By Ian Lund
The transition to clean energy as our principal source of electricity depends upon our ability to build and deliver it. Building clean energy resources is easy, but delivery is hard.
We move electricity around on two types of wires: transmission lines and distribution lines. Transmission lines are the highways of the electric grid, while distribution lines are like the roads that lead to your driveway. The lines can only carry so much electricity at a time, and energizing them beyond their rated capacity can damage them. The limited capacity of transmission lines needs to be addressed before we can power the world with clean energy.
Renewable energy is predictably inconsistent: where the sun shines and when the wind blows will not always be at the place electricity is needed. Contrary to many naysayers, this will be a feature, not a bug, of our future energy system. Many people should be able to use clean energy produced in entirely different states at different times. For example, when the sun is shining in California and Nevada, they will produce more solar energy than they can use and export that to neighboring states. And when the wind blows across the Northern Plains, Montanans can send the excess wind power to Washington and Oregon. If all these regions are connected properly through the transmission system, balancing demand for energy with the intermittent supply of renewables becomes a lot easier.
The importance of this relationship is being demonstrated right now between Washington and Montana. Washington has more ambitious climate goals than Montana and has long eyed our windy plains as a means of decarbonizing their electricity supply. Puget Sound Energy (PSE), a Washington-based utility, owned a share of the now-closed Colstrip Units 1 and 2, but they owned more than the generation capacity; PSE owns the right to transmit energy on the lines leaving Colstrip. When they reach Townsend, the lines become the property of the Bonneville Power Administration. Bonneville moves power to PSE’s customers in Washington. Since the Colstrip units closed, PSE will use its share of transmission capacity to import electricity from a new wind farm being built north of Colstrip. However, PSE will have a difficult time procuring more wind energy from Montana without either additional transmission capacity or the closure of more Colstrip units to free up space on the existing transmission system.
It’s not easy to build new transmission. These projects are very expensive and complicated. Financing and siting lines is challenging because the benefits of new projects accrue only to the generators (e.g., a wind farm) and the off-takers (the customers on the other end of the line). The politics are similar to building a freeway through a town without any on- or off-ramps; communities often resist large transmission lines crossing their land if they won’t get any energy.
Transmission planning in the West happens mostly within the boundaries of a specific balancing area. The West has 38 such areas (see graphic). NorthWestern Energy’s service territory, labeled NWMT on the map, is one such balancing area.
What we need is a way to plan regional transmission projects that aligns the supply of potential renewable energy with the demand. There’s actually a term for this: regional transmission organization (RTO). RTOs are nonprofit, independent coordinating entities that direct the operation of the transmission system across their service territory on behalf of their member utilities. RTOs are common in the eastern U.S. but do not exist in the West, save for the California Independent System Operator. Their chief task is making sure the electric system is managed efficiently; specifically, they work to balance electricity supply and demand on a regional scale, as opposed to each utility performing this task within the limited constraints of its own service territory. RTO formation is voluntary for groups of large utilities that share transmission resources.
One thing we’re watching closely at MEIC is the West’s incremental progress towards RTO formation. A Department of Energy-commissioned study released in July 2021 found that establishing an RTO in the West would create more than $2 billion in benefits to the region by 2030, much of which would be as savings to ratepayers.
The concept has already been proven in Montana. In June 2021, NorthWestern Energy joined the Western Energy Imbalance Market, which allows utilities across the region to trade energy on a short-term basis based on when it was most economical to do so. In the last six months, NorthWestern and its customers received $5.87 million in benefits from participating in the market. By pooling their resources, utilities can save on costs, better utilize renewable energy, and reduce their need for operating reserves. MEIC supports RTO formation, building more transmission, and other steps to modernize the way we manage energy in the West.
This article was published in the March 2022 issue of Down To Earth.