Editor’s note: There’s momentum behind permitting reform in the U.S. Congress right now. It could mean unstopping a serious bottleneck in climate tech — transmission. So we’re revisiting an episode from last May with Grid Strategies’ Rob Gramlich to understand how we got here, the impacts on climate tech, and the potential fixes.
The U.S. power grid is clogged, and it’s holding back the energy transition.
Solar and wind farms are waiting four or more years to connect to the grid. Rising congestion costs are driving up retail electricity prices while hurting generator revenues. And the process of approving projects for interconnection is so complicated and expensive that it’s forcing developers to abandon the projects they were planning to build.
We need much more transmission capacity and a better process for connecting projects. And we need it now more than ever. Demand for power will skyrocket as we connect EVs, heat pumps and other new loads to the grid. But Rob Gramlich, our guest today, comes with good news: We did it before. We can do it again.
Rob is the founder and president of Grid Strategies. In this episode, Shayle and Rob talk through the three major challenges of transmission – congestion, interconnection, and buildout. And Rob explains how we’ve built out transmission in the past with efforts like ERCOT’s Competitive Renewable Energy Zones (CREZ) and MISO’s Multi-Value Projects (MVPs).
They also cover topics like:
- The history of transmission buildout in the U.S.
- The three P’s of transmission challenges: planning, permitting, and paying
- How congestion costs might shoot up over the next few years as grid capacity lags behind generation, causing new generation to slow and retail electricity prices to go up
- Reforming the slow, complex, and expensive approval process for interconnection at the Federal Energy Regulatory Commission
- How the backed up interconnection queue leads developers to submit speculative projects, hoping for one project, but filing six to see what they get
- Where local opposition fits into transmission’s larger problems
Recommended resources
- Grid Strategies: Transmission Congestion Costs in the U.S. RTOs
- Grid Strategies: Fewer New Miles: The U.S. Transmission Grid in the 2010s
- E&E News: Senators line up to support permitting package
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Transcript
Shayle Kann: I’m Shayle Kann and this is Catalyst.
Rob Gramlich: A lot of people first thought about transmission as, “Oh, yeah, that’s pretty important too, but it’s impossible, so why waste our time?” and I strongly disagree with that because we did it and we know how to do it.
Shayle Kann: Transmission, interconnection, congestion, oof.
I’m Shayle Kann. I invest in revolutionary climate technologies and energy impact partners. Welcome. Well, we don’t usually talk a lot of politics on this show deliberately, but there is some pretty interesting serious momentum right now behind permitting reform in the United States, which could mean unstopping a serious bottleneck in climate tech, which is transmission. There’s nothing new about calls for building out transmission capacity. We’ve been talking about it for a long time and climate wonks have been pounding the drum for years because we need that capacity to build out all of the new electricity generation capacity that is going to be required to electrify and to deliver on all the load growth that we are seeing.
These are things that you know, but it is worth re-noting the scale that will be required. The Princeton Net Zero America study estimated that the US might need to triple HVDC transmission capacity by 2050 to reach a high degree of electrification. It also thought that we might need to increase capacity by something like 60% by 2030, which is a crazy amount in a short period of time. And we are just so far off track on that right now. I think relative to basically anything in decarbonization, the pace of new transmission build out in the United States and many Western countries might be the one where we are furthest off track, so any daylight there is pretty interesting.
Because there is a little bit of daylight there, I think it’s worth revisiting the ins and the outs of the bottleneck itself, how we got here and the range of solutions that might be available to unclog it. So we’re bringing back an episode that we released last year on transmission with Rob Gramlich, who’s one of the smartest people in this space. He’s the founder and president of Grid Strategies, which does consulting on the power grid and particularly on transmission. We cover what it means for the grid as well as the transmission issue itself. We talk about congestion costs, interconnection cues, all the messy interrelated problems that comprise this morass that we are in on the grid. We’ll be back later in August with new episodes, but in the meantime, here’s my conversation from last year with Rob.
Rob, welcome.
Rob Gramlich: Great to be here. Thanks, Shayle.
Shayle Kann: I’m excited to have you and to talk about transmission. So I think it’d be useful to start with maybe some historical context about transmission in the United States. What has our build rate on transmission been like over the years? How has it changed? Obviously, there was a period of an enormous amount of transmission buildout as we were first building out the backbone of the network, but walk me through the medium-to-long arc of transmission history here.
Rob Gramlich: Yeah, sure. Yeah, let’s do 50 years in 50 seconds here. In the ’70s, there was a big transmission buildout. You had remote big central station, coal, mine-mouth coal and other plants. And earlier, prior to that, you had the hydro, connecting hydro to loads and those were really the long-distance transmission and then the rest was connecting utility to utility. So we’ve got … The industry grew up with 3,000 or so independent utilities that were Balkanized little fiefdoms and they would do their own generation transmission distribution. Then for reliability, they would get some connections between them and that was our transmission network overlaid with occasional long-distance hydro connections or coal connections and the occasional random Pacific DC Intertie connecting the Northwest to California. Then for years, we did nothing. The ’70s, ’80s, ’90s, beginning of 2000s, barely any transmission built.
Shayle Kann: Can I pause for a second there? Why did we do nothing over that period? Is because we had built out what we needed and there wasn’t demand or was it actually bottlenecks?
Rob Gramlich: Yeah, largely, load growth had been up to 7% a year and then it was relatively flat in those latter decades of the last century and we also … There was some excess generation capacity, so there wasn’t a lot of buildout to connect new generation until right around the turn of the century and we had that big flood of natural gas, mainly combined cycle entry. And they didn’t need a lot of transmission, but we did have a little bit of an uptick in transmission then because the nation was trying to support competitive power markets and we had restructuring and there was, when we restructured, we found out, “Whoa, there’s a lot of congestion on the grid and congestion is harmful for markets and it creates market power and local zones where generators have market power.” So there was some buildout then in the early 2000s to remedy that.
And then the next phase was 2008 to ’13 where there was a pretty significant buildout, mainly wind energy-driven, MISO, Multi-Value Projects, people, your listeners, probably heard about ERCOT, competitive renewable energy zones, CREZ. Taken together, those led to roughly 4,000 miles of high-voltage, meaning like 345 kV and above trend lines built just in the year 2013, which was a big increase from prior years and maybe a record going at least for a few decades. But then after that buildout, it died down again. There’s a variety of causes. A lot of people attribute the unintended consequences of FERC Order 1000, but also solar came in and cheaper. So if you wanted to do the next slug of renewables, you could do more local solar. You didn’t have to do remote solar or wind and gas prices had dropped. So with the shale gas, you could do local gas generation.
So for the last decade, there really wasn’t much and now it’s dried up to a trickle. We’re down in the couple of hundred miles of high capacity, so less than 10% of what we did a decade ago and that’s where we are.
Shayle Kann: And so I think what’s interesting about that, if you just take the two periods that you described of higher level buildout, in the ’70s, we built out a lot, a lot and then it went dry. It sounds like you’re saying, it went dry after that largely because there wasn’t demand. Load growth had slowed down and we had an excess generation. So that wasn’t necessarily a problem. It was just we didn’t eat a whole lot more at the time.
Rob Gramlich: That’s fair. Those of us who were thinking, “Well, we need to continue the clean energy growth, and to decarbonize, we need to keep this going,” we were a small minority voice over the last decade.
Shayle Kann: Well, right, so then around the 2008-2013 period, I think this is what a lot of people forget now because we think about the situation we’re in today, which we’re going to talk about, which is not building much at all and clearly needing a lot more in the coming decades and you forget that actually we did build out quite a lot a decade ago. But in this case, that dried up partially because maybe we didn’t need it in an immediate sense, but this time, I think there’s less of an excuse because it was pretty clear we were going to need a lot more sometime in the near future, right?
Rob Gramlich: That’s exactly right. I completely agree. And the nice thing about the success of a decade ago is that it does show we can do this. A lot of people’s first thought about transmission is, “Oh, yeah, that’s pretty important too, but it’s impossible, so why waste our time?” and I strongly disagree with that because we did it and we know how to do it.
Shayle Kann: So there’s just a lot of threads to unravel when it comes to transmission. I want to try to get a clear handle on what exactly is the problem, why is it that we are struggling to build out more, but also not just buildout. The way that I think about transmission, you could tell me if I’m missing something here, is that you’ve got three interrelated challenges, the first two having to do with the existing network and challenges that are presented on the existing network and then the third being about expanding the network. So the first two are congestion, transmission congestion on the existing grid, the second being interconnection, getting new resources connected to the existing grid, and then the third, of course, is buildout of the network. So let’s talk through those one by one starting with congestion. How big a problem is congestion on the existing transmission network? How expensive is it and for whom?
Rob Gramlich: Sure, yeah. There are some current symptoms of limited transmission capacity and congestion and curtailment of renewable projects are among those. And congestion is basically when there is limited capacity to deliver from point A to point B on the network. In wholesale power markets, that’s often reflected by a higher price on the delivery, the endpoint side of that and a lower price on the source side. So the generator is getting a low price, the load is paying a high price and that’s a cost. That’s a cost split between the generation and the load. And we’re seeing that rise. It doubled.
We just put out a Grid Strategies’ report finding it doubled from 2020 to 2021, and pretty soon, we’ll get 2022 data. Anecdotally, I’m hearing from renewable generators that it’s rising still more and this is not surprising because it’s cyclical. After we built that slug of transmission 10 years ago, we had had congestion and curtailment and then it declined significantly for about five years because we got ahead of the problem with transmission, but then we’ve been lagging on transmission development. So now the generation of load are catching up and now all of that, of course on steroids with the EV and electrification incentives and the Inflation Reduction Act and the generation incentives. We’re going to be putting a lot more both supply and demand on and we’re going to have a much more constrained grid, I think, for a good five years, and then depending on how long it takes us to build transmission, it could last longer.
Shayle Kann: Well, this is the broader point, right? “Why is this a existential challenge for decarbonization?” It’s exactly what you described. We’re simultaneously going to be trying to build just an enormous volume of new largely renewables, but new clean energy both because we need to decarbonize the grid and because the economics look good in thanks in part to tax credits and the IRA. So we’re going to be building out all this new generation. It happens to be the kind of generation that generally needs … It’s not going to all be distributed. And then who knows how much more load, but we’re going to be adding load through electric vehicles, through heat pumps, through data centers, maybe through green hydrogen, maybe through direct air capture, right? We’ve got all these categories of load growth.
So that world of flat load that we’ve had for the past couple of decades is clearly in the past. So you had those two things together and there’s no way it doesn’t result in more congestion unless you build out the network. But I just want to make sure I’m clear on a number that you stated. You found that congestion costs doubled from 2020 to 2021 over one year.
Rob Gramlich: Over one year doubled, yup.
Shayle Kann: That’s extraordinary. Was that-
Rob Gramlich: Now there’s a little bit of noise like gas prices or a warm or cold winter. Different things can affect that, but that is the trend. It is going up and we are hitting an inflection point. When we look back in a few years, I won’t be surprised to see it look kind of like a hockey stick rather than a smooth upward line just because you get to the capacity of the grid and then you’re out. When you’re out, you’re out. And if there’s no headroom, congestion costs go up very high pretty quickly.
Shayle Kann: So absent … Let’s just assume for a second we don’t build out sufficient new capacity to alleviate that congestion and we see that hockey stick, what happens then? I guess the natural result of that is we stop building new generation, and at the same time, retail prices shoot upward. Is that the scenario you could picture?
Rob Gramlich: Yup, that’s right. Consumers pay the cost and renewable generators and their investors take a beating in markets. We’re seeing that now in some regions like SPP. There’s a fair amount of curtailment in California, some in MISO in the Midwest and it’s very hard for them, especially it’s just hard to predict. The prospective modeling is usually not very good, because in reality, the lines are not all in service and there’s a lot more congestion in reality or looking backwards than there usually is in prospective modeling. So it’s very frustrating for investors, in particular, to estimate. So that’s likely what we’ll see.
Shayle Kann: Has there been any movement toward alternative ways to alleviate congestion, for example, putting energy storage strategically placed on a transmission network to alleviate congestion? Does that have a prospect for you?
Rob Gramlich: Sure, yeah. I think there are really important opportunities along those lines. Not to mention also just I think smaller renewable generation sites and occasional distribution level connections and things like that. I think there’s going to have to be a lot of smart placement of projects that fit on little spots on the grid and everybody will be looking at the bulk power version of hosting capacity, “Where can you fit generation?” But also as you mentioned, storage as transmission could be very helpful. Essentially a battery on either end of a constraint can function as a transmission line. And then there’s a set of grid-enhancing technologies like topology optimization, power flow control, dynamic line ratings that all can deliver more over existing wires using monitoring and control technologies on the grid.
And those are usually very quick to deploy and much cheaper than other options, so I think there is a great opportunity for those. The challenge, as you and your listeners know, is utility incentives on there. We love our utilities. Our utilities love their capital in the rate base. They don’t love quite so much cheap things that can solve problems without a lot of capital in the rate base. So that’s the problem with grid-enhancing technologies.
Shayle Kann: So we’ve got some things that have their challenges but can help to some degree to alleviate the congestion problem, but not to solve it. I think especially given how much new build is coming and how much new load is coming. There’s no future where we don’t have rising congestion costs overall in the absence of new transmission buildout. Do you agree with that?
Rob Gramlich: Correct, I agree.
Shayle Kann: Okay. All right, so congestion is problem number one. Now let’s get to problem number two, which is interconnection and you hear a lot about this now. I think, to me, this is actually fast becoming maybe the most immediate and acute problem that we’ve got, which is the ability of a new source of generation or energy storage for that matter to connect to the grid is taking longer and becoming more expensive. So can you put some context or some numbers to what it looks like to try to interconnect these days?
Rob Gramlich: Sure, a couple of numbers. So interconnection to the bulk power system used to take one or two years, now it’s over four years on average. So it’s more than doubled in terms of the timeframe of processing and the cost has more than doubled as well. It used to be in the hundred dollars a kilowatt range. Now it’s probably over 300, sometimes up to … Well it’s maybe 200 to 300 and sometimes in places up to 800 or a thousand dollars a kilowatt. And what’s here is generators are asked to pay, not just for the driveway to connect to the grid, the gen-tie, generator tie line, but the deeper network upgrades that are needed for them to be fully deliverable.
And so if you think about building a new house on the current road system, you pay for your driveway, but then you’re also being asked to pay for a road that might be four blocks away or five miles away and you might be the straw that broke the camel’s back triggering the need for that upgrade. And so you’re asked to pay for that, which has some economic elegance to it, but it really makes no sense for the current resource mix because what you have to do is study each individual generator for that and then you assign, you send the bill to that generator, that generator says, “Whoa, I’m not going to pay for that upgrade that, by the way, benefits every generator after me and all my competitors, so I’m going to drop out of the queue.”
Okay, well, now it happens. Now the system operator has to restudy everybody else in the queue because you dropped out and then there’s this great shuffling and now the nation’s limited set of transmission engineers are tied up doing endless studies and restudies rather than actually planning the transmission system. So it’s a complete process disaster and everybody’s well aware of it at the regional transmission organizations in FERC and all that. And there’s plenty of reform efforts going on and different varieties. We’ve got a lot of ideas we’ve proposed into that, but some of the ideas are just obvious because the problems are so acute and obviously flawed.
Shayle Kann: You half-answered one of my key questions, which has always been, I hear about the interconnection queues getting longer and longer and the timelines getting longer and the cost getting higher, but for me at least, the like, “What happens? What’s causing all that?” is a bit of a black box. Maybe we could walk through a more concrete imaginary example. So let’s just say I’m trying to build a solar project somewhere and I want to connect it to the bulk power system. So I file my interconnection request. What happens between that and then getting an approval?
Rob Gramlich: Yeah, well, you file your interconnection request with the transmission provider, which could be a regional transmission organization or just a vertically integrated utility, either way, they study your project and they’re also studying scores of other projects that might be in a similar area, which just stopping right there, that’s very different from 20 years ago when we at FERC, I worked for the chairman of FERC at the time, when we put these rules in place, all anybody was building was gas plants and you’d have a very small discrete set of gas plants and they’d be usually connecting to the high-voltage grid and there just wasn’t a lot to process then. Now you’ve got against dozens or scores of projects and they all interrelate to each other, whether some are assumed to be on or others not proceeding. So you have this complicated set of conditions to study.
In theory, you’re supposed to just file your request. They tell you, “Okay, here’s what it costs. Here’s the facility study,” and then you get that and you decide, “Okay, I’ll proceed,” and then you pay them the money and you connect and you get your interconnection agreement, which is in FERC-approved tariffs in terms of what the agreement looks like and that’s like a contract. The problem is just the complexity of these studies and re-studies and how every project influences every other project. And to me, and this whole thing used to be easier, simpler, and cheaper when the grid had some headroom, right? Because there weren’t projects that were the straw breaking the camel’s back. Now every project is breaking another camel’s back and so it’s just blown up into a completely unworkable process.
We can talk about solutions, but an obvious one, if you’re looking at this 30,000-foot level is to say, “Wait a minute, why are we trying to actually build the regional network through a generator-by-generator serial interconnection process? Shouldn’t we just build that network that everybody knows needs to be built first and then it’s simpler, easier and cheaper for the generators to just connect?”
Shayle Kann: In other words, you would just say like, “Okay, we’re going to build a line from A to B and then now get in line generators and we can fit a certain amount of capacity on this line and so we’re going to put everybody in up to this line. And it’s very straightforward,” as opposed to the generators saying, “Hey, I want to put a generator here and then we do a million studies and re-studies to determine the cost to each one of them of whatever the network buildout is going to have to look like.”
Rob Gramlich: Exactly. It’s almost too obvious, but yeah, that’s the answer is proactively plan the grid first and then plug in. Doesn’t mean the generators pay zero. They can pay some fee and that fee might be different in one zone of the grid versus another zone, but there’s much less generator-specific analysis. That is just simple and done at the end.
Shayle Kann: What does is to stop us from doing it that way? Is it a FERC thing? Like you said, FERC needs to reform the process or is it-
Rob Gramlich: Yeah, so FERC has a nationwide notice, a proposed rule out that actually might be finalized late spring here and it does some of these things, but it doesn’t go the full distance. Again, the root cause is the transmission capacity and you have to do that through transmission planning. So FERC also has a planning rule we can talk about, so either at the regional level or through FERC requirements, we need to get to the transmission planning to really solve the root cause problem.
Shayle Kann: I’ve read that, I think the stat is that currently in interconnection queues in the United States, there is more renewable capacity sitting in the queue than there is total electricity generation capacity in the United States right now. What do you make of that? Is it one of the results of this dynamic is that your incentive is just to put as much in the queue as you possibly can hoping that something goes through and so as a result we have a bunch of fluff in the queue or what’s going on?
Rob Gramlich: Yeah, well, yes and yes, and to be more specific, there’s about two terawatts of generation in the queue. It’s almost all wind, solar and storage and there’s only about a terawatt and a quarter of generating capacity operating on the grid right now, so-
Shayle Kann: All generating capacity?
Rob Gramlich: Of all generating capacity on the grid. So there’s almost double. And so is all of that really going to be connected? No. A lot of the interconnection requests or projects that a developer hopes, they get the lucky spot on the grid where their interconnection costs is relatively low and they’ll move forward to that project, but it’s a crap shoot. Even if you plan on building one project, you might file six interconnection requests and just see what you get. So there is some phishing going on and developers hate it. Some of my clients in the solar industry and the wind industry folks, they hate being called speculative projects because they’re sort of criticized for that as if we should just ban speculation, but what are you supposed to do if you’re a developer of generation other than try to file some requests and see if you get a better answer?
Shayle Kann: Okay, so congestion getting worse quick, interconnection already quite bad, also continuing to get worse. So the solution is planning and buildout, clearly buildout. So I guess this is where everybody agrees we need to build out a ton of new transmission. Everybody agrees we’re not doing it at the moment. So can you distill the challenges that we face in build out of new transmission? And also maybe in comparison to, as you’ve said, we’ve gone through periods not that long in our history, we have built out a lot of new transmission. So what changed?
Rob Gramlich: Sure. So I think it’s helpful again, to refer back to what success looks like. When we did it well, how did we do that? So in the ERCOT/CREZ example and the MISO Multi-Value Projects-
Shayle Kann: I’m going to define that acronym. So that’s the Clean Renewable Energy Zones, that was the ERCOT and ERCOT … So this is right. Because Texas has its own grid and gets to do things its own way, Texas created the CREZ, I don’t know what to call it, program, which resulted in a bunch of transmission buildout.
Rob Gramlich: That’s right. The radical Progressives in Texas in the 2008 timeframe passed a law for that, actually an interesting political alignment between very conservative West Texas ranchers and the environmental community. But anyway, in Texas and in the Upper Midwest, we did a couple things. We proactively planned for the future generation mix. People actually sat down and said, “Okay, we expect about this much new generation to come on and about this much retirement and here’s where they are on the grid and here’s the demand we expect. And in the Midwest, there were a bunch of renewable portfolio standards that utilities needed to meet.”
So they said, “Okay, well based on that 10 or 20-year outlook, what is the most efficient grid?” And then they did this co-optimization or just this determination of, “Well, we don’t want to pay for tons of transmission more than we need to get all the remote generation because it might be better to have some local generation.” So there was a sweet spot of the amount of local versus remote generation and balancing the cost of transmission. So then they did that and then they assigned the costs to all the beneficiaries across all the states, all of Texas in that case and in the Midwest according to all the beneficiaries there.
So that relatively broad allocation of costs was also critical to getting it done. Ultimately, you got to get the money back. There’s never been a shortage of investment capital for this business, but there’s a shortage of ways to get your money back when you build useful lines. So in the Midwest, well, both Texas and the Midwest, you have this regional tariff because of the independent system operator or regional transmission organization. So you can plan through that process and then you can get the money back. And if you can plan and get the money back, then you’re most of the way there.
The other challenge is permitting. I like to talk about the three P’s of transmission barriers, planning, permitting and paying. So we talked about the planning and the paying, and then of course, permitting is hard, but in these cases, they got the permits. They’re never easy. It’s a while. It takes a lot of studies, but in that MISO Midwest case, 16 out of 17 of the lines got permitted and we can live with that batting average, right? If you have a well-planned line and then you have these independent expert RTO executives go to the planning CPCN proceeding in a state and say, “Here’s why this line is needed,” not every line will get permitted, but most of them will. So I think that’s solvable. We can certainly talk about permitting legislation and ways to improve the process, but it’s just not the case that you can’t build anything. I think if you do the planning, permitting and paying, well, we can do that, and again, we did it before.
Shayle Kann: Where does local opposition fit in? Is that in the permitting bucket in your mind? As I think about these stories in the past of clean line for example and trying to build out all this transmission, that was such a big challenge, I think, of local opposition, ending up being one of the major, and that bleeding up into politics and permitting and a bunch of other stuff being one of the death knells for some of those lines. So how big a problem do you think of that as being?
Rob Gramlich: Yeah, it’s a challenge. A lot of these lines are really out in rural areas, and if you can get the landowners to agree with their lease payment, then you can get the lease agreement and you can string together contiguous plots of land to build the line. So there’s a lot certainly on the developer to do in terms of where to route the line, how to work with the communities. One little provision we got into the Inflation Reduction Act is this $760 million program for local community economic development, hosting benefits for counties or local communities. So policies like that can help. Certainly, early outreach by developers is critical, but by and large, these lines are not going near many people. It’s not like siting LNG facilities in towns. It’s a different type of siting process.
Shayle Kann: So stepping back, is your sense of where we are … I mean, I don’t know, I’m torn between two things that you’re saying. On one hand, if you just look at the dynamic at play immediately today, it looks like it’s bad and getting worse. Congestion is bad and getting worse. Interconnection is bad and getting worse. We’re not building much new capacity as it stands today and then we have all these examples of projects taking 15 years to get permitted and built and that kind of thing. So you could easily make a case, a semi-apocalyptic case, that the transmission ends up being the thing that holds back the energy transition above all other things.
But it also sounds like you’re saying, one, these problems are not insurmountable, and two, there is some progress being made at FERC. There’s possible permitting reform. There’s some thoughts around new planning. So where are you on the, “Everything is fine,” to, “Everything is screwed,” access at the moment?
Rob Gramlich: Yeah, I’m in the sort of, “This is not rocket science. Dammit, we should do this now,” and, “Oh, we were so close getting some really good stuff in the 117th Congress.” There really wasn’t very much for transmission in the Inflation Reduction Act or bipartisan infrastructure law. And at FERC, the drama there, very unfortunately, is that Chairman Rich Glick, who had these great initiatives that were, in my opinion, extremely well designed to tailor to the problem, he is no longer there for reasons outside of electricity policy. And so now we’re in Never, Neverland at FERC. We have these potentially great actions, but we don’t know if they will pass and we don’t know if maybe they’ll just pass a weak form of them.
And either, with or without strong FERC rules, inevitably, the regional consensus is going to be important. So having governors involved in this and supportive of a buildout of transmission in their regions is very helpful. Usually they care a lot more about economic development, whereas the regulators might be just being counting whether one rate payer benefits by this much or that rate payer. So getting broad policy support in the regions is a need and an opportunity and that’s hard work. We don’t necessarily have that yet. There are some encouraging signs in different regions about utilities starting to look outside their footprints and figure maybe they’ll get involved in transmission.
So there are some signs of hope, but I do think we’ve got a big problem on our hands and it is getting worse and none of the policy actions over the last two or three years have solved the problem. There’s promising proposals, but they haven’t passed and they’re not in place, so we got a lot of work to do.
Shayle Kann: Is there any world in which … I mean you’ve talked about the straw that broke the camel’s back in the context of a generator trying to get interconnected, but is there a straw that could break the camel’s back here if congestion costs and interconnection costs and timelines get so bad? If it becomes even worse and we don’t build out enough in the near term, will it be unavoidable that we’ll need to do some kind of massive reform or could we just continue into oblivion?
Rob Gramlich: Well, I do think reforms are happening at the regional level on interconnection and the FERC reform rulemaking is likely to proceed regardless of new commissioners coming just because the proposal was passed on a bipartisan 5-0 vote at FERC. So it’s those process reforms are less controversial than the how do you build out the grid. So I think we’ll get process reforms both from FERC and at the regional level that will improve the situation to some extent. So hopefully, that four-and-a-half-year average time will shrink maybe to three, but I don’t expect it to solve the problem more than that until we get transmission built, but I also don’t expect the queues to get even worse than they are. I think there are a lot of activities to improve the queue processing issue.
Shayle Kann: This is wild prognostication, but one thing I think about a lot, so I remember, in the modeling immediately after the IRA passed, the REPEAT Project, Jesse Jenkins project estimated that, around the end of this decade, we were going to be building out over a hundred gigawatts per year of solar alone in the United States, not to mention all the wind and the batteries and all this other kind of stuff. And I think, economically, that seems like it’s right, and I know they model this in too, but my big question has been, how are we going to interconnect all this stuff? Do you think it’s possible or likely, I guess, that we are going to get to that point that quickly?
Rob Gramlich: We have to have the grid and Jesse’s project also said that I think 80% of the Inflation Reduction Act’s carbon reductions will be lost if we don’t build out the grid. And so I think all the modeling is showing the grid really is the constraint. If it wasn’t before IRA, it is now and so we really have to get busy on building out the grid.
Shayle Kann: All right, Rob, I feel like I have a somewhat better handle on exactly what’s inside that black box of transmission at the moment, but I appreciate you walking me through it, and hopefully, we’ll see some progress, we can have you back on and talk about it.
Rob Gramlich: Well, great. And we need more talented help, need more folks working on this. There’s plenty of work in this area, so look me up. And there’s organizations that are working on this, a lot of good people, a lot of good NGOs and associations, etcetera. So I hope folks get interested and fall in love with the grid.
Shayle Kann: Rob Gramlich is the founder and president of Grid Strategies. This show is a co-production of Postscript Media and Canary Media. You can head over to canarymedia.com for links to today’s topics. Postscript is supported by Prelude Ventures, a venture capital firm that partners with entrepreneurs to address climate change across a range of sectors including advanced energy, food and ag, transportation and logistics, advanced materials and manufacturing and advanced computing. This episode was produced by Daniel Waldorf, mixing by Roy Campanella and Sean Marquand, theme song by Sean Marquand. I’m Shayle Kann and this is Catalyst.
