts (MW) would run over 700 miles from wind farms in western Oklahoma, southwestern Kansas and the Texas Panhandle to Tennessee and the rest of the Southeast.

Other attempts to plan and build long-distance transmission lines have failed owing to opposition from local landowners and environmental groups.

But Clean Line is seeking a partnership with the U.S. Department of Energy and has already got qualified backing from major environmental lobbying groups, making the project much more likely to succeed.

EASING CONGESTION

Power markets in the Plains-area regions of the three states are currently saturated. Local wind producers often receive very low and sometimes even negative prices, because there is not enough transmission capacity to send excess power to neighbouring areas. By easing congestion, the Plains and Eastern Clean Line would support higher power prices and the continued build-out of wind farms.

More renewables would also help relieve looming shortages in the Southeast. The region is projected to see higher-than-average growth in power consumption over the next two decades but is unusually dependent on coal-fired power plants, many of which are threatened by environmental regulations.

The federally owned Tennessee Valley Authority (TVA), which provides power for 9 million people across seven states, plans to obtain 50 percent of its electricity from carbon-free sources. It has already entered into agreements with wind farms outside its territory for thousands of megawatts but needs thousands more to reach its goal.

The Plains and Eastern Clean Line would connect with the TVA near Memphis and make more wind power available across the TVA and neighbouring service areas.

TRANSMISSION PRIORITY

Plains and the other Clean Lines are just one illustration of the rising interest in long-distance transmission systems.

The existing power network was designed to connect electricity customers with nearby power plants, not to shift power produced in one region to consumers in another. But the shift away from fossil fuels and towards renewables such as wind and solar will require much more long-distance capacity.

The best sites for wind farms are found mostly in a band down the centre of the country stretching from North Dakota and Montana in the north to Texas and New Mexico in the south. By contrast, power demand is concentrated along the East and West coasts.

The transmission system lacks enough capacity to move such huge amounts of power. Existing wind farms have more or less filled up all the spare capacity across the Eastern Inteconnection, the giant synchronised grid that links up power markets in the eastern two-thirds of the country.

As a result, new wind farms are increasingly being built nearer to the coasts to be closer to customers, even though such locations have lower average wind speeds than on the plains and are therefore more expensive and less effective.

Between 2005 and 2009, the geographical centre of new wind installations on the Eastern Interconnection shifted 220 miles east from near Kirksville in Iowa to Ottawa in Illinois, according to Clean Energy.

The Plains and Eastern Clean Line is one attempt to reverse this shift. Large areas near the origin of the Clean Line have average wind speeds of 9.0 metres per second (about 20 miles per hour) compared with less than 6 miles per hour in the target delivery market of the Southeast.

The Clean Line is just one piece of a much larger puzzle. In 2008, the Joint Coordinated System Plan (JCSP), prepared by the major transmission operators in the Eastern Interconnection, estimated the network would need an extra 7,500 miles of HVDC lines to be able to accommodate 20 percent wind generation by 2024.

The Department of Energy's Eastern Wind Integration and Transmission Study (EWITS) in 2011 came to a similar conclusion. "Planning for (new) transmission is imperative because it takes longer to build new transmission capacity than it does to build new wind plants," the study warned.

SECTION 1222 AGREEMENT

Building more transmission capacity is a priority for the federal government. The Federal Energy Regulatory Commission (FERC) allows rates of return of as much as 12-13 percent for investments in transmission, which has triggered an upsurge in interest from utilities across the country, according to a recent article in the Wall Street Journal ("U.S. Electricity Use on Wane" Jan 2).

In 2010, the Department of Energy invited proposals for new or upgraded transmission projects. In response, Clean Line Energy submitted an application for a partnership agreement with the department and with the Southwestern Power Administration to develop and build the Plains and Eastern Clean Line.

Section 1222 of the 2005 Energy Policy Act allows the Department of Energy to "design, develop, construct, operate, maintain or own" new and existing electric transmission lines, either on its own or in partnership with other organisations, subject to some restrictions (42 USC 16421).

The department's financial contribution is strictly limited by law. But partnering with the government brings other benefits. "Clean Line foresees the involvement of the Energy Department and Southwestern in ... three critically important areas: public outreach, siting and permitting," its project proposal says.

"Southwestern has a long history of working cooperatively with utilities, landowners, state officials and others in helping meet their needs and at the same time serving national interests," Clean Energy explained.

Southwestern can also acquire rights of way from holdout landowners, if necessary, by employing the federal government's power of eminent domain.

Clean Energy has promised to acquire land voluntarily as much as possible and use state-level eminent domain laws only where necessary.

States typically allow utilities to use eminent domain for siting transmission lines. Clean Energy may struggle, however, to win utility status in some transit states it carries electricity across but does not serve, so it needs backup eminent domain powers from the federal government.

Finally, Clean Energy's projects will need government permits under the 1969 National Environmental Policy Act (NEPA).

"Through the section 1222 process, the project will benefit from the Energy Department and Southwestern taking a leading role in coordinating federal permitting actions and overseeing necessary NEPA analyses." In plain language, it may be easier to get an environmental permit if the government is a partner in the project.

PRIVATE FINANCING

Like other transmission projects, HVDC lines have proved popular with investors but only after they have reached an advanced stage and are construction ready. Investors remain leery of the complexity and high risk of failure while a project is being designed and applying for permits and rights of way.

Clean Line already has financial backing from ZAM (Ziff Asset Management) Ventures. On Nov. 27, Clean Line announced a $40 million equity investment from Britain's National Grid .

National Grid brings cash, credibility and expertise. It already has experience owning and operating transmission systems, including HVDC links, in both the United States and the United Kingdom. National Grid built and operates the existing HVDC link between New England and Canada and is involved in Britain's interconnectors with France and the Netherlands.

Completing the planning, permitting and siting processes for transmission systems takes five to seven years or longer, according to Clean Line. The Plains and Eastern link is unlikely to enter service until towards the end of the decade.

But it is an important first step. Many more such links will be needed in the next 10 years if wind and solar generation continues to grow.