Forget the challenges associated with government tax credits. Do you
want to know the real barrier for future North American wind market
growth? Here’s a clue: It’s not a lack of public support. It’s not the ongoing debate about the production tax credit (PTC) either. It’s actually something far less controversial, but all the more important, and it can be summed up in four simple words: transmission and the grid.
Make no mistake, it represents one of the single biggest hurdles for
the development of global clean energy. And in the United States, it’s
now the biggest challenge that’s holding the development within the
market back. Why? To put it bluntly, while the U.S. continues to benefit from
favourable wind resources and vast tracts of open land on which to
develop project portfolios, the painful truth is that the obvious
development sites aren’t anywhere close to major conurbations and the
power hungry consumers.
That’s because the best projects are located right in the middle,
while most of the power is needed right out on the perimeters on the
East and West coasts. And for the developers, that presents a growing problem. While it’s
perfectly possible to sell some of the power locally, the ability to
transmit power over multiple state borders and over hundreds of miles
has proved to be an expensive distraction, both in terms of time and
money.
That’s exactly why outfits like Clean Energy Line Partners have
opened up shop. It’s also explains why whenever they engage in an open
solicitation process to gauge interest, they’re inevitably
over-subscribed. As it stands, the firm currently has five major
transmission projects under development and in planning. Its latest
initiative, known as The Grain Belt Express Clean Line, offers a
780-mile high voltage direct current (HVDC) link from Kansas, Missouri,
Illinois and Indiana to key eastern states.
In this particular instance, The Grain Belt Express received requests for more than 20 GW of transmission service — that represents more than four and a half times the total capacity of the line.
Those requests were received in just three months. The business model behind each of the lines is simple: Developers bid
for access to transmission on the service and in return can guarantee
along-term market to sell their power. In return, owner operators like
Clean Energy Line Partners benefit from long-term stable revenues from
developers reliant on the service.
It’s surprisingly simple model that, by tackling the complex issues
of transmitting power interstate, suddenly opens up huge opportunity in
the market. The most interesting element, however, is still to come. For as the
phase introduction of these transmission superhighways becomes reality,
the revenues that they generate won’t be so easily overlooked.
Expect therefore, for many of these projects to quickly change hands,
superseding existing grid and utility infrastructure as they do so. In the longer term, it’s that bypassing of existing infrastructure
that will also have a profound and meaningful impact on the traditional
power business. And that, by proxy, will shift the US energy markets in
a way that right now, may be difficult to imagine. As we have previously argued in our 2014 report, Tackling Transmission,
the roll out of major renewable energy generating initiatives has had a
profound impact on transmission and the grid — the true impacts of
which may not yet fully be understood.
http://www.renewableenergyworld.com/articles/2015/05/forget-the-ptc-wind-energy-s-real-problem-is-transmission.html