Electric Transmission and Economic Opportunities

Richard W. Caperton

Senior Energy Policy Analyst

Energy Opportunity at the Center for American Progress

• Clean energy is a success story in tough economic times.

• Now we need to scale everything up.

• There are three things that will grow the clean energy economy– Market demand– Financing– Infrastructure

Transmission Does More than Carry Power

• Enables new generation

• Improves reliability

• Reduces congestion and improves market conditions

• Puts people back to work

Transmission Enables New Generation

"In order for renewable to replace a meaningful amount of our imported oil, we need a national electricity transmission system to carry this electricity be it wind, solar, biomass or other alternatives." - T. Boone Pickens, Texas oil magnate

• The U.S. DOE has identified transmission limitations as the greatest obstacle to realizing the enormous economic, environmental, and energy security benefits of obtaining at least 20% of our electricity from the wind.

• A poll conducted at the WINDPOWER 2008 Conference and Exhibition in June in Houston, Texas, found that participants saw transmission as the largest roadblock to the continued development of wind energy in the U.S.

• Almost 300,000 MW of wind projects, more than enough to meet 20% of our electricity needs, are waiting in line to connect to the grid because there is inadequate transmission capacity to carry the electricity they would produce.

The DOE 20% wind scenario would create over 500,000 jobs and $450 billion in economic impact by 2030, including billions in tax revenue for rural landowners and farmers.

Transmission Improves Reliability

Base-Case Estimation of Cost of Power Interruptions by Customer Class

Base-Case Estimate of the Cost of Power Interruptions by Type of Interruption

Transmission Improves Reliability

“Today, our grids are antiquated, fragile, and vulnerable to cascading failure. Power outages and defects in the current grid system cost U.S. businesses more than $120 billion dollars a year. It has to be upgraded anyway." - Vice President Al Gore

• The 2003 blackout in the Northeast U.S. and Canada caused an estimated $7-10 billion in economic losses.

• An analysis of SPP construction of two transmission projects found that the projects would have “reduced loss benefits” of nearly $100 million.

Transmission Reduces Congestion and Improves Market Conditions

Transmission Reduces Congestion and Improves Market Conditions

“The AWC Project will reduce LMPs, especially in the “EMAAC” region of PJM, compared to the radial alternative. These price impacts would save PJM customers approximately $126 million per year or $1.35 billion over 20 years.” - The Brattle Group

• The DOE identified New England in 2006 as a Congestion Area of Concern due to high electricity price differentials across the region and congestion-related reliability problems in Massachusetts, and Connecticut. However, congestion continues to decrease due to efforts and achievements on several fronts: specifically with energy efficiency reducing total loads. In 2009, New England was no longer a Congestion Area of Concern; but New England still faces a potential resource shortfall under extreme load conditions over the next few years.

• The DOE continues to identify San Francisco, Seattle, Portland area as a Congestion Area of Concern; and the DOE continues to identify the San Diego – Los Angeles areas as a Critical Congestion Area. The New York, Philadelphia, Baltimore, and Washington D.C. area are also listed as a Critical Congestion Area according to the DOE.

• The Figure illustrates that PJM’s top 20 congestion-causing constraints were responsible for 87% of PJM’s total congestion costs in 2007.

Transmission Construction Puts People Back to Work

Pilot projects from the Rapid Response Team on Transmission:

• Oregon and Idaho: 500 jobs, 300 mile long, 500 kV transmission line

• Wyoming and Idaho: 1,200 jobs,1,150 mile long, high-voltage transmission

• Minnesota and Wisconsin: 1,650 jobs, Double-circuit 345 kV transmission line, and single circuit 345 kV line.

• Oregon: 450 jobs, 210 miles of 500 kV transmission line

• New Mexico and Arizona: 3,408 jobs, two 500 kV lines

• Pennsylvania and New Jersey: 2,000 jobs, 145 mile long 500 kV, and several 230 kV lines

• Wyoming, Utah, and Nevada: 1,500 jobs, 700 mile long 600 kV line

Transmission Construction Puts People Back to Work

“We want to spend a fair amount of money investing in a new smart grid. That is, the ability to transmit across high-tension wires in the minds of most people in the public, or underground in these wires, wind and solar energy. You can't do that now. That would create tens of thousands of new jobs, high-paying jobs.” Vice President Biden

• An AWEA report analyzes that a SPP proposal that costs $1.1 billion in transmission expansion in Kansas, Oklahoma, and Texas would create 7,475 transmission jobs and $962 million in economic output.

• A report by the University of Southern Maine analyzed a 2008 proposal by Central Maine Power Company that would cost $1.5 billion and be implemented over three years. The project would result in 2,100 indirect and direct jobs in Maine. The project would result in $242 million in wages and salaries, and increase Maine’s GDP by nearly $300 million over four years.

• The American Transmission Company (ATC) recently completed a large scale project (353 kV) and a small scale project (138 kV) in Wisconsin and Minnesota. The small scale project generated 42.5 jobs for every mile and had a $6 million per mile total economic impact. The large scale project generated 11.6 jobs for every mile and has a $2.1 million per mile total economic impact.

Thank you!

www.americanprogress.org

rcaperton@americanprogress.org

1-202-741-6284