Colorado's San Luis Valley is a solar energy developer's dream. Thanks to its altitude (roughly 7,000 feet above sea level) and the cloud-blocking capabilities of the surrounding snow-capped mountains, it gets more photons from the sun than just about anywhere else in the world. According to the Colorado Governor's Energy Office, a photovoltaic array covering just one-third of the valley could produce enough electricity for the entire country's needs.
Yet there has been almost no solar development in the valley. That's because there's no way to get the electricity out of the area and into the nearby population centers of the front range cities of Denver and Colorado Springs. A recent attempt by Xcel Energy and its partners to build a transmission line linking the two areas has been delayed because of opposition by a billionaire hedge fund manager who owns a ranch that the line would cross.
An oft-repeated phrase in the energy world holds: "If you love renewables, you have to at least like transmission." Apparently, nobody likes transmission. It's ugly, time-consuming and requires individual negotiations with hundreds of landowners. Despite calls for a nationwide transmission grid -- a system of electricity superhighways that would bring renewable energy from areas where the wind blows (the Great Plains) and the sun shines (the desert Southwest, such as in the San Luis Valley) -- from industry luminaries like venture capitalist Vinod Khosla and American Electric Power CEO Michael Morris, no ground has been broken.
Cost isn't the issue. Building a network of high-voltage transmission lines capable of producing enough electricity to cover 50 percent of the country's energy needs would cost somewhere between $60 billion and $200 billion. That's a hefty sum, but relatively small when one is talking about the trillions of dollars invested every decade into energy infrastructure.
The real problem is one of process. Building a new transmission line requires navigating a tangled web of regulators, financing pitfalls and vocal resistance from local landowners. All told, a new transmission line project can take up to 10 years to complete. Building a nationwide transmission network in this country is simply too daunting for just about anyone to accomplish under current rules.
But big ideas can become reality. Thirteen years ago, South Korea set out to build a nationwide network of wires to advance a home-grown industry. Amidst a severe financial crisis in 1997, the government of South Korea initiated a plan for a broadband internet network that would reach 98% of the country's citizens (this was at a time when most countries had fewer than 10% of their citizens hooked up to broadband). Within two years, the country had completed the broadband network.
How did the Korean government accomplish such an ambitious plan? Not through high taxes or mass confiscations of property. Instead, it assembled a consortium of stakeholders into a national group led by government bureaucrats and then provided a stew of loan guarantees and tax credits to incentivize the project.
If the United States government applied the Korean model to the construction of a national renewable transmission grid, the overall cost to the government would be less than $20 billion -- most of which would be doled out in the form of loan guarantee credit subsidies and investment tax credits. Much of that money would eventually come back to federal coffers in the form of increased tax revenue from the renewable energy projects that would be spawned as a result of the program. Under such a program, the system could be built in less than a decade.
But that would be just the beginning of the success story. Let's revisit what happened in South Korea. In 1998, while the broadband network was being built, the Korean IT industry produced about $25 billion in revenue.
By 2008, the country's IT industry revenues shot up to more than $110 billion. South Korea became a hot spot for technology development and manufacturing, and part of the reason for that was the cachet of having the world's fastest and most pervasive internet network.
A nationwide renewable transmission grid could have a similar impact on the renewable energy industry in the U.S. Any wind or solar developer will tell you that the lack of transmission lines is a major reason why large-scale development is on hold. Solve the transmission problem -- with government oversight and credit protection, but paid for mostly with private funds -- and you could see an explosion in the build-out of renewable energy in the U.S.
Sam Jaffe is Research Manager for renewable and distributed energy at IDC Energy Insights, a global research and advisory firm. He is also the co-author, with Myung Oak Kim, of The New Korea: An Inside Look at South Korea's Economic Rise (Amacom, April 2010).