WWS 402: The Electric Power Grid In the United States

Director: H.A. Feiveson

Renewable Energy Production and Transmission In the United States

Patrick Wasserman

Spring 2011

Student Honor Code Pledge: This paper represents my own work in accordance with University regulations.

Patrick Wasserman

Executive Summary The United States currently generates about 12% of its electricity from renewable resources, which includes wind, solar, hydro, and geothermal energy.Renewable resource electricity generation has a number of positive benefits for the United States: it reduces dependence on foreign resources, diversifies the U.S. energy portfolio, encourages economic growth, creates many thousands of jobs for U.S. citizens, mitigates the emissions of harmful greenhouse gases, and, more broadly, itprepares the U.S. to satisfy its energy needs in years to come.Because the benefits are great and the costs are minimal, projections for the future growth of renewable electricity generation are significant, with perhaps over 50% of the nation¶s electricity needs to be met by renewable resources by the year 2050. This growth is, however, largely dependent on state and federal legislation.As of now there is minimal federal support that encourages the development of renewable resources, with federal assistance takingprimarily the form of production, investment, and manufacturing tax credits.While these tax credits do indeed subsidize the cost of renewable resources thereby encouraging growth, the status of these credits has been quite volatile, therefore inducing investor uncertainty.A number of states have, on the other hand, implemented Renewable Portfolio Standards that mandate the state¶s electricity portfolio to utilize a certain percentage of renewable resources by a given date.These Renewable Portfolio Standards demonstrate state willingness to embrace renewable resources, yet without comprehensive federal support and a comparable national commitment to renewable resources true potential cannot yet be realized. In addition to the implementation of renewable resources, transmission of electricity is a critical component of this discussion. Firstly, the geographic distribution of renewable resources is such that it requires long distance high-voltage transmission from the site of generation to the site of consumption.Much of this infrastructure does not yet exist, therefore limiting the extent to which renewable resource electricity generation can grow without serious developments to the transmission infrastructure.Additionally, wind and solar power generation are intermittent producers of electricity, reliant on the ebb and flow of the natural conditions of a given day.This presents complications for grid management that must be addressed to best utilize these resources. While extensive development of the nation¶s transmission infrastructure would have broadly based economic benefit for the individual and for the nation as a whole, there are three central barriers that have prevented notable progress: planning, payment, and permitting.A lack of authoritative federal oversight results in an uncoordinated effort to implement transmission infrastructure, therefore creating general disagreement and overall stagnation.Individual states and regions are unable to realize the broad economic benefit of developed infrastructure, thereby resulting in a failure to broadly allocate costs and a failure to efficiently design and implement new high-voltage transmission.Granting the Federal Energy Regulatory Commission authority to create nation-wide transmission plans, broadly allocate the costs, and to site the path of transmission infrastructure would likely alleviate these concerns, thereby allowing the United States to fully realize the true potential of renewable resource electricity production.

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Introduction Renewable energy electricity production is that which is generated utilizing natural resources that are perpetually replenished.These perpetually replenishing resources include energy from the sun, wind, flowing water, and of the earth¶s hot core.This generation of electricityis in contrast to fossil fuel electricity generation, which uses finite natural resources such as coal, natural gas, or petroleum.These fossil fuel resources have a number of negative consequences, making them unviable for meeting the electricity needs of the future.Most notably, the use of fossil fuels for electricity productionemits a number of harmful greenhouse gases, including sulfur dioxide, carbon dioxide, carbon monoxide, nitrogen oxides, and particulate matter, a problem of increasing severity as the globe faces concerns of climate change.Additionally, these finite fossil fuels are just that ± finite.It is unrealistic and irresponsible to use these resources to depletion, for there exists an alternative path using renewable energy. Perhaps more important than the actual generation of electricity from renewable resources is the transmission of electricity from where it is produced to where it is used.Renewable resources are most oftenlocated in areas that are geographically distant from where the electricity is to be used, therefore requiring extensive transmission infrastructure.This infrastructure does not yet exist and will be of critical importance if renewable electricity production is to play a significant role in the U.S. electricity portfolio. In this report I will first discuss the current electricity generation portfolio of the United States and the role of renewable energy.I will elaborate upon the relevant federal and state legislation that plays a large role in supporting (or failure to support) the growth and development of renewable generation.Subsequently I will outline each form of renewable electricity generation in the United States ± wind, solar, hydro, geothermal, and enhanced

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geothermal ± and will detail their current role in the nation¶s electricity portfolio, including projections for future growth.Lastly I will elaborate on the status of transmission, including the limitations to growth, issues of concern, and the possibility of significant infrastructure development to support the increasing role of renewable energy.

An Overview of the United States Federal: Total electricity capacity in the United States was approximately 1,030,000 MW (1,030 GW) in 2009.The total generation in 2009 represented a 4.1% decrease compared to 2008, primarily as a result of increasing fossil fuel prices.1The increased role of renewable energy in the United States¶ energy portfolio reduces this dependence on fossil fuel energy production, thereby partially eliminating the volatility of electricity prices and, consequently, the volatility in annual generation that arises from increased fossil fuel prices.Diversifying the portfolio to include a higher proportion of renewable energy promotesself-dependence rather than the reliance on a number of foreign sources.2President Obama frequently articulates this point, perhaps in an effort to evoke a sense of patriotism towards building the nation¶s renewable energy resources. The data released by the EIA estimates the 2009 renewable electric capacity to be equal to 125,800 MW, representing about 12% of the nation¶s total capacity.While the total generation of electricity decreased in 2009, the functional renewable electric capacity increased quite

1

EIA. "Electric Power Industry 2009: Year in Review." U.S. Energy Information Administration. 4 Jan. 2011. Web. 29 Mar. 2011. <http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html>. 2 Gramlich, Rob, Michael Goggin, and Katherine Gensler. Green Power Superhighways: Building a Path to America's Clean Energy Future. Rep. The American Wind Energy Association and The Solar Energy Industries Association, Feb. 2009. Web.

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significantly by 14% in 2009, following a 19.9% increase in 2008.3Of this installed capacity hydropower has by far the greatest share with approximately 3/4ths of the total, representing about 7% of the nation¶s total electricity generation, followed thereafter by wind, geothermal, and then solar.4 Wind energy is the fastest growing renewable energy in the nation, representing 63.3% of all electricity capacity gains in 2009.5 Of great importance to the developing sector of renewable energy is the role of federal legislation.Currently, the most relevant supportive legislation is that of applicable tax credits ± the Production Tax Credit (PTC), Investment Tax Credit (ITC), and Manufacturing Tax Credit (MTC).6The PTC, based on the electrical output of the facility, discounts the federal income taxesof owners of renewable energy projects - $22/MWh for wind and geothermal, and $11/MWh for hydroelectric.Similarly, the ITC discounts income taxesbased on capital investment on renewable energy projects - 30% for solar and wind, and 10% for geothermal.Following the American Recovery and Reinvestment Act of 2009, those eligible for the PTC can now instead choose the ITC, making these tax credits quite similar in effect.Lastly, the MTC discounts federal income taxes for manufacturing facilities that support clean energy development.7 While these federal tax credits do indeed encourage the development of renewable resources, there is much room for improvement.These aforementioned tax credits are renewed on an irregular and unpredictable basis, adding a level of uncertainty for investors thereby preventing unrestricted growth.A better implemented comprehensive federal program tailored

3 4

EIA, 2010 Department of Energy - "Department of Energy - Hydropower." The United States. Web. 30 Mar. 2011. 5 EIA, 2010 6 Goodward, Jenna, and Mariana Gonzalez. "Renewable Energy Tax Credits." The World Resources Institute 18 (2010). Web. 1 Apr. 2011. <http://pdf.wri.org/bottom_line_renewable_energy_tax_credits_10-2010.pdf>. 7 Ibid.

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specifically to encourage the development of renewable resources would eliminate this investor doubt and better allow the planning and implementation of additional resources. Using information received from electricity producers, the EIA most recently projected 72,157 MW of capacity to be added by the year 2014.Of this, 48.3% is expected to come from natural gas, 23.1% from coal, and most (but not all) of the remaining to come from renewables.8This simple projection demonstrates that while renewables are indeed quite relevant and will continue to play an ever-increasing role in the nation¶s energy portfolio, the United States¶ electricity generation has and will continue to come primarily from fossil fuel generation.

State: While federal action has been generally lacking a number of states have independently implemented measures of their own to encourage the development of renewable resources.Most notably, 27 states thus far have implemented Renewable Portfolio Standards (RPS).These state legislation standards require a certain percentage of a utility¶s generation to come from renewable resources by a given date, and vary widely state by state.Many allow utilities to comply through tradable credits, some include carve outs requiring a specific energy source to generate a certain percentage of the portfolio, and each state generally has a different definition for what they include as a ³renewable´ resource.Besides these 27 states with renewable portfolio standards, there are an additional 4 states with Alternative Energy Portfolio Standards (which are effectively the same) and another 5 states with renewable energy goals.9A map of the nation in this regard can be seen under Figure 1 in the Appendix.

8 9

EIA, 2010 Pew Center on Global Climate Change "Renewable & Alternative Energy Portfolio Standards." Web. 19 Mar. 2011. <http://www.pewclimate.org/what_s_being_done/in_the_states/rps.cfm>.

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The Generation of Renewable Electricity Wind: Wind energy utilizes the power of wind to turn a set of rotors, thereby operating an electricity-generating turbine. The current capacity of wind turbines in the United States is approximately 40,180 MW, representing about a third of the U.S.¶ renewable generation and about 4% of the nation¶s total electricity capacity.10Furthermore, the United States¶ wind capacity constitutes more than 20% of the world¶s installed wind power, second only to China (by a mere 2,000 MW).11 There are a number of benefits to wind power that makes it a favorable renewable energy and partially explain its explosion of growth in recent years.Firstly, there are essentially no harmful greenhouse gases (GHG) emitted from wind generation - the only emissions occur during production and transportation.12Additionally, wind power is relatively costcompetitive with other electricity sources, and is mostly trouble-free.The PEW Center for Global Climate Change estimates the levelized cost of wind electricity production to be between 6-13 cents / kWh, depending on the specifics of the individual wind array.This levelized cost represents the price at which electricity must be generated from a specific source to break even, taking into account the economic costs of generation over the resources entire lifetime.As a baseline, natural gas production ranges from 6.3 ± 10 cents / kWh, illustrating that wind power is quite competitive.13Furthermore, the average current consumer cost of electricity in the United States

American Wind Energy Association - "Industry Statistics." Web. 23 Mar. 2011. Global Wind Energy Council - Global Wind Report: Annual Market Update 2010. Web. 24 Mar. 2011. 12 Energy Efficiency and Renewable Energy. 20% Wind Energy by 2030. Rep. U.S. Department of Energy, July, 2008. 13 Pew Center on Global Climate Change. "Wind Power." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/wind>.
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is approximately 9.83 cents / kWh, making wind power an economically favorable option for consumers as well.14 The main restraining factor in wind electricity generation is the intermittence of production.It is possible that electricity generation of a wind array may drop to nearly zero at a time when it is most needed, simply because the wind is not blowing at that moment in time.This intermittency generates a capacity factor for wind production generally between 25-40%, compared to 60% for coal and 80% for gas-fired, although coal and gas-fired plants are capable of running at nearly 100% if utility managers so choose.15This percentage is a measure of the total produced output of the resource over the total capacity if it were running at full strength.While this is indeed a limitation of wind power, it can most certainly be overcome with intelligent and innovative grid management. Another limitation on wind electricity is that the greatest wind resources are in the Midwest region of the nation, quite far from the heaviest users of electricity.This poses great transmission complications, for the infrastructure to transfer electricity across this long distance does not yet exist and is quite expensive to build.For a map of the nation with the distribution of available wind, see Figure 2 in the Appendix.Because these transmission complications are relevant to other renewable resources as well, the transmission of renewable energies will be discussed in depth later in this report. Offshore wind arrays present a very viable option for future growth in the wind sector.28 states in the U.S. have coastal boundaries and use 78% of the nation¶s electricity, making them perfect candidates for offshore wind.Situating the arrays closer to the consumer also limits the extent to which extensive long-distance transmission infrastructure is needed, thereby

14 15

EIA, 2010 PEW Center on Global Climate Change ± Wind Power

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simplifying a very complicated factor in the equation.Furthermore, offshore wind arrays produce approximately 50% more electricity because of higher wind speeds over the water.However, offshore wind arrays come with a notable cost, which is about 50% higher than land based wind farms.Additionally, the technology for deep-water wind arrays does not yet exist, therefore limiting water-based wind to shallow waters.16Citizens often hold a ³not in my backyard´ mentality and will lobby extensively to prevent the construction of wind projects they regard to be unsightly. The prospects for future wind growth look promising, though are largely dependent on the support provided by the federal government.The United States Department of Energy estimates that wind could provide 20% of the nation¶s electricity generation through wind generation by 2030 without any additional energy storage.This would require capacity to reach over 300,000 MW, of which 50,000 MW would likely come from offshore arrays.This would avoid 825 metric tons of annual CO2 emissions by 2030, representing a 30% reduction, with the cumulative CO2 mitigation reaching about 7,600 metric tons.17

Solar: The amount of energy that reaches the earth¶s surface from the sun each and every hour is approximately equivalent to the energy used by the entire world annually, making solar power a renewable resource of possibly immeasurable value in years to come.As of now, solar power accounts for only a small proportion of renewable energy both in the United States and abroad,

16 17

U.S. Department of Energy, 2008 Ibid.

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with the U.S. installed capacity last estimated by the Solar Energy Industries Association to be 2,108 MW in 2009, ranking fourth behind Germany, Spain, and Japan.18 Of this 2,108 MW of installed capacity, solar photovoltaics (PV) produce 1,676 MW while concentrated solar power (CSP) produces the other 432 MW.When one thinks of solar power one traditionally thinks of solar photovoltaics, which uses one or more solar panels consisting of semiconductor materials to convert sunlight into electricity.Concentrated solar power, on the other hand, uses a system of mirrors or lenses to concentrate the sunlight onto a working fluid.This working fluid is then heated, which produces steam, which then consequently drives a turbine, thereby producing electricity.19 Like wind generation, production and transportation are the only stages during which GHG emissions occur during the lifespan of solar power projects; on average an installation must operate for four years to generate the amount of energy that was expended to create and transport the installation.Also like wind power solar power can only produce electricity intermittently.While this is indeed an inconvenience, intelligent grid management can indeed minimize this concern.One such way of doing so is by incorporating solar and wind generation together, for solar produces best during the day while wind produces best at night.Lastly, like wind generation, the potential for solar power is unevenly distributed across the nation, presenting complications for electricity transmission.20Figure 3 in the Appendix illustrates this concern and presents the average daily solar resource potential across the nation. The levelized cost of solar power is quite high relative to other renewable energy resources, perhaps explaining why wind and hydroelectric resources dwarf the installed capacity
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"Industry Data." SEIA - Solar Energy Industries Association. Web. 19 Mar. 2011. <http://www.seia.org/cs/research/industry_data>. 19 Pew Center on Global Climate Change. "Solar Power." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/solar>. 20 Ibid.

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of solar.The levelized cost is estimated to be 20 ± 28 cents / kWh for solar photovoltaic installations and 14 ± 19 cents / kWh for concentrated solar power, with the actual cost dependent on the individual installation.One reason for this rather expensive cost is because the required materials, such as silicon, are in low supply and have a high cost.Additionally, solar technology is not terribly efficient and captures only 12-15% of the available energy.21 The projections for future growth of solar electricity generation look promising even with the limitations mentioned above.The United States Department of Energy estimates domestic solar PV generation to grow by 21.3% annually through the year 2030 while other projections predict even higher growth rates.It is also estimated that by 2020 regions most suitable for solar power will be able to produce solar electricity at a price competitive to other electricity generation.Supporting this claim, the International Energy Agency estimates that solar electricity could cost as little as 5 cents / kWh by the year 2020.22

Hydro: Hydroelectric power is the most widespread form of renewable energy used across the globe, and for a number of good reasons.In the United States hydroelectric power represents approximately 3/4ths of the nation¶s total renewable resources, with installed capacity estimated to be around 95,000 MW.23 The most common implementation of hydroelectric power in the United States is conventional hydropower in which a reservoir of water is held behind a dam.This potential energy can be released under the command of the dam operator, at which

21 22

PEW Center on Global Climate Change ± Solar Power Ibid. 23 U.S. Department of Energy - Hydropower

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point the water descends the height of the dam (known as the head), thereby using kinetic energy to drive a turbine and produce electricity.24 The main reason for widespread implementation of hydroelectric power is its low cost.Hydroelectric power¶s levelized cost is between 1 ± 10 cents / kWh, depending on the individual site.Initial construction comprises a majority of the cost after which expenses for maintenance and operation are minimal.Unlike other renewable resources, hydroelectric power is quite flexible and can be implemented at any time, thereby allowing it be used both as baseload and peak generation.This is because the flow of water can be directed with the flip of a switch, and is therefore available at any time of day. Despite the many advantages of hydro, creating the dam and reservoir necessary to produce large-scale hydroelectric power requires a serious disruption in the flow of a river.This has grave consequences for the natural ecosystem of both the flowing river and the surrounding land, which is soon thereafter underwater.Once the reservoir is formed, vegetation that once stood dry is now under a sea of water, which consequently releases a number of GHG into the environment.Furthermore, the construction of reservoirs can displace from their homes a large number of people who are often without an effective voice when deciding the location of a hydroelectric dam.25 While these concerns are indeed consequential, there is much room for further growth of hydroelectric power in the United States through the development of new infrastructure, the addition of electricity generation to existing dams, and efficiency upgrades to current facilities.The development of new hydroelectric facilities has the potential to add 60 ± 180,000 MW of capacity, depending on how aggressively the nation or individual entities pursue smallPew Center on Global Climate Change. "Hydropower." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/hydropower>. 25 Ibid.
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scale or micro hydroelectric resources. This estimate has a wide range because comprehensive implementation of hydroelectric power throughout small-scale water resources of the nation has great potential but is difficult to estimate, for there exists flowing water throughout the entire country. Furthermore, only 3% of U.S. dams currently generate electricity, and implementing hydroelectric power at these locations could add an additional 17 ± 30,000 MW of capacity.Increased efficiency at current facilities could also supplement these already large additions to capacity, which could increase generation by 4 ± 7,000 MW. In total these hydroelectric developments could add an additional 81 ± 217,000 MW of capacity to the nation¶s electricity portfolio. If these increases to the hydroelectric capacity of the United States were implemented, CO2 emissions as a result of electricity generation could decrease from current levels by as much as 8 ± 25%.26 The obstacles to the development of hydroelectric power in the United States are as follows:Firstly, the locations best suited for hydroelectric power have already been utilized as such.Additionally, hydroelectric power is very heavily regulated, second only to nuclear power.Finally, hydroelectric power is susceptible to climate change, for example changes in precipitation patterns.27

Geothermal: Geothermal energy utilizes the naturally occurring heat generated in the earth¶s core to produce steam that is then able to drive a turbine, thereby producing electricity.The nature of geothermal energy requires very technical hard rock drilling under high heat and pressure, making geothermal energy relatively difficult to capture.The current installed capacity of

26 27

PEW Center on Global Climate Change ± Hydropower Ibid.

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geothermal electricity generation in the United States is approximately 3,086 MW, thereby composing less than 1% of the nation¶s total renewable electricity generation.Perhaps surprisingly, only four states actually produce geothermal electricity, of which California produces by far the majority (88% of the nation¶s total).28The levelized cost of geothermal electricity is between 5 ± 11 cent / kWh, making it quite competitive with other forms of renewable energy.29 Like hydroelectric power but unlike wind or solar, geothermal electricity generation has an advantage in that it is continuously available.The continuous generation of geothermal electricity will allow the United States to pursue a portfolio of renewable resources while still allowing grid managers to meet the consumers¶ demand when needed. Future projections made by the U.S. Geological Survey estimate that with the current technology the United States could implement up to an additional 40,000 MW of installed capacity.Perhaps more realistically the Energy Information Association predicts that with the implementation of a cap-and-trade program geothermal electricity generation could grow at a rate of 4.2% annually, thereby attaining generation of about 7,000 MW by the year 2030.30 The obstacles to future growth are noteworthy. Because the implementation of geothermal electricity production requires high-risk exploration, there is much investment uncertainty prior to implementation that can make it difficult to acquire necessary funding.Additionally, there are only a small number of locations suitable for geothermal

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Holm, Alison, Leslie Blodgett, Dan Jennejohn, and Karl Gawell. Geothermal Energy: International Market Update. Rep. Geothermal Energy Association, May 2010. Web. 29 Pew Center on Global Climate Change. "Geothermal." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/geothermal>. 30 EIA. ³Energy Market and Economic Impacts of S. 2191, the Lieberman-Warner Climate Security Act of 2007.´ Office of IntegratedAnalysis and Forecasting U.S. Department of Energy. April 2008.

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production, most of which are located in the western states.31A map of the geothermal resource distribution in the United States can be viewed in Figure 4 of the Appendix.

Enhanced Geothermal: Enhanced geothermal electricity production works in essentially the same way as traditional geothermal but instead uses artificially created hydrothermal resources.This entails the rather complicated process of drilling to extreme depths, fracturing the rock to create channels through which liquid can flow, injecting chilled fluid underground, which is then heated by the core of the earth, and then finally extractingthe heated working fluid used as if it were naturally occurring geothermal.Enhanced geothermal sounds a bit complex, dangerous, and with high-riskbecause it is.For this reason, and because the technology for commercial implementation does not yet exist, there are currently no commercial-scale plants in operation.However, because enhanced geothermal does not rely on readily accessible naturally occurring hydrothermal resources, enhanced geothermal electricity production does not face the same geographic limitations as traditional geothermal electricity.32For a map of the distribution of enhanced geothermal resources across the nation see Figure 5 of the Appendix. Although the technology for implementation does not yet exist projections for future growth are quite significant.The Massachusetts Institute of Technology predicts that installedcapacity could reach 100,000 MW by the year 2050, though this would require up to 15 years of research and development before any sort of commercial implementation.Furthermore, the U.S. Geological Survey asserts that the United States is capable of eventually installing over

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PEW Center on Global Climate Change ± Geothermal Pew Center on Global Climate Change. "Enhanced Geothermal Systems." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/EGS>.

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500,000 MW with advanced technology.33Upon commercial implementation the levelized cost is expected to be between 3.6 ± 9.2 cents / kWh, though much higher up until that point.The future of enhanced geothermal electricity production is entirely dependent on the development of relevant technology, namely high temperature and high pressure drilling, but with proper advancements could provide a rather significant proportion of the United States¶ energy portfolio.34

Overall Renewable Potential: With the proper governmental support it is likely that renewable energy will start to play a very significant role in the U.S. electricity portfolio by the year 2030, increasing to perhaps more than 50% of electricity generation by the year 2050.

The Transmission of Renewable Energy

While the projections of future renewable electricity generation in the United States are indeed encouraging, the truth of the matter is that the transmission of renewable energy is perhaps the more relevantdiscussion.Until the United States fully develops the transmission infrastructure necessary, renewable energy will not be able to play a major role in the electricity generation portfolio.Furthermore, failure to develop the necessary transmission impedes the growth of the renewable energy industry.Navigating Consultant predicts that the solar industry could create 440,000 jobs and $325 billion in the next eight years if it is able to grow without

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34

PEW Center on Global Climate Change ± Enhanced Geothermal Systems Ibid.

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constraint.35Similarly, the U.S. Department of Energy predicts that if wind power were to satisfy 20% of the U.S. electricity generation in 2030, the industry could create an additional 500,000 jobs and $450 billion in economic revenue.36 In addition to extensive job creation and economic benefit for the nation as a whole, uninhibitedgrowth in the renewable energy economy would lower the cost of electricity for the end use consumer, even with the required transmission infrastructure developments taken into account.This is primarily as a result of broadened access to electricity generation through a more comprehensive transmission infrastructure.As of now consumers are dependent on the resources that generate electricity locally, which can quite often be inefficient, expensive, and subject to the volatility of fossil fuel prices.Furthermore, without market competition electricity generators are without an incentive to provide competitive prices and up-to-date generation technology.A comprehensive transmission infrastructure allows the consumer to access the most efficiently operating resources, thereby minimizing the price.37 In a recent study the American Electric Power projected that renewable electricity generation with the necessary transmission developments would result in net savings of $2.71 ± 4.00 / MWh for the average household.38Likewise, a regional study by the Charles River Associates calculated that developing wind electricity in Kansas, Oklahoma, and Texas at an annual infrastructure cost of $400-500 million could yield approximately $2 billion in economic benefit annually.39The Electricity Reliability Council of Texas (ERCOT) found that a $4.9 billion investment in transmission would save $1.7 billion each year in fuel costs, thereby
Navigant Consulting. Economic Impacts of Extending Federal Solar Tax Credits. Rep. Solar Energy Research and Education Foundation, 15 Sept. 2008. Web. <http://seia.org/galleries/pdf/Navigant%20Consulting%20Report%209.15.08.pdf>. 36 U.S. Department of Energy ± 20% Wind Energy by 2030 37 Gramlich et al., Green Power Superhighways, 2009 38 American Electric Power - Analysis of Benefits and Costs for a U.S. Interstate EHV Transmission System. May 2009. Web. <http://www.aep.com/about/transmission/docs/AEPBenefit-CostforEHVInterstateFINAL.pdf>. 39 Charles River Associates. SPP WITF Wind Integration Study. Rep. Southwest Power Pool, Jan. 2010. Web.
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repaying the investment in less than 3 years.ERCOT did indeed choose to pursue this infrastructure development as a result of their positive cost-benefit analysis, yielding remarkable growth that puts Texas as the leading state producer of wind power by a significant margin.40 The actual design of these required transmission infrastructure developments could take a number of different forms, though the implementation would most certainly utilize high-voltage transmission lines.A 765-kV transmission line can carry six times the electricity of a 345-kV line, thereby minimizing land use and infrastructure costs.Furthermore, high-voltage transmission lines are much more efficient, thereby reducing energy loss, making high-voltage transmission the most cost effective solution.41Qualified experts in the industry advocate different solutions:American Electric Power and the American Wind Energy Association recommend the use of 765-kV alternating current (AC) transmission lines, while the Joint Coordinated System Plan, consisting of a number of major Eastern U.S. transmission operators, advocate the use of a mixture of 800-kV direct current (DC) lines and high-voltage AC lines.42 For further information on the distinction between AC and DC transmission, please see the box below entitled ³The Difference Between Alternating Current (AC) and Direct Current (DC).´ In addition to the construction of transmission infrastructure there are a number of modifications that can be made to grid management to encourage efficiency and integration of renewable resources.Firstly, greater cooperation between areas of transmission will allow the most efficient delivery of electricity.Currently there are 140 autonomous operations, between which linkages are constrained.This requires an operator to rely on high-cost reserve generation to meet increased demand, while at the same time another operator nearby may be asking an

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ERCOT,ERCOT's CREZ Transmission Optimization Study. Apr. 2008. Web. <http://interchange.puc.state.tx.us/WebApp/Interchange/Documents/33672_1016_580099.PDF.> 41 Gramlich et al., Green Power Superhighways, 2009 42 Ibid.

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electricity generator to shut down because of decreased demand.One grid operator of the Midwest chose to consolidate 26 of the sectors into one, realizing annual savings of $113-208 million that outweigh the costs by a factor of 3.7 ± 6.7.43 Furthermore, splicing the operation schedule into smaller blocks would allow for more flexible power generation, of particular importance with the integration of renewable resources.Because the schedule of generation is currently divided into hourly blocks, it often requires the use of reserve generation when demand spikes.Splitting the schedule into smaller 5 or 10-minute blocks allows electricity generation to be more finely tuned to the needs of the consumer, thereby operating at maximum efficiency.44 Three main barriers exist to the construction of comprehensive high-voltage transmission infrastructure: planning, payment, and permitting.There is currently a lack of comprehensive infrastructure planning.Instead, most developments in the transmission infrastructure are narrowly based, serving a single state or region.This creates a mish-mosh of transmission infrastructure with no real comprehensive structure in mind.What is instead needed is a governing body that can develop transmission plans for the nation as a whole, a role perhaps best suited for the Federal Energy Regulatory Commission (FERC).Working with state and regional governing bodies, including the main AC power grids ± the Eastern Connection, Western Connection, and ERCOT ± FERC would be best able to analyze the most efficient routes for high-voltage transmission lines and the optimalgeographical distribution for the development of renewable resource electricity generation.45This would eliminate the current clashing of forces of

Lori A. Spence, ³Informational Filing of Midwest Independent Transmission System Operator, Inc. Docket No. EL06-000,´ Letter to Magalie R. Salas, Federal Energy Regulatory Commission, April 3, 2006. 44 Gramlich et al., Green Power Superhighways, 2009 45 Ibid.

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development and would promote unity and cooperation in the development of the transmission infrastructure. In regards to the financing of such a project, the required investment for additional transmission infrastructure has not yet been made because the incentive for investment does not yet exist.While a newly developed transmission infrastructure would indeed have great economic benefits for the individual and the nation as a whole, these benefits are not fully realized by those making the investment.Those doing the cost-benefit analysis also limit their scope too narrowly, often limiting the scope to within five years and only considering the benefits to consumers within the immediate area, when in reality the benefits radiate outwards and into the future.46As a result of this a single state can put an end to a large-scale multi-state project if the state is not satisfied with the benefits for their consumers, when in fact the reality of the project would indeed bring significant economic benefits to a wide range of people and to the nation as a whole.Additionally, the payment for transmission faces the free rider dilemma because common regulation requires that those that induce increased transmission congestion ± electricity generators looking to add capacity to the grid - must provide the financing for the required infrastructure upgrades.Consequently it is a waiting game in which no one wants to be responsible to pay for vast infrastructure developments.47 Like the concern of undirected planning, the allocation of cost also requires federal oversight.Granting FERC the authority to very broadly allocate costs across the entire spectrum of those that benefit would minimize the costs of development. Furthermore, unlike the limited scope of state or regional based evaluations, FERC oversight would include diffuse economic

46
47

Gramlich et al., Green Power Superhighways, 2009 Ibid.

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benefits in their assessment of cost-benefitanalysis, encouraging the development of transmission that would have otherwise been perceived as too costly. Also of great concern is the unnecessarily complex process of obtaining the necessary permits to construct multi-state transmission.The process is one that takes a number of years and requires those taking on the brave task of planning the project to satisfy a number of local, state, and federal regulations.The process is complicated by the overlapping administrative authority, with no clear understanding of which regulatory agency is in control.A multi-state transmission line is at the mercy of each state in its path, making it nearly impossible to implement large-scale projects let alone a national high-voltage grid that fully supports the development of renewable energy.Like the other concerns previously discussed, this too could be overcome if FERC were given national siting authority, granting the federal agency more or less authoritative control to implement a nation-wide comprehensive transmission infrastructure.48 The Difference Between Alternating Current (AC) and Direct Current (DC) Scientifically speaking, the difference between alternating current and direct current is quite simple: the electrons of direct current follow the path of travel in one direction, while the electrons of alternating current perpetually switch the direction of travel. Practically speaking, this has a number of consequences. The widespread use of AC for electricity transmission allows electricity to be transferred at high voltages, thereby minimizing efficiency losses. Subsequently the AC can quite easily be stepped down to lower voltages for commercial and residential use. However, AC transmission lines can only connect synchronized AC networks, and not all the transmission networks in the U.S. are synchronized. Direct current traditionally presented no real competition for AC transmission until the development of high-voltage direct current (HVDC). HVDC is more efficient than AC and therefore cheaper for long distance transmission, thereby allowing the transmission of large amounts of power from remote electricity generators or to interconnect AC power grids. Furthermore, HVDC has the potential for increased grid stability and can help mitigate the intermittency of renewable electricity generation through proper grid management because the magnitude and flow of electricity can be directly commanded, unlike AC.43 HVDC transmission requires, however, conversion to AC at the end user, which entails very costly conversion equipment. Therefore HVDC really only makes economic sense past a certain break-even distance - approximately 50km for underwater transmission and 600-800km for overhead transmission.48
48

Gramlich et al., Green Power Superhighways, 2009

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Conclusion The growth of renewable energy electricity production in the United States looks quite promising, and renewable resources will play an increasingly significant role in the nation¶s electricity portfolio in years to come.As this report has outlined, this growth is dependent on a number of factors, perhaps most importantly on the scope and character of federal and state legislation.The federal government has great influence on renewable resource development by financially incentivizing growth, through the implementation of federal production, investment, and manufacturing tax credits. State based Renewable Portfolio Standards will also have a great impact on future development, requiring a vast expansion of renewable energy resources even in the absence of federal policy.Even more essential to the development of renewable resource electricity generation would be the achievement of a vast expansion of high-voltage electricity transmission infrastructure across the nation. To impel such expansion, the federal government must step in with clear authority, perhaps under the lead of the Federal Energy Regulatory Commission, to oversee transmission planning, siting, and cost allocation.

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Appendix: Figure 1: Renewable and Alternative Energy Portfolios

Source: Pew Center on Global Climate Change - 2011

Figure 2: Wind Resource Potential at 50m Above Ground

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Figure 3: Average Daily Solar Resource for South-facing PV

Figure 4: Distribution of U.S. Geothermal Resources

Source: Green, B.D. and G.R. Nix, Geothermal: the Energy Under Our Feet, the National Renewable Energy Laboratory, November 2006.

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Figure 5: Distribution of U.S. Enhanced Geothermal Resources

Source: Tester, Jefferson, et al. 2006. The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems (EGS) on the United States in the 21st Century.Massachusetts Institute of Technology.

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Gramlich, Rob, Michael Goggin, and Katherine Gensler. Green Power Superhighways: Building a Path to America's Clean Energy Future. Rep. The American Wind Energy Association and The Solar Energy Industries Association, Feb. 2009. Web. Holm, Alison, Leslie Blodgett, Dan Jennejohn, and Karl Gawell. Geothermal Energy: International Market Update. Rep. Geothermal Energy Association, May 2010. Web. Lori A. Spence, ³Informational Filing of Midwest Independent Transmission System Operator, Inc. Docket No. EL06-000,´ Letter to Magalie R. Salas, Federal Energy Regulatory Commission, April 3, 2006. Navigant Consulting. Economic Impacts of Extending Federal Solar Tax Credits. Rep. Solar Energy Research and Education Foundation, 15 Sept. 2008. Web. <http://seia.org/galleries/pdf/Navigant%20Consulting%20Report%209.15.08.pdf>. Pew Center on Global Climate Change. "Hydropower." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/hydropower>. Pew Center on Global Climate Change. "Solar Power." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/solar>. Pew Center on Global Climate Change. "Wind Power." Web. 21 March 2011. <http://www.pewclimate.org/technology/factsheet/wind>. Pew Center on Global Climate Change "Renewable & Alternative Energy Portfolio Standards." Web. 19 Mar. 2011. <http://www.pewclimate.org/what_s_being_done/in_the_states/rps.cfm>. SEIA ± Solar Energy Industries Association - "Industry Data." Web. 19 Mar. 2011. <http://www.seia.org/cs/research/industry_data>.

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