By - Jim Vess

Grid investments swell as utilities seek to deal with old problems and new challenges

Energize Weekly, November 15, 2017

Investment in the nation’s electric grid surged over the past decade and is set to peak in 2019, according to an analysis by energy and management consulting firm ScottMadden.

Spending on distribution infrastructure grew by 8.6 percent and spending on transmission infrastructure grew by 16 percent between 2011 and 2016, according to the analysis. That compares with a 4.7 percent increase in investments for power generation.

That trend is continuing. Investor-owned utilities, which provide service to more than two-thirds of the U.S., have plans to invest $41 billion in grid projects through 2019, according to the Edison Electric Institute (EEI), an industry trade group.

“These investments supply an array of benefits, including providing reliable electricity service to customers, relieving congestion, facilitating wholesale market competition, supporting a diverse and changing energy mix, and mitigating damage and limiting customer outages during adverse conditions,” the EEI said.

Transmission and distribution spending is expected to represent about 45 percent of total capital spending for selected major utilities in the years 2016 through 2018, according to Regulatory Research Associates. After that it will drop off.

“Transmission development is focusing on more than planning for peak,” the ScottMadden analysis said. “Grid operators are planning for shoulder months when renewables output can be high relative to demand, which has implications for the kinds of investment needed.”

Grid projects got an initial boost from the 2009 American Recovery and Reinvestment Act, the Obama administration economic stimulus package, which provided the U.S. Department of Energy (DOE) with $4.5 billion for projects and grants to modernize the power grid. The DOE and the utility industry jointly funded 99 cost-sharing projects worth $8 billion.

Still, increasing local and environmental opposition to siting is making it harder to get major projects funded, approved and constructed, ScottMadden said.

“Given challenges of getting transmission constructed and the emerging ‘downstream’ investment needs for grid modernization and accommodation of DERs (distributed energy resources), we might expect to see a shift in investment from transmission to distribution assets,” the analysis said.

The report cited a number of transmission projects that were addressing traditional and emerging grid issues.

  • The 240-mile, $320 million, 345-kilovolt (kV) Lower Rio Grande Valley project, is an example of upgrading aging infrastructure.
  • The Great Northern Transmission Line, a new $677 million, 500-kV line from southern Manitoba to northeastern Minnesota, will expand markets providing Minnesota Power and other utilities in the Upper Midwest access to a reasonably priced, predominantly emission-free energy supply, including 383 MW of hydropower and wind storage energy products
  • The $3 billion TransWest Express, a 730-mile, 600-kV bi-directional line, will carry wind-generated and solar electricity from Wyoming to the Southwest where it can link with load centers in California.
  • Panama City Area voltage improvements, a $20 million project completed in 2015, is providing dynamic voltage support to the Panama City, Fla., area.
  • The goal of the Western Region Economic Project, a $154 million project in the Entergy Texas area, is to reduce congestion through a new 230-kV line and an upgrade to an existing 25-mile, 138-kV line.
  • The Moses-Adirondack Smart Path Reliability project will rebuild 78 miles of transmission lines, upgrading to 345 kV, at a cost of $440 million, with the aim of carrying wind and hydropower from northern New York state to populated downstate areas as part of the New York Energy Highway, a plan to boost clean energy in the state.

“As grid development drivers change and utility investment seeks attractive risk-adjusted returns, more utilities are proposing grid modernization initiatives,” the analysis said. “There is no universal definition of grid modernization; however, one observer defines it as ‘actions making the electricity system more resilient, responsive, and interactive.’”

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