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China, EU and U.S. Must Resolve Transmission Bottlenecks to Realize Renewable Energy Potential

published: 2011-06-07 11:24

According to a recent report by the World Resources Institute (WRI), "High Wire Act," three of the largest renewable energy markets, China, the European Union and the United States, have the same basic problem when it comes to the deployment of renewable energy -- transmission bottlenecks. Renewable energy has massive potential to reduce the world's reliance on fossil fuel and. Large-scale wind and solar energy plants offer clean energy alternatives; however, many renewable energysites require hundreds of acres in locations far away from the population centers they serve.

The issues extend beyond having the lines to transmit renewableenergy. Wind and solar have intermittent production cycles, which means the electrical supply depends on adequate wind or sunshine for generation. Transmission concerns also include technical issues, such as fault tolerance and load balancing. Solving transmission line congestion necessitates a comprehensive and organized approach to policies for building or expanding transmission networks. 

Chinaand the EU market have adopted more forward thinking renewable energy generation polices compared to other markets. WRI writes, “Even in markets where governments have set aggressive renewable energy goals, transmission policy has not kept pace with clean energy ambitions, largely as a result of concerns over associated costs and reliability.” In each case, the most significant impediment to planning and siting transmission lines - the political and territorial squabbling at the local, national, or Member state levels.


Chinaplans to double it renewable energy production over 2009 levels, from 874 GW in 2009 to 1,600 GW transmission capacity in 2020. Solar power generation will expand to 1.8 GW. While U.S. and EU have mature grids that require upgrades and new lines, China focuses on building a new transmission infrastructure. Two state agencies manage the Chinese grid, the China Southern PowerGrid Corporation (CSG) and the State Grid Corporation of China (SGCC). The grid consists of12 regional systems, but suffers from fragile interconnections.

Over the last few years, modifications to the 2005 Renewable Energy Law resulted in the introduction of U.S. style Renewable Portfolio Standard, which obligates the grid companies to buy RE. Revisions made to the 2009 Renewable Energy Law enable the grid companies to recoup the price difference on outlays paid to RE generators and what the grid companies charge customers because of the feed-in tariffs requirements. The government pays a partial subsidy to the grid transmission companies to link renewable energy power plants within their service area to the grid as long as they meet technical requirements.

SGCC and CSG have economic limits to what it can do to increase transmission capacity, but without the hassles associated with cost allocation. Between 2005 and 2010, these companies increased their investment in the grid from $23 billion to more than $50 billion. In 2008, SGCC used a combination of company reserves, government funds, and bank loans to double it planned 2009 and 2010 investment to $169.9 billion. Transmission issues in China have more to do with the absence of connection guidelines, lack of coordination, and rigid dispatching standards. Enforcement of connection requirements, better planning and coordination of available resources can go a long way toward fixing China's transmission woes.

European Union

The European Union's June 2009 Renewable Energy Directive requires member states to reach 20 percent renewable energy by 2020. In June 2010, each member state was required to put forth a National Action Plan for how it planned to achieve this goal. The European Union uses a blend of private and public dollars to fund the development of transmission lines. One main obstacle to building adequate transmission capacity relates to the “not in my back yard syndrome.” Citizens have major concerns about the affect of transmission lines on property values and the local environment.

The second obstacle concerns the permitting and approval process. Obtaining site transmission takes five times longer than approval for renewable generation, especially when running lines across borders. The EU Commission (EC) can select important transmission line projects to try to ease through the approval process. However, the EC, nor other agencies, have the authority to compel member states to honor the solutions. This policy shortcoming has been address, beginning in 2014; the National Regulatory Agencies (NRAs) will have the power to make binding decisions without input from member states.

The primary challenge for solving the EU transmission bottleneck lies in persuading Member states to agree to an uniform cost allocation system,  network  usage fees and  inter-country grid connection standards.

United States

The U.S. has three interconnects with 100 separate balancing areas. Each balancing area has it own system operator. Each state has the final say on the construction of transmission lines in their jurisdiction. Siting requirements vary from state to state; and, often, within counties of a particular state. Most policy makers take a very narrow view of transmission projects and examine the payoff solely from the perspective of what it can do for their constituents. The possibility that transmission lines may offer the highest benefits to millions of other Americans, spread across other regions of the country does not matter. This approach has stifled development of the necessary transmission infrastructure for moving large amounts of renewable energy. The lack of national leadership on this issue threatens the fruition of many large solar and wind projects.

The World Resources Institute writes, “Critically, there is no single U.S. body to plan the investment in transmission required to carry electricity between generation and load sites across country. Instead, states (and even local governments) have approval authority and there is limited federal power to require coordination (backstop authority).” WRI went on to say, “ If the federal government does not act, local transmission siting decisions will continue to thwart an integrated, national (or even large regional) solution.”

Other concerns about U.S. transmission include cost allocation and sufficient financing for the grid expansion. There is legislation pending in Congress that would address some of these issues, but getting effective laws passed has proven nearly impossible when it involves state rights.

The World Resource Institute states in its report that each of the markets require reform in the areas of planning, siting approval, and cost allocation. Policy development will determine if renewable energy potential reaches its full potential. According to WRI, China and the U.S. have the most potential for expansion of the RE market. However, the European Union may provide the best “short-term” opportunity for investors due to the certainty of the “political structure and culture that is more conducive to RE integration despite the relatively lower market expansion potential.”

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