The U.S. Midwest has massive wind power potential, and it’s a growing target for solar power projects as well. What it lacks is the transmission capacity to carry that clean energy to market — a costly problem compounded by convoluted transmission planning rules that have held back gigawatts of wind projects over the past few years. 

That’s how Beth Soholt, executive director of the Clean Grid Alliance, describes the challenge for Midwest renewable energy developers, utilities and grid operators trying to expand the region’s clean energy resources. “Our fundamental problem is a lack of transmission capacity,” she said. “We need more wire.” 

After years of stymied growth, interstate grid operators are looking for new ways to share costs and benefits across the region’s energy stakeholders, she said. While that may be too late to allow stalled wind projects to capture expiring federal tax credits, it’s still a major opportunity to create the conditions needed to meet the country’s massive demand for carbon-free energy in the decade to come. 

Take this week’s creation of a joint planning initiative between the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP), meant to identify transmission projects that could bring value to customers along the “seam,” or border separating the two grid operators’ territories. That seam cuts from north to south across the country’s wind-rich Great Plains, making it a key barrier to transmission lines that could carry wind power to eastern markets hungry for carbon-free energy. 

But getting grid operators to identify the value of transmission projects crossing those borders, and thus allowing the utilities that would build them to recover their costs, is a mind-bogglingly complex task, Soholt said. 

(Image courtesy of MISO) 

The "triple hurdle" of transmission cost recovery 

First, would-be projects must be included in MISO and SPP’s annual studies to determine if new transmission is needed, she said. But those studies don’t necessarily consider non-reliability issues, such as the value of the new generation capacity they would introduce to each grid operator’s markets, or whether the carbon-free nature of that energy helps states or utilities meet carbon-reduction goals more cheaply than other alternatives. 

Even if both MISO and SPP find that a cross-seam transmission project meets those thresholds, it must then be subjected to a joint process that tries to align one grid operator's distinct metrics and methods for measuring costs and benefits with the other’s. “We call it the triple hurdle,” she said.

The Federal Energy Regulatory Commission sought to ease these kinds of disconnects with the passage of Order 1000 in 2011, which mandated coordinated transmission planning and cost-sharing between states, grid operators and utilities. But those Order 1000-mandated processes haven’t delivered, according to multiple grid policy experts. 

“We have not seen any significant interregional projects since I was chairman of FERC in 2009,” Jon Wellinghoff, former FERC chairman and current CEO of Grid Policy, told Greentech Media earlier this year. 

Daniel Hall, central region director of electricity and transmission for the American Wind Energy Association, agreed that the Order 1000-created coordinated system plan process between SPP and MISO hasn’t yielded fruit. “That process has not, to date, identified a single project,” Hall said. 

That’s a big problem for wind and solar power developers targeting the region. MISO and SPP between them have roughly 210 gigawatts of generation in their interconnection queue, of which about 85 percent is wind and solar, he said. But absent a process to enable new transmission capacity costs to be shared across multiple parties, those wind and solar developers are responsible for paying for the transmission upgrades required to interconnect them — and those costs can make or break a project’s economic viability. 

Clean energy growth in the balance

Hall and Soholt cited the example of about 5 GW of renewable energy projects, mostly wind farms, that were part of MISO’s 2017 generation interconnection queue. Because the transmission required to allow those projects to connect to the grid wasn’t included in MISO's or SPP’s studies, the developers were saddled with the costs of building it themselves. 

That’s forced most of the projects to drop out of the running, most recently the 157 MW Brickyard Hill wind farm to be built by EDF Renewables for utility Ameren Missouri. Of the original 5 GW, only about 140 MW of viable projects remain, Soholt said. 

Likewise, utility AEP was forced to cancel its 2 GW Wind Catcher wind project in 2018, in part because it would require a $1.6 billion transmission upgrade, and return to state regulators with a smaller-scale project that didn't require major transmission builds. 

These processes are distinct from those that apply to merchant transmission projects like the Grain Belt Express or TransWest Express, which are being developed independently of the cost-of-service mechanisms driving FERC-regulated grid operator policies, Soholt noted. While those are gigawatt-scale projects connecting far-off wind power to markets, “they’re just a drop in the bucket [compared] to what we really need,” she said. 

Fixing these disconnects will require a lot of work, but it can be done. Back in 2011 MISO staff recommended 17 transmission projects, worth about $5.2 billion, in its “multi-value projects” (MVP) portfolio, that have since expanded the region’s wind power transmission capacity by about 25 GW, Soholt said. As part of that broader expansion, 11 transmission-owning utilities formed the “CapX2020 initiative” to coordinate their cost-sharing approach to finance about 3,600 MW of that capacity, she added. 

The MVP and CapX2020 process “are examples where people pooled their collective need and came up with a package that worked for everyone,” she said. That’s similar to Texas’ Competitive Renewable Energy Zone policy, which helped bring new transmission to carry West Texas wind power to eastern cities. 

But the capacity enabled by the MVP process is now more or less tapped out, she said. The American Wind Energy Association and the Clean Grid Alliance are among the renewable energy industry groups working with MISO and SPP to modernize their transmission planning regimes to allow similar cooperative efforts to pick up where MVP left off. 

Beyond individual efforts at MISO and SPP, the newly launched "seam" joint initiative could yield a new set of processes for valuing projects across both grid operators’ systems, potentially yielding a set of transmission projects that could be included in their upcoming 2021 studies, she said.  

“If we can just get a planning process that can work to surface projects and then decide how we’re going to allocate the cost based on the values and benefits they’re going to bring to the markets, then we have something to work with,” she said. “But if we can’t execute on some of those pieces, we’re dead in the water.”