When it comes to energy policy in the U.S., I go back and forth between the competitive benefits of deregulation and the problems that can crop up when lots of different retailers, transmission folks, and generators are solely concerned with their own interests, ignoring a more global (and noble) goal of creating a stable grid with cleaner power.
In terms of generation and retail sales of electricity, competition can be a really good thing, spurring development of new renewable sources of energy as well as innovative retail concepts like Reliant’s deal where Texans get a free Nest thermostat in exchange for signing a 24 month contract.
But when it comes to distribution, innovation has been problematic. Matthew Wald at The New York Times recently examined some of the problems with the national grid infrastructure in the U.S. “Balkanized” is the word bandied about to describe what goes on in the U.S. where there are 500 separate owners of various parts of the grid. This includes lots of regional service operators that are only responsible for their own states and making sure that grid architecture functions there. Within those regions there can be additional issues because tens of different utilities with differing interests can exist in a given state.
The U.S. government actually paid hundreds of engineers $16 million to develop a plan for redesigning the Eastern Interconnection. The redesign project quoted a cost of $115.2 billion between 2010 and 2030 to build a more robust Eastern grid, capable of bringing online more renewable energy. That’s a big figure but the money’s actually less of the problem than the fact that there’s no incentive for regional grid operators to cooperate, particularly if building long haul transmission lines that could better integrate solar and wind power threatens local power providers wedded to coal and natural gas.
This all reminds me of something natural gas and wind energy investor T. Boone Pickens has said over and over again—that the U.S. has no energy plan, and has had none for the past 40 years. When it comes to grid infrastructure, we may need the federal government to step in with a plan to improve electricity transmission.
In the meantime, some in the private sector are hoping to create an interconnected grid. In the U.S. the Western Interconnect, the Eastern Interconnect and the Texas Interconnect are all separate islands. This is problematic because it restricts energy sales from one region to the next. Though it’s been very quiet for the past year startup Tres Amigas raised $12 million precisely for a project that would build a “SuperStation” to connect the U.S. grid, thus easily converting AC to DC current in an efficient way. The full project would cost a whopping $1.5 billion. I often wonder if the company is doing exactly what the government should be doing.
Long distance electricity transmission and a highly connected grid is actually critical to the future of renewables. If you don’t have a highly connected grid putting renewables on the grid gets much harder. Solar and wind farms have to be built wherever wind and sun are most abundant. If there were an easy way to transport that energy, there’s a much greater incentive to build it. Currently all renewable energy projects have to factor in extensive transmission challenges. I often hear that despite China’s aggressive march into renewable energy deployment, a major issues remains that much of it is not grid-connected because of transmission challenges.
On principal I support deregulated electricity markets but when it comes to transmission, it may be time for the federal government to take a bigger role in ensuring long distance electricity transmission and a more connected grid. In fact, a better connected grid would actually create a more liquid and competitive market for energy because it would give customers greater access to different energy generators from which to purchase power. It may be time for the federal government to start mandating changes to the national grid.