Grid Renewal Could Boost Economy

on July 18, 2011 at 6:00 AM

Renewal and expansion of North America’s electric transmission grid has the potential to create hundreds of thousands of jobs and spur development of wind and solar energy sources if sufficient private investment is made in coming decades, industry experts said.

A study for the Working Group for Investment in Reliable and Economic Electric Systems (WIRES) has estimated US investment in the grid could be made at some $12 to $16 billion a year until 2030 if planning, permitting and cost-recovery challenges can be overcome.

“The real question is: Why don’t we have a national plan to strengthen the grid”

That level of investment would support 150,000 to 200,000 full-time equivalent jobs each year over the 20-year period.

In Canada, around $C45 billion is expected to be spent, generating as many as 50,000 full-time jobs.

“The cost of a stronger and more extensive high-voltage grid that would underpin reliable and competitive wholesale power markets and serve new sources of electric generation would be between $240 billion to $320 billion over the next 20 years,” the report said.

Whether investment will match that “startling” estimate will depend on economic conditions as well as public policy and regulatory constraints which have previously impeded improvements, according to the report, the first to study the economic effects of large-scale investment in the grid.

Incorporating Renewables

Installation of new transmission lines will stimulate renewable energy sources such as wind whose development may be constrained by remote locations that lack transmission infrastructure.

The total investment would include as much as $100 billion on transmission for new wind and solar facilities which would support as many as 250,000 jobs a year over 20 years, according to the report, issued in May by consultants The Brattle Group.

A separate study of wind resources in Wyoming found the state could generate 250 gigawatts with capacity factors above 40%, approaching the 300 GW estimated by the Department of Energy that would be needed if the US as a whole was so draw 20% of its electricity from wind by 2030.

But sparsely populated Wyoming lacks the transmission capacity to contribute significantly to the national grid, said Eric Lantz of the National Renewable Energy Laboratory, at a Washington briefing held by the WIRES group.

If implemented under the NREL’s projections, the Wyoming wind industry could generate an average 4,700 construction jobs a year for 10 years, and a further 2,500 operations jobs a year over 20 years, Lantz said.

In Minnesota, a group of 11 utilities is building five transmission lines totaling some 700 miles and costing $1.9 billion in a project that is expected to generate some 8,000 jobs when construction peaks in 2013.

The group, called CapX2020, aims to alleviate reliability concerns and to lay a foundation for future generation, said Randy Fordice, project communications specialist for the organization.

Renewing The Grid

The private sector will provide the massive new investment, argued Hannes Pfeifenberger, principal of The Brattle Group, because it recognizes the need for renewal of aging infrastructure while expanding to allow development of renewable fuels.

“There’s not a shortage of willingness to invest,” he told the briefing. “If we want to lower carbon emissions, we need to have the investment.”

But Jim Hoecker, WIRES counsel and former chairman of the Federal Energy Regulatory Commission, said the availability of capital will depend on a regulatory environment that investors see as favorable.

“The capital is there if there is a degree of regulatory certainty,” Hoecker said. “There is a lot of risk in this market and a lot of risk in the regulatory environment.”

Among the issues expected to be addressed in a FERC report due July 21 is how the costs of new transmission are allocated between states or regions, Hoecker said.

And the commission should seek to establish an overall program for improving the grid, Hoecker said.

“The real question is: why don’t we have a national plan to strengthen the grid,” he asked.