As the Federal Energy Regulatory Commission (FERC) begins to study transmission reform, a new report out today from ICF Resources and the American Council on Renewable Energy (ACORE) highlights the problem with transmission cost allocation today.
The study essentially found that while the entire power system typically benefits from significant transmission upgrades, new wind and solar projects are being asked to foot nearly the entire bill when they want to connect to the grid. The analysis, Just and Reasonable? Transmission Upgrades Charged to Interconnecting Generators Are Delivering System-Wide Benefits, focused on a representative sample of network upgrades in the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) regions. Even with conservative assumptions, ICF found significant system-wide benefits in two-thirds of the upgrades evaluated — benefits that other users of the shared system are receiving at little to no cost.
“Regional power grids are like highway systems, moving power to where it’s needed and keeping electrons flowing to homes and businesses around the clock,” said ACORE President and CEO Gregory Wetstone.
Indeed when the rules were first developed they were reasonable, said Himali Parmar Vice President, Energy Markets with ICF in a webcast about the report. She likened them to the cost of adding a driveway to a road. The costs would be around $10-50 per kW. But with so much demand for renewable energy, developers today are being asked to pay around $250-450 per kW, said Parmar, akin to asking them to add a new lane to the highway or even build an entirely new highway altogether.
“Right now, new wind and solar projects are essentially asked to shoulder the financial burden of adding new lanes to that electron highway, lanes that benefit everyone,” Wetstone said in a statement.
Building an entirely new transmission line benefits the entire system, and ACORE points out