Building New Transmission ≠ Smart Grid

Lynne Kiesling

When I was reading around for my post on smart grid and renewables interconnection, I found several different parties willing to elide the two, to gloss over the important, subtle distinction between building new wires and incorporating digital intelligence and communication capabilities into a wires network. They are potentiall related, but different, and should be treated as such.

As described in this Green Inc. blog post, the thoughtful folks at the Center for American Progress appear to disagree with me, arguing that there is really no difference:

A truly national clean-energy smart grid must consist of two distinct components: an interstate “sustainable transmission grid” that will transport clean utility-scale renewable energy long distances to market, and a digital “smart distribution grid” to deliver this electricity efficiently to local consumers. The absence of a national grid that seamlessly integrates these two components is one of the biggest impediments to large-scale deployment of low-carbon electricity.

Or at least in her Green Inc. post Libby Tucker characterizes them as disagreeing with me … but this quote she pulled of theirs is at least consistent with the fact that the application of digital communication technology in the wires network falls disproportionately in the distribution network, not in the high-voltage transmission network. At that level the question predominantly is still on the economic value of the contruction of additional transmission infrastructure.

I am not universally predisposed against building new transmission infrastructure; however, I am arguing that until we have meaningful, relevant retail price signals and retail choice for retail consumers, it is impossible for us to know the economic value of additional transmission infrastructure. That, combined with the high level of political lobbying from Boone Pickens and others, leads me to be extremely cautious in recommending larage-scale transmission infrastructure construction. What if we spend lots of money (including taxpayer money) building this network, and it turns out we were wrong about its economic value? Then we’ve just created another set of stranded assets, the bete noire of the regulated electricity industry.

I’m also convinced that we cannot know the economic value to retail consumers/taxpayers of additional transmission infrastructure connecting large-scale renewables until we have an economically meaningful carbon price, which implies that carbon policy uncertainty should be resolved before we start long-distance transmission planning.

As we make decisions about building new long-distance transmission, I think FERC’s Acting Chairman Jon Wellinghoff and I agree on the ideas reflected in this Wall Street Journal article — use existing rights of way, such as rail lines, as transmission paths.

One way to avoid controversy over the location of new power lines could be to run them along railroad rights of way, Mr. Wellinghoff said in an interview.

“There is some discussion of investigating whether or not it’s feasible to site these lines down existing railroad corridors in the United States,” Mr. Wellinghoff said. Lines radiating out from the Midwest would be direct current lines, which “have a lot less interference in them” and could possibly run in a railroad corridor,” he said.

I’ve long believed that one of our most binding physical constraints is land, and that entities with rights of way may be able to profit and to create value by selling or leasing their rights of way to create bundles of infrastructure. I’ve mostly thought of it at the urban distribution level — in the limit, water, natural gas, electricity, and fiber wires in the same right of way — but the idea of siting transmission infrastructure by leasing rights of way from rail companies is a variation on the same idea.


4 thoughts on “Building New Transmission ≠ Smart Grid

  1. Re: “FERC’s Acting Chairman Jon Wellinghoff”

    That’s no act, not any longer anyway, on March 19, 2009 Wellinghoff was designated FERC chairman by Pres. Obama.

  2. Lynne,

    Aggressive construction of new transmission is necessary (but not sufficient condition) to allow retail choice to flourish because retailers need to have multiple suppliers to compete for retail business at a given location to get good prices.

  3. I have a major problem with the concept of an “economically meaningful carbon price”, unless the intent is merely to raise revenue to pour down the federal “rat hole”. (I have a problem with that too, for other reasons.)

    However, if the intent of a focus on carbon policy is to actually reduce US carbon emissions, as part of a global effort to reduce carbon emissions, to some far lower level over some period of time (80% by 2050?), I question whether any “economically meaningful carbon price” selected today could be relied upon to stimulate the required reduction on the required time schedule. That is the major shortcoming of a carbon tax.

    A carbon cap, initially set equal to current emissions levels and scheduled to decline at predetermined intervals by predetermined amounts until the required emissions reduction is achieved, could be relied upon to force the required reduction on the required time schedule. A trading provision could provide a degree of schedule flexibility in a functioning market.

    I believe it is reasonable to assume that the investment required to achieve a given level of carbon emissions reduction would not be the same across all carbon emitters at all levels of residual carbon emissions allowances.

    I also believe it is insane for the US to “unilaterally” go to “war” on climate change, based on “questionable intelligence”, without a “broad coalition” and without adequate “weapons and equipment”. Today we have the leverage to insist on a global approach to a global problem. Once we commit to an economically massive and destructive effort to “save the globe” on our own, or even with the other developed nations, that negotiating leverage is largely lost. A national, or even multi-national “war” on climate change is truly “unwinable”.

  4. Lynne,

    Two things.

    First, repurposing the railroad right of ways might not be easy. In Ohio, we have had some problems when trying to reuse them because at least some of the contracts stated that the right of way was for rail lines. There is no clear contract to use them for anything else, and conversions to bike or hiking trails have been blocked by this.

    Second, did your guy who was going to simulate the grid with smart controls ever return anything conclusive. The student I had who was doing some work on it graduated without getting far enough for any conclusions, so I’m curious if there are solid conclusions around, as well as what methods were used.

    John

Comments are closed.