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Energy Department Provides More Than $8 Billion for Grid Modernization

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Rakesh  Sharma's picture
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I am a New York-based freelance journalist interested in energy markets. I write about energy policy, trading markets, and energy management topics. You can see more of my writing at Rakesh Sharma  

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The Biden administration is planning to spend more than $8 billion in Energy Department financing to modernize the transmission grid. The move will pave the way for transmission of renewable energy from generation facilities, which are often located at great distances from distribution facilities, to homes.

The spending figure includes $5 billion in loan guarantees for projects to transport direct current to offshore wind farms or to be sited along railroads and highways. In addition, the Western Area Power Administration is relaunching an infrastructure program with $3.25 billion for transmission. The Transportation department is also working with the Energy department to provide rights of way along highways to host transmission lines.

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““Deploy, Deploy, Deploy” is our mantra,” Energy Secretary Jennifer Granholm said in a WSJ podcast, speaking about the urgency to meet its renewable energy targets in the current administration. In a press release, Granholm also said commitments from the American Jobs Plans, which intends to set aside $10 billion for a public fund devoted to national infrastructure, are needed to put the plan into motion.

The nonprofit Americans for Clean Energy grid released a report yesterday identifying 22 high-voltage transmission projects that are “shovel ready” and touted the economic benefits of investing in modernizing the grid. The nonprofit estimated the grid modernization projects could generate as many as 1,240,000 jobs and connect 60,000 MW of new renewable capacity to the grid. “A large scale and sustained investment in transmission in America would provide incentives for greater domestic manufacturing of transmission equipment, including conductor cables, tower components, transformers, and converters,” the authors state.  

According to the report, the projects would increase America’s wind and solar generation capacity by nearly 50% from current levels. The increase in capacity could help grow wind and solar’s contribution from 11.6% to 17% of total U.S. electricity supply.

More Work Required

Over the years, various research studies have concluded that increasing transmission capacity is necessary to decarbonize the power sector. An MIT study released in January this year recommended doubling of transmission capacity by 150 million MW miles while Princeton’s Net Zero America project from last year stated that tripling the existing transmission capacity of 240,000 miles by another 300 million MW miles was needed to achieve zero carbon emissions. (In case you are wondering, as I was, a 1-mile line that provides 10 MW of power adds 10 MW miles to the grid). The projects identified in the report add another 8,000 miles and 17 million MW lines of transmission to the grid. Clearly, there’s still a long way to go as far as decarbonizing of the power grid is concerned.

Part of the problem is related to money. There are no incentives for developers to put money into transmission lines. To that end, the report calls for investment tax credits to build out high voltage transmission lines. Local grid updates that can be paid for using operating budget money are not included. Instead, only those projects which are complex to build but have a net benefit to the community are included in the list.  


The other part of the equation is related to the siting and construction of such projects. Even when funds are available, it can be difficult to gain approval from environmental organizations and local community activists for transmission upgrades.


For example, the Champlain Hudson Power express, which intends to transport electric power from Montreal to New York City, is has run into problems earlier with environmental organizations and energy companies in the past. The 330-mile project is expected to cost $2 billion and is one of the projects identified by Clean America Grid’s report. The objections can often hold up permissions related to siting and construction of the project. The report recommends streamlining and expediting of the permitting process.

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