Inadequate transmission infrastructure development, not the Trump administration's shift away from Obama-era climate policy, is seen to pose the main challenge for the renewable power sector in the coming years.
Speaking at the North American Energy Markets Association spring conference in Niagara Falls, Ontario on May 11, founder of Grid Strategies LLC Rob Gramlich discussed how federal policy could affect the power sector.
Gramlich said market forces were driving the power sector away from investing in coal, that the Trump administration had little at their disposal to reverse that trend and that he expects existing tax policy will continue to drive investment in renewable power sources even in the absence of policy favoring less carbon-intensive resources.
"It's really unclear what policy levers that you can have … to avoid coal plant shutdowns and increase coal [generation]," he said. "[The Federal Energy Regulatory Commission] can affect market designs, but it's not clear what they could do or would do."
"I'm feeling pretty confident that the [wind production tax credit and solar investment tax credit] will stay in place," Gramlich said. "There were a lot of people involved in the deal to extend [them] for five to seven years … but to [also] phase them down and phase them out. Manufacturers desire that certainty and have been lobbying for it, even expressing a willingness to phase the [production tax credit] out over time in order to get some certainty [in exchange]."
Treasury Secretary Steven Mnuchin is a "key player" that supports the deal as it currently stands, and there are "at least seven or 10" Republican senators in support of the deal, he added.
Gramlich said the bulk of U.S. carbon emissions comes from the country's power sector.
"A lot of those emissions are in the central part of the U.S.," Gramlich said. "And a lot of the very low-cost wind in particular is in that same region. So there was going to be this big deployment of central region wind to displace carbon emissions in the central part of the country. … We're still going to see some of that deployment driven by tax credits. Longer term, transmission is going to be key."
Gramlich cited the Electric Reliability Council of Texas' Competitive Renewable Energy Zone project, Southwest Power Pool's Highway-Byway project and Midcontinent ISO's "multivalue projects" as examples of "coordinated regional network AC grid expansions" that have helped more renewable capacity access customers.
"We were up to $15 billion a year of transmission [investment] nationally, maybe even more, and historically we had been $4 [billion] or under," Gramlich said. "If the [production tax credit] drives wind to go where the highest productivity wind projects would be, I would expect, and I think the interconnection queues indicate, you're going to see a lot of ERCOT, SPP and MISO wind development again."
Gramlich said the current level of transmission investment is inadequate to support the renewable projects coming on line: "All of that development without corresponding transmission could mean a fair amount of congestion and curtailment."
Gramlich said while there have been bipartisan calls for infrastructure investment, Republicans have prioritized healthcare and tax reform ahead of an infrastructure bill.
"Both the Trump administration and Senate Democrats have put out plans that say the grid is part of infrastructure," Gramlich said. "What that means exactly is unclear. Obviously, transmission is not funded through the government generally. It's probably ultimately funded through rates. But I think there could be some opportunities, particularly for these high-voltage, long-distance lines."
Gramlich said that the Trump administration's focus on streamlining regulations could help to ease transmission project siting and permitting.
"It's very hard to get 1,000 landowners to sign on and agree to a transmission line," he said. "[Projects] often cross multiple federal lands, so you have different federal agencies you have to work with. And each one might put a transmission line on a different timeline for approval. [Rationalizing and speeding] that type of infrastructure is clearly the type of thing the Trump administration is doing."