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U.S. Pushes New Transmission Rules, Resistance to Cross-Region Grid Construction Remains High

published: 2024-05-31 16:24

In May 2024, the Federal Energy Regulatory Commission (FERC) issued a new transmission and cost allocation rule ( FERC Order No. 1920) designed to enhance the U.S. grid's long-term transmission planning capabilities.

In contrast to previous bills, FERC Order No. 1920 imposes more stringent requirements on transmission grid operators. The new bill addresses long-term construction and investment planning for the U.S. interregional transmission network for at least the next 20 years. The bill requires transmission grid operators to update their plans every five years, and must also consider the economics of planning, reliability, and the impact of extreme weather.

The new bill requires that, under certain special circumstances, transmission planning authorities must reevaluate transmission projects that have been approved but not yet built. During the regional transmission planning process, transmission grid operators should consider the use of advanced transmission technologies, such as dynamic line rating (DLR), advanced tidal flow control equipment, and advanced conductors and transmission switches, which can increase the capacity of transmission lines.

Prior to the new law, grid operators in the U.S. were not obligated to participate in long-term planning for the grid. The planning cycle for the grid varied from region to region, with the Midwest Independent System Operator (MISO) having a long-term transmission planning process in place, but other grid operators rarely engaged in such long-term planning.

FERC also established new cost allocation rules for grid upgrades and operations and maintenance. The new bill requires transmission grid operators to revise the Open Access Transmission Tariff (OATT); and allows utilities, power equipment suppliers, and state governments to design cost allocation programs that match the size of their respective capital commitments to ensure that grid upgrades and operations and maintenance are funded accordingly. In addition, FERC will continue to pursue the Construction Work in Progress (CWIP) incentive, which allows grid operators to recover costs as projects are constructed.

FERC analyzed the scale of investment needed to undertake grid upgrades and O&M across the United States. It is predicted that by 2030, the U.S. high-voltage power grid transmission, carrying capacity compared to today's level needs to be increased by 60%, the scale of investment up to $ 330 billion; by 2050, high-voltage power grid transmission, carrying capacity needs to be increased by a factor of three, the total investment needs to reach $ 2.2 trillion.

The new bill comes at a time of high demand for electricity from emerging U.S. manufacturing, electric vehicles and giant data centers. But construction of the U.S. high-voltage power grid has slowed in recent years, making it difficult to keep up with the rapid growth in electricity demand. At the same time, extreme weather events are becoming the norm, and grid operations are under tremendous pressure.

The construction of interstate transmission lines is even more difficult. On the one hand, it is difficult to get projects approved by individual states, and on the other hand, the issue of cost allocation for transmission projects is often criticized. Because states have different clean energy goals, some states with less aggressive goals have argued that they should not be forced to pay for other states' goals and that regional transmission projects would add to the burden on state residents.

The new bill weakens the role of state governments. The role of state governments shifts from leading transmission grid planning and construction to working with other states on transmission planning and cost-sharing matters. Currently, some local officials in the U.S. have said they will sue the federal government over the rule, arguing that the new regulations issued by FERC involve overstepping their authority and violating federal statutes.

It is not difficult to see that FERC Order No. 1920 is intended to break the U.S. transmission grid planning and construction, “each sweeping the snow in front of the door” practice, to strengthen the planning and coordination of adjacent regions, optimize the overall construction of the power grid. But from the implementation point of view, the state government level of resistance is still greater.

Source: https://mp.weixin.qq.com/s/ZzIf0L7URGijO3G_tyw4vg

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