Transmission lines are becoming the single-largest obstacle to the continuing growth of U.S. wind power. But some investors, such as T. Boone Pickens, view the barrier as an equally large opportunity.
One of the windiest areas in the country, for example, is in the Dakotas. But getting electricity from the Dakotas to customers in major cities will take hundreds, even thousands, of miles of new or updated transmission lines.
The Midwestern Transmission System Operator estimates that transmission lines stretching from the Dakotas to New York City would cost $13 billion, but claims the cheaper wind power would save consumers $600 million per year in their electricity bills.
Long distance lines are only part of the overhaul.
Wind power also is more intermittent than coal- or natural-gas-fired power plants, and that makes delivery more of a challenge.
Rich Lordan, a director at the Electric Power Research Institute, notes that – because of wind’s fickleness – a high percentage of wind on the grid will need a better transmission system than the current one.
“The wind energy will need to be backed up by a number of sources to ensure it stays smooth,” he said. “It will need a very robust transmission system, more robust than the one today.”
After all, today’s grid is vulnerable to increases in the demand for electricity and to variations in the energy loaded onto it, he said. That’s because consumption drives the system, dictating when the grid must dole out electricity.
Lordan said the grid is likely shifting to a system where some consumers agree not to use electricity during times of peak demand, when the price becomes too high. Utilities would take them offline when the price reaches those levels, in effect managing demand spikes and avoiding outages.
Demand-response companies, such as EnerNOC (NSDQ: ENOC) and Comverge (NSDQ: COMV), are already moving down that route. They have a number of programs in place to sell utilities “negawatts,” or negative megawatts, by reducing customers’ power use on demand.
“It’s a smart grid,” says Lordan. “If the price gets too high, you can decide not to run the dishwasher.”
The smart grid will be able to detect where there are lulls in wind in advance and redirect the power from other sources.
Europe has taken efficiency a step further by building direct-current lines. Most of our power today is transported by alternating current, which is the type of electricity that runs household appliances. But some have argued that direct current, which loses less power when traveling longer distances, makes more sense for wind power than alternating current. Direct current lines can be placed under the ocean, opening up more possibilities for offshore wind farms.
Decades of Regulatory Delays
Despite the opportunity, nothing about building lines is easy. In fact, both proponents and skeptics of the idea of 20 percent wind point out that the lack of transmission represents the single-largest barrier.
Aside from the expense, transmission lines face a rigorous approval process. Because customers usually end up footing the bill in the form of electricity rate hikes, companies must convince public utility commissions that their project is in the public interest. Applicants must also obtain right-of-way permits to gain access to public land. With opposition from local communities who don’t want power lines in their backyards, these approvals can sometimes take years to get.
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