12.14.09Eric Heisman, Research Associate, Carbon War Room

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Highlights

• $3.25 million in borrowing authority to BPA and WAPA to use within their respective territories for new transmission, upgrades to existing transmission, and to construct, finance, facilitate, plan, operate, maintain, and study the delivery of renewable energy to markets
• Funds will remain available through September 30, 2012

Provision in the Stimulus Bill:

Div. A, Sec. 401 and 409: Bonneville Power and Western Area Power Administrations Borrowing Authority, Renewable Electricity Transmission Study

Our interpretation in Plain English

Both the Bonneville Power Administration (BPA) and Western Area Power Administration (WAPA) received $3.25 million inborrowing authority through the American Recovery and Reinvestment Act (ARRA) of 2009. The Administrations are authorized to use ARRA designated borrowing authority within their respective territories for new transmission, upgrades to existing transmission, and to construct, finance, facilitate, plan, operate, maintain, and study the delivery of renewable energy to markets. The US power administrations' borrowing authority is used primarily to build transmission infrastructure.

In addition to adding borrowing authority, the ARRA also directs the Secretary of Energy to include significant analysis of renewable energy transmission issues in the 2009 triennial National Electric Transmission Congestion Study. The most recent study was completed in 2006.

The problem it's supposed to solve

The existing transmission infrastructure in the United States is built to support the existing electricity generating facilities, and it is very costly to continue to supply power to the growing population. The renewable energy industry faces many challenges with regards to transmission. The borrowing authority made available to the WAPA and BPA is provided to support the development of new infrastructure.

Administering agencies

The BPA and WAPA, both located in the western half of the country, are two of four government power marketing agencies. These agencies work with stakeholders to build transmission infrastructure so that electricity generating facilities can connect to the grid and sell affordable energy to customers throughout the western United States.

The BPA serves public utilities in the Pacific Northwest while the WAPA serves a 15-state region in the central and western US. These agencies supply a large portion of the US with electricity. For example, the BPA provides power to 75% of the Pacific Northwest.

The BPA is using borrowing authority for renewable energy demonstration projects and will fund the majority of a projects lifecycle. Energy generating facilities may typically require funding for a 20 year period and the BPA generally supports projects with enough funding for between one (1) and five (5) years.

Timeline

BPA has used ARRA funding to authorize four projects to date, however there were no solar projects selected.

The WAPA designated a Transmission Infrastructure Program to handle stimulus funds. No projects have been selected to receive ARRA funding to date through WAPA, however the Administration anticipates approving projects any time in the coming months. Funds set aside through ARRA for both the BPA and the WAPA do not have a designated end date and will be available ongoing.

Steps needed to benefit from this provision

Builders desiring transmission capacity may either work with other government agencies or approach BPA and WAPA in order to obtain long-term funding, connect to the grid, or both. Builders should ensure that proceeds from a project will be adequate to repay a loan.

The four agreements which have thus far resulted from ARRA through BPA specify large energy generation capacity of 500 kV per project. The BPA primarily focuses on wind energy projects and does not currently have any proposals for solar development. Land located in the BPA's region is not in a designated `solar energy study area', a designation by the Departments of Energy and Interior to encourage certain states to fast-track large scale solar development. However, BPA will consider all renewables for future projects.

The majority of the Solar Energy Study Areas in the US are located within the WAPA region. In the coming months the WAPA plans to begin making final decisions to approve projects for development through the Transmission Infrastructure Program (TIP). The Administration recently released a notice for the TIP program which will manage ARRA funds. The WAPA has received over 200 responses to the request for information (RFI) for projects to date. The WAPA is currently accepting proposals for solar energy development projects transmission needs. Additional information on the TIP program can be found in the RFI: Here. Details on the TIP program along with published program rules and criteria can be found at: Here.

Projects considered for funding are evaluated against a number of criteria, including the expectation that the project will generate enough transmission service revenue to repay the principal investment, will not adversely impact system reliability of operations and will provide economic development benefits such as job creation.

For questions regarding the TIP program you may contact the TIP Program Officer, Craig Knoell at (720) 962-7050.

Questions for BPA are addressed through the public information line at 800-622-4520 or 503-230-7334. The DC office number for the BPA is 202-586-5640.

References

Western Area Power Administration

Bonneville Power Administration

The RFI for the TIP program

2006 Congestion Study

More information on the 2009 Congestion Study

BPA Renewables Brochure

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