ENERGYWIRE: Can the Midwest build transmission fast enough for an evolving grid?

May 2024

Can the Midwest build transmission fast enough for an evolving grid?

By Jeffrey Tomich | 05/10/2024 06:38 AM EDT

Without billions of dollars in high-voltage power lines, the region may not have enough electricity to meet demand in extreme weather.

The Midwest’s grid operator is expected soon to greenlight the country’s largest-ever investment in new power lines to help states and utilities transition to renewable energy.

It’s not nearly enough.

Experts say that the roughly $20 billion effort, while unprecedented, may be half of what’s needed to support the region’s rapidly evolving power mix.

“The map [of proposed projects] doesn’t meet the moment,” said Joe Sullivan, vice chair of the Minnesota Public Utilities Commission.

The Midcontinent Independent System Operator, he said, is planning its system for needs that will be out of date by the time the lines are built. MISO might also be reluctant to seek approval for too much transmission investment at once, Sullivan said.

“They decided, I think arbitrarily, to cut [the amount] in half, because they thought the number was too high,” he said in an interview.

MISO’s situation provides a window into the growing disconnect between the growth of renewable power and the pace of updates to a struggling bulk power grid. A utility can shutter an aging coal plant and replace it with renewable energy within a few years. But the widespread shift from fossil fuel power plants to wind and solar farms requires a network of regional power lines — akin to an interstate highway system for energy.

And history has proved that building interstate transmission isn’t quick or easy.

“These lines take effectively 10 years from consideration and planning to steel in the ground and being energized,” Michigan Public Service Commission Chair Dan Scripps said in an interview, adding that he has “concerns” whether MISO’s upcoming transmission investment “is sufficient for the need on a timeline that’s commensurate with the challenges that we’re facing.”

The Midwest needs many power lines to ensure an optimized regional grid.

MISO’s 15-state footprint earned a “high risk” label from the North American Electric

Reliability Corp. in its most recent Long-Term Reliability Assessment. That means that over the coming decade, the region may not have enough electricity supplies to meet demand during periods of extreme heat and cold.

State regulators, including Sullivan and Scripps, say not building out an optimized grid would ultimately cost consumers as utilities rely less on wires and more on adding new power plants to meet their needs.

“If we shoot too low on the transmission side, we’re going to pay more — and potentially significantly more — to fix the same challenges with additional generation,” Scripps said.

State regulators, utility officials and clean energy advocates largely give MISO high marks for recognizing the need for more regional power lines. But even as they give MISO a pat on the back, they are pushing the grid operator to do more.

Beth Soholt, executive director of the Clean Grid Alliance, a trade group for renewable energy and transmission developers, said history should be a guide.

In 2011, MISO approved its first regional transmission portfolio, dubbed the Multi-Value Project, at a cost of $3.4 billion. The MVP lines — 17 in all — were not without controversy, including a legal fight over how states split the cost of the projects.

However, the power lines have since paid big dividends in helping ensure reliability, especially in the face of more extreme weather, Soholt said.

“We have real examples of how being able to transfer power in times of need during storms has really helped keep the lights on,” she said. “So there is no doubt that the investments that we’re making are worthwhile.”


The transmission ‘backbone’

MISO’s more recent long-range transmission plan envisions two sets of projects in the Midwest, followed by projects in the grid operator’s South region — an area that includes Louisiana and parts of Arkansas, Mississippi and East Texas. In the last stage, MISO would focus on transmission projects to better connect the Midwest and South.

MISO has so far put forward the two Midwest portfolios of projects. The first, which the grid operator’s board approved in June 2022, is a set of 18 transmission lines across nine states estimated to cost $10.4 billion.

The second, expected to go to MISO’s board for approval in September, will cost $17 billion to $23 billion. The portfolio includes several 765-kilovolt lines — which can carry far more power than the region’s existing lines — that would serve as a high-voltage transmission “backbone.”

MISO executives agree the planned investment leaves the Midwest short of the $40 billion to $50 billion of total regional transmission investment needed over the next two decades to meet state and utility goals and address growing power demand.

“We’re not in disagreement that there’s more work to be done,” said Aubrey Johnson, MISO’s vice president for system planning and competitive transmission. “Where you see the tension… is the rate at which it needs to be done.”

MISO, Johnson said, believes it’s impractical to try to do too much at once.

“There’s only so much we, as a collective team, can study when we’re looking at things from a regional perspective,” Johnson said in an interview. “We’re creating, I would say, a little bit of space for our team to do the work and, quite frankly, for the market and our members.”

He expects more clarity on a timetable for another set of projects following MISO’s June board meeting.

“We’re really trying to push all of those chips to the middle of the table to answer those questions and resolve internally what we need to do,” he said.

MISO estimated years ago that the transformation of the region’s power fleet would require $500 billion in new generation and $100 billion in regional transmission.

But in the three years since MISO began its long-range transmission planning, the pace of the clean energy transition has accelerated.

Two of the largest states in the Midwest — Minnesota and Michigan — enacted laws requiring 100 percent carbon-free power by 2040. Illinois established a 2050 goal. Major utilities in the region, too, have added more renewable energy, more quickly, to meet voluntary carbon reduction goals.

That puts pressure on MISO, which is tasked with coordinating the planning for and analysis of new transmission projects.

Minneapolis-based Xcel Energy Inc. is among the utilities that say MISO’s proposed portfolio of regional power lines doesn’t meet its needs.

“What we feel is needed is far beyond what MISO shows on their maps to meet the 2040 requirements of Minnesota and our own company goals,” Drew Siebenaler, manager of regional transmission planning and analytics for Xcel, said during a Minnesota Public Utilities Commission meeting last month.

System needs also continue to evolve. In its recent long-range plan filed with Minnesota regulators, Xcel estimates electricity demand will rise by about one-third over the next 15 years.

But utilities like Xcel can update their plans in the blink of an eye. And even developing a large solar project can be done in a fraction of the time it takes to build the kind of major new transmission lines required.

Just the planning for regional lines in MISO takes about two years. Even after the grid operator’s board approves the projects, it can take a decade or longer to get state siting approval and complete construction. And that is if there aren’t major permitting snags.

That means projects approved by the grid operator’s board this year likely won’t be in service until the mid-2030s.


Too much at once?

Matt Ellis, manager of transmission strategy and development for Great River Energy, said that the generation and transmission cooperative agrees with MISO’s approach to addressing regional transmission needs in “two bites.”

Ellis told the Minnesota PUC during last month’s meeting that more transmission is needed beyond the set of projects that MISO proposed in March. But, he added, “from a practical side, there’s only so much you can build at the same time.”

MISO is also pursuing other transmission projects in the region, including more localized “reliability” projects and another set of transmission lines to better connect to the neighboring Southwest Power Pool.

The labor market and supply chain “can only take so much,” Ellis said. “We’re already seeing signs of that being strained.”

Another Midwest utility, WEC Energy Corp., likewise gave MISO high marks for “balancing various interests,” in the transmission planning process.

“We will continue to encourage all stakeholders that together we must get it done right as well as get it done quickly,” the utility said in a statement.

But some manufacturers say planned merchant lines could make some of MISO’s projects unnecessary.

The lines are akin to high-voltage power toll roads, charging only direct users like utilities and large industrial facilities. The $8 billion Grain Belt Express, for example, will cross four states, linking remote areas rich in solar and wind to cities with concentrated electricity demand. But the power line isn’t accounted for in MISO’s engineering studies.

A group of four industrial energy users urged FERC in a March letter to force MISO to include the impact of four planned merchant lines in the grid operator’s evaluation of regional transmission needs. Otherwise, the grid operator “will risk billions of ratepayer dollars in duplicative, redundant transmission,” the letter said.

“There’s no doubt that we need more transmission,” said Mark Denzler, chief executive of the Illinois Manufacturers Association, one of the groups that signed on to the letter to FERC. “I don’t know what the exact number should be. We don’t want to slow it down. We just want to make sure it’s done correctly.”

MISO has agreed to conduct a “sensitivity analysis” to study how the planned transmission expansion responds to the construction of the 800-mile Grain Belt Express, which would run through MISO from west to east.

Jimmy Glotfelty, a member of the Public Utilities Commission of Texas, said last month during a meeting of MISO state regulators that a more thorough “base case” analysis of the project’s impact on the proposed transmission portfolio is necessary.

Long before he was on the Texas PUC, Glotfelty co-founded Clean Line Energy Partners, the original developer of the Grain Belt Express, which later sold the project to Chicago-based Invenergy.

“What do they have to be afraid of except saving consumers more money?” he said.

Sullivan of the Minnesota PUC said all of the projects will be needed. And for all the hand-wringing over the size of the transmission investment facing the region, there’s too little focus on the cost of inaction, he said.

“I think a lot about affordability,” he said. “It’s what keeps me up at night. That’s what I get angry emails about. But we have significant needs that, if we don’t have the regional transmission, we’ll have to build generation to meet.”

According to MISO, the cost of building new generation is, on average, about five times as great as building transmission to meet the same system need.

On top of the transition from fossil fuels to renewable energy and battery storage, electricity demand is rising amid new manufacturing, data centers, and the electrification of transportation and buildings. The Midwest is also home to one of the country’s potential hydrogen hubs.

Minnesota regulators have “an obligation” to ensure that electricity demand is met, Sullivan said.

Without the necessary transmission, the demand is still going to be met, he said, “it’s just going to be served at a higher cost.”