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Wiring America Up to Green Power


Should the U.S. subsidize vast high-voltage lines to transport wind and solar electricity to the big cities?

The wind howling over the Great Plains and the unrelenting Southwestern sun pack enough energy to power the entire U.S. with clean, renewable electricity. Trouble is, there's no way to get that power from the Dakotas or Nevada to America's big cities, many on the East Coast. As much as 300,000 megawatts worth of green power, enough to replace more than 300 coal-fired power plants, is being held on the shelf, as it were, because of the lack of transmission lines. This has sparked a movement to create "green power superhighways," as supporters call them. "A high-voltage transmission system will cost a tiny fraction of the money we spent on the highways and do a ton more good," argues Joseph L. Welch, CEO of ITC Holdings (ITC), a Novi (Mich.) transmission line developer.

The idea has powerful support in Washington. Senate Majority Leader Harry Reid (D-Nev.) sees an expanded power line system as key not only to tackling global warming but also to creating jobs in Nevada and the rest of the West. Now, as the Senate begins deliberation on its climate bill, advocates are pushing for a national transmission effort to be part of the legislation.

But is subsidized transmission really a good idea? Naysayers such as Ralph Izzo, CEO of Newark (N.J.) utility PSEG (PEG), argue that such a system would undermine the development of renewable power. His company is putting solar panels on rooftops and planning to build hundreds of wind turbines in the waters off the New Jersey coast. Those projects would no longer be economically feasible if cheaper wind power from the Dakotas came flooding into the Northeast on the new power lines. Creating a transmission system that's largely free to users, on the model of Interstate highways, "unfairly biases [people] against the construction of renewables in parts of the country closest to the load," Izzo complains.

Worse, from the perspective of both Eastern utility executives like Izzo and many environmentalists, is the fact that many of the power lines we build to transport wind energy are destined to travel through coal regions. An electrical wire doesn't care if electrons are "green" or "brown." And since utilities have every incentive to fill up wires to their capacity, any available cheap coal electricity would hop aboard for the trip to the Northeast. That would hurt local utilities—and increase carbon emissions. "There's a very high risk that new transmission development, however well-intentioned, will simply facilitate more of the same old conventional stuff," cautions Environmental Defense Fund (EDF) analyst Mark Brownstein.

Going Big vs. Going Small

At one level, this debate pits wind developers in the West, who need the transmission lines, against companies like Deepwater Wind in Hoboken. N.J., which is eyeing offshore wind resources on the East Coast. "I don't want federal tax dollars paying to export jobs to the West," says Deepwater Managing Director Jim Lanard. From a more elevated vantage, there's a split over the fundamental vision for America's electricity industry. Is it better to emphasize huge wind farms and solar power plants in remote regions where the winds are strongest and the sun the brightest? Or should investment first be directed toward boosting energy efficiency, thus cutting the need for power, and toward smaller-scale electricity generation by means of rooftop solar panels, offshore wind turbines, and other close-to-home efforts? For all the different players, "the stakes are enormous," says PSEG's Izzo.

Both sides in these debates acknowledge the status quo is not defensible. "Everyone pretty much agrees that the current transmission system is not built to do this job," says Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission. It's antiquated and inefficient, with 9% of all power generated getting lost in transmission (compared with 3.5% in other countries). Plus, mandates for renewable energy in most states and the coming carbon-emissions curbs mean the system must get greener and cleaner. As a result, billions of dollars of transmission upgrades must be made.

The central question is who picks up the tab for new wires. At one extreme are those who argue that since everyone ultimately will benefit, all electricity users should pay a little extra in their bills, just as everyone pays gas taxes to support highways. Yes, the $10 billion high-voltage transmission line ITC wants to build from the Great Plains to Chicago would be a huge boon to wind developers in the Dakotas, but "there are not enough people there to pay for it," says ITC's Welch. "Imagine if you asked them to pay for the Interstate highways." Those who oppose such massive subsidies, like the state of Massachusetts and Northeastern utilities, are looking out for parochial interests, argues Rob Gramlich, senior vice-president for public policy at the American Wind Energy Assn., which is pushing the green superhighway idea. The Eastern states want renewable jobs at home, even if the homegrown clean energy costs more, he says.

Not exactly, retorts PSEG's Izzo. He wants wind developers in the Great Plains or solar plants in Arizona to pay for connecting to the grid. That would make it more expensive to bring that electricity to the East Coast, reducing the chances it will undercut his own renewable projects. His position "is our economic self-interest," he admits, "but it is also aligned with the best interests of the country." Why? Because declining to broadly subsidize electricity transmission would enable local renewable efforts to bloom.

"We Need It All"

It's a difficult debate to resolve. "There are good arguments on both sides," says the EDF's Brownstein. What makes it even more challenging is that the U.S. can't meet the goals of a low-carbon electricity system unless it does everything simultaneously: energy efficiency, small-scale "distributed power" based on renewables, and big wind farms and solar plants. "It's a phony argument. We need it all," says Michael G. Morris, CEO of American Electric Power (AEP).

Sierra Club transmission expert Carl Zichella says the problem could be solved with careful planning. The answer would include making better use of the existing grid and promoting small-scale renewable generation, while also building whatever new power lines the nation needs the most. Zichella is working with a number of groups on proposals for a planning process that could better sort out competing interests on a regional basis. "This may be one of the most important things I have ever worked on," he says.

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Green Superhighways?

Not a good idea, unless your goal is to undercut local efforts, says author John Farrell in an Oct. 19 post to the Grist Web site called "A Little Heresy on Transmission." The counterargument appears in a detailed white paper titled "Green Power Superhighways" on the Web site of the American Wind Energy Assn. Such pipes are the only way to tap the vast wind and solar energy in remote regions, it says.

For these and other stories, go to http://bx.businessweek.com/green-energy/reference/.


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