After months of speculation, the Department of Energy (DOE) released a much-anticipated study of the U.S. electric grid last night. It focused on a critical question—how do we make sure we keep the lights on for American families and businesses?
From our initial review of the report, there are three particularly valuable takeaways. These primary findings are discussed in more detail in our new analytical white paper “DOE Study: Markets and Infrastructure Key to Electric Reliability and Resilience,” and are summarized below.
Markets lead to a more resilient, reliable grid
We welcome DOE’s focus on the grid’s resilience – how it can bounce back quickly from disruptions and resist threats. And we strongly support the recommendation to value the essential reliability services that all power plants, including renewable resources, now provide.
Wind energy makes critical contributions to both a more reliable and a resilient power system, thanks in part to technological advances like power electronics. The following table documents the services provided by different energy sources, showing that wind and other renewables can meet or exceed the level of reliability services provided by conventional power plants.
The fact that no single energy source excels at all services shows the value of a diverse power grid.
It also highlights the importance of markets for essential reliability services. Markets sort out which resources provide which services cost-effectively at any point in time.
Wind plants will not always be the most economic option for most services; neither will coal, gas or nuclear plants. That’s fine, and in fact, that’s the beauty of markets. Markets cost-effectively meet reliability needs through division of labor.
Besides generating electricity, wind turbines provide valuable grid services such as ride-through when other plants fail; voltage control; and frequency regulation.
AWEA strongly supports DOE’s recommendation for “creating fuel-neutral markets … that compensate grid participants for services that are necessary to support reliable grid operations” (page 126), and we have long advocated for such markets.
Building transmission unlocks America’s power potential
Transmission benefits all low-cost electricity sources by allowing cheap power to reach customers, just like the interstate highway system allowed the most efficient producers and retailers to get their products to market.
Grid operators and other experts say more transmission is a key solution for making electricity more reliable and saving consumers money. As DOE’s report says:
“Transmission investments provide an array of benefits that include providing reliable electricity service to customers, relieving congestion, facilitating robust wholesale market competition, enabling a diverse and changing energy portfolio, and mitigating damage and limiting customer outages (resilience) during adverse conditions. Well-planned transmission investments also reduce total costs… A robust transmission system is needed to provide the flexibility that will enable the modern electric system to operate. Although much transmission has been built to enhance reliability and meet customer needs, continued investment and development will be needed to provide that flexibility.” (p. 75)
For example, DOE highlighted transmission projects in the Southwest Power Pool (SPP), which manages the grid across 14 Midwest states. SPP weighed the costs and benefits of transmission projects it built 2012–2014, and found its $3.4 billion transmission investment was expected to reduce customer costs by $12 billion. That’s a direct consumer benefit of about $3.50 for every dollar invested, plus the benefits of rural economic development, avoided health costs from pollution, and hedging against fuel price spikes.
In summary, transmission is a win-win-win.
Easing regulatory barriers will help the U.S. achieve “energy dominance”
Building wind farms and transmission requires navigating permitting and other regulatory obstacles.
Top recommendations include that “DOE and related Federal agencies should accelerate and reduce costs for the licensing, relicensing, and permitting of grid infrastructure,” and that “DOE should review regulatory burdens for siting and permitting for generation and gas and electricity transmission infrastructure and should take actions to accelerate the process and reduce costs.” (p. 127)
This is particularly important when it comes to building new power lines. DOE diagnoses what ails transmission development and identifies these remedies:
“The challenge for building transmission continues to revolve around the three traditional steps involved, each of which can be time-consuming, involved, and complex: (1) demonstrating a need for the transmission project, also known as transmission planning, (2) determining who pays for the transmission project, also called cost allocation, and (3) state and Federal agency siting and permitting. FERC has taken steps to help with the first two, with reforms such as Order No. 1000, which remains a work in progress.” (p. 75) DOE also explains that “natural gas pipelines can be built more quickly than electric transmission lines (in most states) because they have a comparatively streamlined permitting process.” (p. 37)
We look forward to continue working with DOE to ensure Americans have access to low-cost, reliable clean energy, so that America maintains “energy dominance” as the Administration has challenged us. By making it easier to build new wind farms and transmission, we can keep increasing grid reliability while saving money for families and businesses.
See this brief video for an illustration of how wind makes the power grid more reliable: