This blog is the twelfth in our series, “The ABCs of the AJP.”
Power lines, strung between high-voltage transmission towers, are etched across the American landscape. Yet the United States’ current transmission infrastructure is outdated and inefficient, plagued by bottlenecks and weak interconnections across regions, which limit the grid’s ability to integrate renewable generation and its overall resilience. Improving and expanding the Nation’s transmission infrastructure is therefore central to the American Jobs Plan’s (AJP) grid modernization, decarbonization and job-creation goals.
As discussed on our previous post on grid modernization, new transmission lines must be installed to allow high-capacity, long-distance power transmission, so that renewable energy can be efficiently transmitted from remote areas where it is plentiful to more densely populated locations where it is needed.
Here, we explore how the AJP’s aim of securing investment for development of transmission infrastructure may advance a number of additional objectives:
- It can help bridge the physical and jurisdictional lines drawn between the Nation’s regional power markets.
- It can improve the resiliency of the grid to the reliability threats posed by increasingly extreme weather events.
- And it can help stitch together the historical opposition between environmental and labor interests.
Power Lines, Political Lines, and Linkages
The contiguous U.S. is served by three power grids – the Eastern, Western, and Texas Interconnections. These largely separate grids have very few connection points and can only pass small amounts of energy between each other. The boundaries at which the grids abut (and minimally connect) are known as “seams.”
Ongoing research from the Department of Energy’s (DOE) National Renewable Energy Lab (NREL) suggests that fortifying these seams would provide substantial economic and environmental benefits, making it possible, for example, for solar power from the desert southwest to meet peak electricity demand in the northeast and then support similar demand peaks at later times in the west.
While NREL has yet to finalize its seams study, reportedly due to the prior administration’s efforts to downplay those benefits, other studies have similarly projected tremendous return on investments in grid integration and improved power transmission.
- According to one such study, integrating the Nation’s grids and installing high-voltage direct-current (DC) transmission lines – which can transmit energy over long distances more effectively than the alternating current (AC) lines that dominate the current grid – has the potential to save consumers over $47 billion annually.
In spite of the obvious benefits associated with a better-connected grid, overcoming the physical and jurisdictional boundaries separating the three interconnections will not be easy.
In particular, Texas has historically preserved its independence from oversight of the Federal Energy Regulatory Commission (FERC) by not significantly participating in interstate energy transmission.
That independence may be increasingly difficult to defend, however, in the aftermath of the failure of much of the Texas grid operated by the Electric Reliability Council of Texas (ERCOT) during this past February’s extreme winter storm.
- Cities like El Paso, which are not part of ERCOT, fared relatively well, because they were able to receive power from neighboring balancing authorities and power markets.
- But the major metropolitan areas of Houston and Dallas-Fort Worth suffered catastrophic power losses because they were limited to the supply within ERCOT, which was designed to meet peak demand on a hot summer’s day and could not keep up with the unprecedented winter demand.
It should come as no surprise, then, that the AJP’s argument in favor of spending billions of dollars to improve our Nation’s transmission infrastructure leads with a description of the Texas outages and prior research indicating that weather-related power outages cost the U.S. economy up to $70 billion each year.
Leveraging Private Investment
Achieving the AJP’s goal of a zero-carbon electricity sector by 2035, without constructing new transmission, would require a significant “overbuild” of renewable generation resources, which are already reaching cost parity with conventional energy sources with or without an improved grid. Trapping solar and wind power in local markets increases the likelihood of over-supply at peak production times, which can result in negative prices in wholesale power markets. Power lines capable of long-distance transmission make it possible to deliver such over-supply to other markets.
The AJP seeks to enhance the Nation’s transmission infrastructure by inviting the private sector to invest in a cleaner and more resilient power grid, including through its call for an investment tax credit (ITC) for the buildout of high capacity power lines, which has recently gained significant traction in Congress and industry.
Just last week, the American Council on Renewable Energy (ACORE) reported that a transmission line ITC would create 650,000 jobs and encourage more than $15 billion in private capital investment in high voltage transmission infrastructure, all the while improving cost allocation of large, interregional transmission projects. These projects, in addition to contributing to efforts to decarbonize our economy, have the potential also to deliver public health benefits of clean energy to low-income urban areas by increasing reliance on remote renewables and decreasing reliance on older, high-emission plants.
Power Lines and Picket Lines – Organized Labor and the AJP
Historically, one of the most prominent sources of tension within the Democratic Party coalition has come from the perceived disjunction between the interests of the environmental and labor movements. The AJP is keenly aware of this potential fault line, and takes pains to ensure that labor’s interests are aligned with the plan’s environmental justice and clean energy priorities.
As described in our prior post, the AJP is intended not only to create jobs, but “good” jobs, which means jobs that both pay prevailing wages and ensure that “workers have a free and fair choice to organize, join a union, and bargain collectively with their employers.” The AJP also includes provisions, such as a $40 billion Dislocated Workers Program, to fund job training and help workers transition out of industries that will be sidelined during the transition to a zero-carbon economy.
These commitments to a just transition away from fuels such as coal, coupled with a commitment to rebuild a solid middle class and the power of organized labor, may be critical to obtaining the support needed to advance the AJP in Congress.
Lining-Up Support for a Better Grid or a Regional Grid on Life-Support
As our prior post noted, the Western Energy Imbalance Market – a real-time energy market that allows balancing authorities from British Columbia to El Paso trade power more seamlessly – has, by stitching together the patchwork of balancing authorities in the west, avoided curtailments of renewable generation and thereby achieved more than a half-million tons of carbon dioxide reductions since its inception in 2014, while saving ratepayers over $1 billion in costs.
The promise of a more interconnected electricity grid is great, both in terms of carbon reduction and cost savings. February’s ERCOT failure may be just the type of catastrophic event that can overcome the interests in favor of continued balkanization among not only the Nation’s three electricity interconnections, but also among balancing authorities and regional markets.
Yet, some of the most significant opposition to expansion of that Western Energy Imbalance Market – what’s described as “regionalization” of the California electricity grid – has come from labor, which wants to secure jobs in renewable energy generation in California, rather than elsewhere in the West. Along with labor, some environmental interests defeated prior legislative efforts towards regionalization by arguing that entering a regional market would yield California’s independent ability to pursue its climate goals to federal agencies under the prior administration that did not share California’s goals.
It remains unclear whether, in the Biden-Harris Administration, there is room to revisit the regionalization debate, now that the narrative about sacrificing California’s independence to pursue its climate objectives is essentially mooted. Certainly, it should help that this Administration has placed creation of “good” jobs at the centerpiece of efforts to enhance the Nation’s transmission infrastructure.