The burgeoning wind industry in America’s Upper Midwest could be at risk of shutting down if a new transmission policy by a local grid operator goes through, according to a pair of wind advocacy groups.
Even worse — the plan could put the nation’s renewable energy goals in jeopardy.
The American Wind Energy Association (AWEA) and Wind on the Wires (WOW) have filed a protest with the Federal Energy Regulatory Commission (FERC) to stop a proposal by the Midwest Independent Transmission System Operator (MISO) — one that would dramatically change the way costs are distributed for new transmission lines.
Specifically, the plan would force energy generators to bear a 90 percent share of new transmission costs in the region, wind farm developers included.
Currently, generators and utilities split the price paid, 50-50.
For the wind industry, that would be seen as a shame. Current plans for regional wind are grand. Developers want to build a wave of utility-scale wind farms, and get the ones that have already sprouted plugged in. In fact, a decent chunk of the power waiting to be added to the grid in the Midwest is wind.
But if FERC approves the proposal by MISO, which covers 13 states, those megawatts may have to keep on waiting. Here’s why:
"The proposed change would nearly double the cost for a wind plant to connect to the power system in the Upper Midwest, potentially forcing many wind plant developers to pull the plug on tens of billions of dollars of investment they have planned for the region," said AWEA in a statement.
Simply put, wind would no longer be economical under the MISO scheme, and some projects that are waiting in the wings would be killed.
Without the planned turbines, states in the Upper Midwest, which include Minnesota, Wisconsin, Illinois, Indiana, and the Dakotas, may struggle to meet their renewable energy goals and mandates, the AWEA says. America as a whole would be hard-pressed to reach the White House ambition of doubling the nation’s supply of renewable energy in the next three years sans the Upper Midwest, known as the "Saudi Arabia of wind."
As AWEA and WOW see it, the MISO policy is "unworkable" for the wind sector because of this fact. It assigns nearly all of the costs of upgrading the grid to the next wind plant waiting in line to connect to it. It’s akin to
"requiring the next car entering a congested highway to pay the full cost of adding a new lane," said WOW Director Beth Soholt.
The Upper Midwest isn’t alone on this issue. Transmission has become the major tripwire to America’s green-powered future.
One of the biggest hang-ups is over a cross-country transmission superhighway that would zap electricity from America’s midsection to the urban areas that need it. The plan carries a massive, multi-billion dollar price tag. Those in favor say it would move the nation toward a clean renewable energy future. Those against see it as a total waste of cash, a covert attempt to serve some of the dirtiest coal plants, giving them access to new markets through transmission.
And then there’s the big issue of cost: Who would pay for it?
The MISO proposal is a local version of that long-simmering cost dispute.
What’s clear is that loading up the costs on generators could price many wind farm plans out of existence. There’s also the issue of costs to electricity consumers. The price hike to generators that a shift to MISO’s cost sharing would bring would be passed onto certain Midwestern consumers. They’ll end up paying more for the transmission of wind, and may not even benefit, if it gets sent to neighboring states. That could stymie public support for new wind energy.
AWEA and WOW have an alternative vision — to more broadly distribute transmission-line investments "in a way that matches the broadly distributed benefits of building a stronger grid, such as improved reliability and reduced power prices."
But MISO’s rationale for its policy suggests something else entirely — that wind shouldn’t be the only game in town in the Upper Midwest.
"We continue to focus on addressing the challenges of integrating large quantities of wind through ongoing work with our stakeholders and state officials. This work includes developing long-term transmission plans, cost allocation strategies and other market solutions that preserve and enhance the ability of all resources, including wind, to integrate and operate efficiently."
FERC has not indicated whether it favors MISO’s proposal or would recommend changes.
In a ruling in June on the Southwest Power Pool (SPP), the agency sided with the wind industry, deciding to more broadly and fairly spread the cost of building new transmission to all users of the SPP electric grid.
SPP serves Kansas, and parts of New Mexico, Texas, Oklahoma, Arkansas, and Louisiana, Missouri and Nebraska. In response to the decision, AWEA was hopeful for future transmission rulings:
"We hope other regions and the federal government will follow their lead and institute similar reforms so that we can begin to put the world-class wind resources that are currently stranded in rural parts of this country to use."