January 7, 2021
Transmission policy is a complicated business, and 2021 will involve a number of important policy debates. Transmission policy revolves around markets that ensure power reaches our homes and businesses, often crossing wide regions and crossing state lines. We refer to the regional power delivery system as the transmission or bulk electric grid. Coordinating energy supply and demand across wide regions involves complex policies for building out new transmission, ensuring reliable operation of the system, and regulating market activities on that system.
As energy production and consumption continues to change in the Midwest, there is increasing focus on planning to deliver low cost clean energy across the region. Transmission is a critical component of getting energy from sources to businesses and homes in Minnesota and across the Midwest. While recent analysis notes that a lack of transmission development has been a barrier to clean energy, the Biden-Harris administration may have the opportunity to unleash an estimated $7.8B in economic activity by expanding the grid. These system investments increase economic and job opportunities for Minnesota’s clean energy industry.
A year ago, CEEM and Clean Grid Alliance highlighted how problems with building out transmission are limiting Minnesota’s transition to a clean energy future, and hurting business. As we all learned in 2020, a lot can change in a year and 2021 looks to change further, with more state and regional coordination, utilities accelerating retirements of coal plants on the transmission system, a changing federal regulatory environment, and an incoming Biden-Harris administration emphasizing federal clean energy actions. With all this in mind, we check in with some of Minnesota’s transmission experts about what is happening, and what that means for Minnesota’s clean energy industries.
Midwest governors and regulators focus on transmission
Transmission policy revolves around markets that ensure power reaches our homes and businesses, often crossing wide regions and crossing state lines. Because of this transmission is a regional issue. For these lines to operate at their highest capacity, there must be regional policies with regional coordination.
Transmission is a multi-state issue, and policy makers across the midwest are committing to work on shared goals, unlocking clean energy opportunities. For example, the Midwest Governors’ Association (MGA) is working across state lines on energy policy. Over recent years, the MGA led an effort known as MID-GRID 2035, with clean energy transition goals, including“. . .the goal to establish a long-term transmission grid vision for the region.” This year, Minnesota Governor Tim Walz will chair the MGA, and announced continued commitment to address transmission issues.
Midwest regulators are also weighing in on transmission issues. In the Midwest, the work of transmission development and market design falls to the Midcontinent Independent System Operator (MISO). Within MISO, state regulators have a voice through the Organization of MISO States (OMS). Current Minnesota Public Utilities Commissioner Matt Schuerger serves as OMS President. OMS members focus on long term goals, including state policies, like Minnesota’s. OMS has set forth 2021 priorities, which include a focus on planning for more transmission.
Midwest utilities transition from coal
Utilities across the region are quickly moving away from coal and investing in renewables. A recent analysis shows that six Midwest utilities will be retiring 5,850 megawatts of coal in the next five years and investing in over 8,000 megawatts of wind, solar and battery storage. Peder Mewis, Western Regional Policy Manager for Clean Grid Alliance notes
“While these retirements will provide opportunities to connect new renewable resources, long-term transmission buildout will still be necessary for states to meet progressive clean energy goals.”
For instance, Great River Energy recently announced the closure of their Coal Creek generating facility and replaced it with 800 megawatts of new wind located in Minnesota, Iowa and South Dakota. Mewis points out that these wind farms will be using existing grid interconnection points (i.e. no need to build new infrastructure). He says this example shows how few opportunities there are on the existing transmission grid.
Federal regulators push for market changes
Transmission markets are also undergoing changes -- expanding business opportunities for distributed energy resources (DER). In September, the Federal Energy Regulatory Commission (FERC) issued a landmark order to open organized regional markets (regional transmission organizations/RTOs and independent system operators/ISOs) to allow for DERs to compete as energy service providers. FERC Order 2222 allows for DERs to work together (aggregation) to access regional markets. This order signals potentially massive new market opportunities for DERs. MISO convened a new Distributed Energy Resources Task Force (DERTF) to address compliance with Order 2222. The working group began meeting in December 2020, and includes significant representation from Minnesota’s companies and government agencies.
However, legal arguments are unfolding that will impact how the market processes move forward. The legal debates focus on if states will be able to choose to opt-out of the order. Opting out effectively leaves some states closed for business to markets for energy services from DERs.
Independent consultant and transmission expert Rao Konidena of Rakon Energy has been following the developments.
“Transmission is critical for Minnesota’s aggregated distributed energy resources to access the Midcontinent Independent System Operator (MISO) energy, capacity, and ancillary services markets. If the MISO control room operator dispatches Minnesota’s DERs, that results in fewer carbon emissions and lesser energy costs occur.”
Biden-Harris administration aims to boost the clean energy economy
The clean energy industry should expect a big shift in energy priorities under a 2021 Biden-Harris administration. The Biden-Harris campaign promoted plans for clean energy infrastructure and economic opportunities, promising to
“Marshall an historic investment in energy efficiency, clean energy, electrical systems and line infrastructure that makes it easier to electrify transportation, and new battery storage and transmission infrastructure that will address bottlenecks and unlock America’s full clean energy potential – built by American workers, using American-made materials.”
Similarly, new leadership in federal regulatory agencies could have a big impact on efforts to move transmission projects forward. FERC Commissioners influence transmission policy discussions that impact clean energy opportunities. Industry analysts note that FERC leadership plays a key role in the clean energy transition, and may impact Biden’s agenda.
In November, President Trump appointed new Commissioners Allison Clements and James Danly. Clean energy advocates praised the appointment of Clements, in particular, who made her career as a clean energy advocate and champion. Danly was appointed to Chair in an unprecedented move to remove former Chairship from Neil Chatterjee, which is rumored to result from Chatterjee’s willingness to price carbon emissions. Danly’s record on clean energy topics is mixed, with many clean energy advocates opposed to his policy decisions related to incentives and clean energy mandates within states.
At CEEM we will continue to watch these changes unfold as this new political and regulatory landscape takes shape. Check out our newly updated policy and regulatory affairs page to keep track of the latest news.