Analysts at Minneapolis-based Great Plains Institute say the U.S. electrical power grid of aging infrastructure is challenged by extreme weather fueled by climate change, and a changing electricity-generation portfolio.
National experts warn that portions of the grid face shortfalls in power supply during times of high demand. GPI analysts Brian Ross, vice president of renewable energy, and Matt Prorok, senior policy manager for electricity, say it's crucial to invest in a more resilient electrical grid to handle fast-growing, lower-cost clean energy.
"How we regulate energy markets is not evolving as fast as the energy markets themselves," Ross said. "We see wind and solar as the cheapest forms of electricity. And demand is going up. We have a market-driven evolution and a system designed for resources no longer economic and mired in century-old processes.''
Here is an interview with the two, edited for clarity and length.
Q: Minnesota got through the summer without major blackouts, but what's the threat of that?
Prorok: We have aging grid assets, transmission lines that are 100 years old in some parts of the country, that limit the new power generation we can bring online to keep the system going. We also have aging power plants that need more frequent maintenance. And increasing occurrences of extreme weather drive electrical-load increases that put more stress on power plants. Fortunately, we haven't seen any blackouts yet in our part of the country. California got close. By cutting demand, they got through it.
Q: Will renewable and natural gas plants be able to keep up with the energy need as coal plants close?
Ross: Coal-fired and nuclear power plants are retiring because they're not competitive with other forms of generation, primarily renewable generation. If we can build and operate new wind energy plants at a lower cost than running existing coal plants, that's not "early" retirement. That's letting market forces work.
In fact, the power development market is overwhelmed with proposals to add power. The plunging cost of renewables has created demand for these resources that outstrips supply. The development market is responding with hundreds of gigawatts of proposed projects. But transmission planning and investment have never operated at such transformative speed.
Prorok: The solution is to upgrade transmission facilities, the cost of which is assigned to the interconnection customer. Over the last decade, these upgrade costs have risen to the point that in some parts of MISO, few if any can afford them. In addition, MISO prohibits technologies like battery storage from addressing grid-capacity need, limiting tools to reliably interconnect new projects. (Midcontinent Independent System Operator, or MISO, is the independent, nonprofit operator of high-voltage electricity across 15 U.S. states, including Minnesota.)
Q: Can you explain the possible role of batteries?
Ross: There are alternatives to transmission projects that could enable these resources to come online. Battery storage is one that is poorly accommodated in the regulations and market rules. Traditionally, power purchase agreements offer a price for production of dollars per megawatt hour for 20 years. But that doesn't allow renewables to be used for load balancing and ancillary services. More creative contracting is needed so that renewables can be used to address grid issues.
Q: Is there any reason for optimism?
Prorok: Transmission is a lumpy investment. It takes nearly 10 years to plan and build regional transmission. They are also expensive projects that will be in service for over 40 years. MISO just approved 18 transmission projects. This will help bring large amounts of renewable energy onto the region's grid. It's expected to provide an estimated two-to-one payback over the next 20 years.
Ross: Since the needed transmission improvements will be distributed across a whole lot of kilowatt-hours over a 40-year period, the cost per kilowatt-hour is generally pretty small. Moreover, it's almost always offset by the savings from being able to use more inexpensive generation and increasing the efficiency of the system.
The costs are all upfront, and the savings are down the road. While we like to think our planning and investment decisions are rational, this temporal mismatch is very hard for planners, regulators and market participants to accept.
Q: How does upgraded transmission increase the power grid's reliability, as it transitions to more renewables?
Prorok: More transmission, specifically long-distance, multistate, high-voltage transmission, provides optionality. It helps import power when there is not enough available locally. It enables exports to other regions when they are short on generation, enabling the local utility to sell excess energy at a premium price, helping affordability for their customers. The grid of the future will be inherently more dispersed. Transmission connects it all together to keep electrons flowing to people's homes and businesses.