You can tell what the press agents have to sell by the energy story of the week. A while ago it was small modular nuclear reactors, a promising technology that has so far produced more news stories than reactors. Then came carbon sequestration: burn whatever you want but stick the carbon somewhere. This is a creation of the oil industry’s relentless PR program and the likely theme of the next climate conference being staged in a Persian Gulf sheikdom. The story du jour, however, concerns the shortage of electric transmission infrastructure needed to connect renewable energy projects to the grid for delivery to the ultimate customer. Unlike the other two stories, this one is neither self-serving nor bogus.
Quick history. In the early days, the electric company put a coal-fired generator in the middle of town to serve customers. Direct current electricity did not travel far. Then the industry’s pioneers developed alternating current, which could travel. so they put the generators next to distant waterfalls and sent the current over specially designed transmission lines to the customers. (You couldn’t move the waterfall but you could move the electricity.) Then they built huge coal-fired stations next to coal mines and shipped the electricity by wire, rather than build the generating station near the customer and ship the coal to the power station. Now, the industry wants to move electricity long distances from huge wind and solar renewable energy projects (located where the best wind and sun are) to the consumer. Unfortunately, renewable projects are not often located on the same transmission routes as existing coal and hydro generation plants. Moving renewable power to customers requires new transmission lines. The old ones are in the wrong places. Related: ‘Nuclear Diesel’ Could Become A Gamechanger In Energy Markets
Before we go any further, get two things straight. First, owning and operating a transmission line is an attractive business offering good returns. There is no shortage of investors or potential operators. Second, transmission accounts for less than 15% of the electric bill. So whether this business is operated efficiently or badly won’t make much difference to the average customer’s electric bill.
Now for the problem, certainly common to Europe, North America and Australia. Transmission projects are bogged down by regulatory, permitting, siting and environmental problems. Getting the line from announcement to completion can take 5-10 years. People don’t want their views spoiled. They don’t want the lines underwater because the project might stir up the bottom. They don’t want the line through the neighborhood because if it does not benefit them directly, why put up with the line’s inconvenience? We calculate that in the US, the industry needs to spend at least 50% more to put up a transmission network that will function up to the required level, but we suspect that the spending gap is not due to lack of interest but to delays. The renewable projects are held up waiting for the line.
We discussed this with some transmission executives. One said he didn’t understand why generators hung around waiting. Wasn’t there somewhere else to locate? We weren’t sure why investors hung around waiting so long for the payoff, either. Another executive, not convincingly, said that his firm offered a portfolio of projects and he had patient, long-term investors. Except we know some of those investors and we doubt they expected to get stuck waiting for so long when they invested. They need to worry that by the time the line is finished, consumers at the end point might have found an alternative power source. Say a small modular reactor, ready for operation by then. Or maybe a solar power satellite (Caltech says that with the drop in rocket launch costs, solar power satellites might cost about the same as a nuclear plant.) Now that they are stuck, they might as well be patient.
This situation leads to three questions. First, if building transmission the standard way is so difficult, what about looking at alternatives? Maybe undergrounding, or direct current, or an indirect route or even superconductors? Well, the standard answer is those are more expensive that the standard line. But does that make sense? More expensive than the standard line that you cannot build?
Second, might the government view transmission now in the same way it viewed the National Road in the early days of the Republic or the Federal Highway System in the 1950s? If we need it, maybe the government should take the right of way and build it, or at least build one big east-west line to bring renewables to the population centers. Capital costs will make up a large part of the total and the government can raise money at maybe half the cost of a private company. That advantage might encourage the government to do something daring, like install a superconductor line. (We are not engineers opining on the right kind of line, just suggesting that ownership might change the technological decision.)
Third, the discussions in the press imply that if we don’t close the transmission gap, the whole decarbonization effort might fail. We don’t buy that. Building more conventional transmission is the simplest solution. We might, instead, install renewables in less optimal places where building transmission is easier. Or use renewable energy to produce hydrogen rather than transmit it as electricity. Or get serious about a nuclear renaissance or even solar power from satellites.
In short, mind the gap but don’t panic.
By Leonard Hyman and William Tilles for Oilprice.com
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