When T. Boone Pickens, the Texan oil tycoon, announced plans to build the largest wind farm in the country, he faced one big problem. There were no transmission lines connecting his site to the rest of the electricity grid. Pickens’ solution: He would build them himself.
This highlights the main issue facing the growth of centralized wind power. You can’t have power without the power lines.
According to Ed Legge, a spokesman for the Edison Electric Institute, an association of public electric companies, it’s the old question of whether the chicken or the egg comes first. “Do you build the bridge first or the source?” he said.
Wind is alluring because it’s the cheapest green energy to produce, and it is far less expensive than solar power, for example. The United States this year has overtaken Germany as the world’s No. 1 wind-power producer, according to the American Wind Energy Association, and the sector has the potential to grow far larger. The U.S. Department of Energy forecasts wind power could reach 20 percent of the nation’s power supply by 2030, up from about 1 percent today.
But wind developers – some not as well capitalized as Pickens – are wary of building wind farms where there are no transmission lines, even if that’s also where the most wind blows. They fear their investment will dry up with no lines to deliver the power. And make no mistake: Transmission lines are expensive.
The DOE estimates that reaching 20 percent wind power will cost $60 billion in new wind-power transmission by 2030. But that cost spells an attractive opportunity for deep-pocketed entrepreneurs like Pickens.
The need for new grid infrastructure is by no means a new discussion. For the last twenty years, the nationwide power grid has suffered from chronic underinvestment. A DOE study notes that the annual investment in transmission lines had fallen from $5.5 billion in the early 1970s to below $3 billion in the 1990s. In fact, in 1998, utilities spent less than half of what they did in 1975.
Over this same time period, the country’s generating capacity has steadily increased, adding to the distressed grid’s troubles.
Deregulation is partially to blame. In deregulated markets, utilities are required to share their transmission lines to promote competition. But in this system, they have little financial incentive to maintain and build more lines. Profits increase the longer the equipment is in use, discouraging updates and repairs. In particular, public utilities, who must answer to shareholders, have a difficult time justifying building new lines. After all, the utility is no longer the sole beneficiary of the investment.
These issues have created a grid system that is outdated and – in some cases – falling apart. Power outages have become commonplace, and they’re expensive. The largest blackout in North American history, in August 2003, affected some 50 million people in Canada and the United States and resulted in damages of about $6 billion.
Wanted: Total Grid Overhaul
It will take a building boom in new lines to add a significant amount of wind to the grid.
For one thing, with wind power, there’s the issue of distance. Developers like Pickens – who chose remote West Texas as his wind site – are looking at locations increasingly off the grid to harness the strongest wind.