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DOE Quadrennial Energy Review highlights benefits of transmission, grid operating reforms

The first Quadrennial Energy Review cover
DOE Quadrennial Energy Review highlights benefits of transmission, grid operating reforms
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Today, the Department of Energy (DOE) released its Quadrennial Energy Review (QER), which correctly notes that there is a critical need for more high-capacity bulk electricity transmission regardless of which energy future the U.S. pursues. The report also notes how grid operating reforms enable the U.S. to more efficiently use the existing grid, saving consumers money while providing them with access to more renewable energy.

The QER rightly recognizes that both utility-scale and distributed renewable resources will play a key role in moving America to a cleaner energy mix, and that transmission upgrades will be required under either scenario. The report states that “high deployment of very low-cost distributed energy resources does not eliminate the need for additional transmission capacity. In fact, transmission requirements in the Upper Midwest and Great Lakes regions increase slightly under the distributed PV scenario in order to optimize remaining baseload resources.” In other regions, the need for transmission was slightly reduced, the report found, but there was still a very large need for new transmission.

Long-needed transmission upgrades have played a critical role in allowing Americans to access low-cost renewable energy in recent years. Texas’s Competitive Renewable Energy Zone lines have spurred a “wind rush” in that state, while similar upgrades in the Southwest Power Pool are delivering Gigawatts of new wind resources to customers. These newly tapped wind resources are some of the best in the world, with many offering capacity factors in excess of 50 percent and delivering energy for several cents per kilowatt-hour. The Texas wind boom resulted in the addition of 9,000 jobs in 2014, bringing the total number of wind energy jobs to 17,000 —more than any other state in the nation. Other regions are following the example of this success, with the Mid-Continent ISO planning major grid upgrades that will enable the delivery of more than a dozen Gigawatts of low-cost wind through the Multi Value Projects.

These grid upgrades more than pay for themselves, often with a benefit-cost ratio approaching 2-1 by delivering a host of other benefits, much as America’s investment in the interstate highway network has provided benefits to nearly every sector of the economy. In addition to saving consumers money by providing access to low-cost clean energy, grid upgrades improve electric reliability, make electricity markets more competitive, protect consumers against fuel price fluctuations, and provide other benefits. For example, transmission lines primarily added to help integrate wind in Texas have improved electric reliability around Dallas and San Antonio, while also facilitating the development of oil and gas production in West Texas.

DOE’s QER also highlights how grid operating reforms allow us to use the existing power system more efficiently. The report notes how changes in power system operations, greater regional coordination on grid operations, and market signals benefit consumers while also facilitating the integration of renewable resources. For example, the Energy Imbalance Market that began late last year in the Western U.S. is rapidly expanding, after yielding consumers benefits of $6 million during its first two months of operations. For more information on those grid operating reforms, see Chapter 10 here.

The QER follows the release of the DOE’s Wind Vision last month, which found it is technically feasible for wind energy to provide 10 percent of our nation’s electricity (up from around 5 percent today) by 2020, 20 percent by 2030 and 35 percent by 2050. The Wind Vision found meeting these targets would only require an incremental increase in transmission construction beyond the annual amount utilities have completed in recent years.

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Michael Goggin is Vice President at Grid Strategies LLC, a DC-area consulting firm working on grid and markets issues for clean energy clients including AWEA. He was previously head of Research at AWEA.

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