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As bottleneck stymies projects, Midwest groups call for transmission reforms

A row of wind turbines tower over a cornfield in central Iowa. In the Midwest, a lack of transmission capacity has limited developers of new wind and solar projects seeking to connect to the grid. Photo by Carl Wycoff / Flickr / Creative Commons

The Midwest is gearing up for a high-renewable future, but it faces a major obstacle: Despite abundant interest from states and developers who want to build new wind and solar projects, the region doesn’t have enough transmission capacity to accommodate them.

Now, environmental advocates are urging for changes to the operations of the Midwest’s interstate grid operator, MISO.

MISO’s territory covers all or part of 15 states and one Canadian province. Much of the problem is concentrated in its western states: the Dakotas, Minnesota and Iowa. Approximately 5,000 megawatts of renewable energy projects were approved for interconnection in those states in February 2017.

But after studies revealed transmission upgrades would range in the tens to hundreds of millions of dollars, the total dropped to 1,500 MW, according to the Clean Grid Alliance, a nonprofit whose members include renewable developers, manufacturers and environmental groups. In the end, only two projects determined they could move forward, totaling 250 MW. As of October, even these projects were likely to have to drop out because upgrades were estimated at more than $100 million, according to a blog post from the alliance.

Typically, about one-fourth of the projects approved to interconnect to the grid actually end up doing so. Most developers drop out of the queue, whether because they decide not to move forward with projects, or they consolidate projects, or they find a better interconnection point, said John Moore, a Midwest transmission expert at the Natural Resources Defense Council.

But right now, he said, the grid can only accommodate about 7% of the projects in the queue. By NRDC’s estimates, the lack of transmission will mean an average of 19 million tons of additional carbon emissions annually between 2020 and 2030.

“We’ve never seen anything like this, certainly not in the 20 years that I’ve been doing work at MISO,” Moore said.

“We’re just really trying to raise awareness about the issue and also raise awareness about the fact that there’s a loss of opportunity,” both environmental and economic, said Natalie McIntire, a technical and policy consultant at the Clean Grid Alliance. The organization is among MISO’s stakeholders, which also include utilities and state policymakers. McIntire said that while the problem is especially urgent in the western states — largely because those states have been the site of a lot of wind development — it’s happening throughout the region. MISO’s southern states, for example, are seeing more solar, putting a strain on transmission there, too, McIntire said.

A fragmented planning process

A large part of the challenge, McIntire said, is the fragmented nature of two of MISO’s planning processes. The first is the generator interconnection application process, in which the organization’s administrators approve generation projects — such as wind farms — for interconnection and assess the costs of transmission upgrades that are needed to connect them to the grid.

The other is the transmission expansion plan, an annual assessment of local transmission needs throughout the territory, mostly proposed by utilities to improve grid reliability, which results in a set of approved transmission upgrades. These are separate from the ones approved for generation developers to interconnect.

Stakeholders are pushing to reform the annual expansion planning process. 

The new process would prioritize projects for larger swaths of the territory instead of the smaller, more local projects evaluated in the current expansion planning process. Having fewer, but larger, transmission projects would be less expensive than the many small ones that currently result from the annual evaluation, said Daniel Hall, central region director of electricity and transmission at the American Wind Energy Association.

An effective long-range planning process would consider reliability like it does now, but supporters said it would also assess how new transmission could support states’ policies, including renewable goals, and how it could benefit consumers in the region economically. Advocates often point out that aside from being cleaner, wind farms and solar arrays enabled by new transmission bring tax revenue and jobs to communities.

They’d like the process to align with the generator interconnection evaluation process: MISO’s evaluators would look at the generation projects in the interconnection queue alongside other transmission needs, and they’d come up with an expansion plan that benefits all of those projects and the residents in the territory they cover.

Wider cost sharing

Under current procedures, developers of projects like wind farms and solar arrays that require transmission upgrades to connect to the grid — and most projects at this point do require upgrades — have to foot the bill for those new transmission lines.

Those lines carry power over long distances, often between states, before it reaches the distribution lines that take it to customers. It can cost millions of dollars to build new transmission lines, often outweighing the benefits for developers to follow through with their projects.

For larger lines, like the 345-kilovolt ones required for projects seeking interconnection now, developers typically cover 90% while utilities include the other 10% in their rate bases. But “we believe that these larger upgrades are bringing much broader benefits than just for interconnecting the generators,” McIntire said. Because of that, she and the alliance’s other members would like the costs to be more evenly shared. Aligning generator interconnection evaluations and transmission expansion planning could help that happen.

The path to passing reform

Hall said MISO leaders have indicated they’re open to changes, although the specifics aren’t clear yet. Representatives from the organization were unavailable to comment for this story. The grid operator has a task force examining the issue of aligning generation interconnection with transmission expansion, Hall said. That task force won’t make recommendations for changes but will identify issues and delegate them to other committees within the organization that will then recommend appropriate actions.

MISO’s board will likely approve its annual transmission expansion plan in January or February, said Moore, at NRDC. As of now, that plan looks to be mostly “small ball” projects that won’t address the need for transmission capacity, he said. Projects are falling out of the generation interconnection queue not only because the current system can’t accommodate them, but because the system being planned for the next several years can’t accommodate them, he said.

Moore agreed that the planning process needs to better split costs between developers and utilities. “If the developers have to pay for all of this, we’re going to be stuck with a 2010 grid or a 2020 grid, and we’re never going to get beyond that,” he said.

Advocates say changes to MISO’s procedures require support from the organization’s stakeholders — including utilities and state policymakers, as well as other energy and environmental experts. The board can’t approve change without that support, they said.

Utilities open to discussion

“We continue to support long-term transmission planning solutions with the Midcontinent Independent System Operator, Inc. and other stakeholders,” Jeff Dodd, director of transmission policy at Ameren electric utility, wrote in an emailed statement. Ameren in July canceled a 157-megawatt wind project in Missouri due to “unacceptably high” transmission upgrade costs.

“Ameren realizes the benefits provided by [MISO’s] Multi-Value Projects and the opportunity these projects present in bringing clean and affordable energy to our customers,” Dodd said. “We welcome the opportunity to collaborate with stakeholders to improve the generator interconnection process and to focus on long-term transmission expansion planning.”

The multi-value projects Dodd referred to were a set of transmission upgrades implemented over the past decade that were deemed to benefit the entire region, so costs could be spread among the customers in MISO’s territory.

“We are always working with MISO on the best ways to improve the transmission grid,” said a statement from Xcel Energy, which operates electric utilities in several Midwest states including Minnesota and the Dakotas. “There are many proposals being discussed and we’ll continue to evaluate them while keeping in mind the need to ensure the reliability of the grid and affordability for our customers.”

Hall said it would make sense that some utilities, particularly those whose generation projects have been put on hold in the current process, would be “fairly supportive” of reforms.

He added that the Midwestern Governors Association has identified transmission planning as a priority. The organization sent a letter to MISO’s CEO, John R. Bear, expressing support for a long range transmission plan.

“Transmission expansion is absolutely critical for the region,” Hall said. “There is a significant amount of low-cost generation ready to connect but can’t with the current transmission system in place.” This is a problem for ratepayers, he said, because they’re paying for more expensive generation.

Plus, many customers want clean energy in the system, he added. “And until we get a significant expansion of our transmission system, they’re not going to be able to get it.”

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