Why Obama's Plan to Help Renewable Energy May Backfire and Aid Big Coal

By David Morris, AlterNet. Posted February 6, 2009.

Many would argue that although renewable energy is available virtually everywhere, sunshine is more plentiful and the winds are stronger in a few locations, and therefore by generating electricity in those locations, we save money. Sunny Nevada, for example, can produce solar electricity from solar panels for about 20 percent less than Iowa and about 35 percent less than in Pittsburgh. A wind turbine in windy North Dakota could produce electricity at a cost close to 30 percent lower than the same turbine located in Ohio.

But in most cases, these significant variations in production costs result in modest variations in the final cost of energy to the ultimate consumer, because more remote generation resources have an added cost of transporting the energy across long distances. For example, my colleague John Farrell estimates that if Ohio's electricity came from North Dakota wind farms -- 1,000 miles away -- the cost of constructing new transmission lines to carry that power, and the electricity losses suffered during transmission, could surpass the lower cost of production.

Even if modest financial savings do occur, they are easily outweighed by the arduous and contentious prospect of having to seize or negotiate for the use of the land of hundreds of thousands of farmers, homeowners and businesses to build the new lines.

The arguments against building and overlaying a new national transmission system are more compelling:

1. Building a new high-voltage transmission line diverts resources from the more important task of making the best use of the existing electrical network and integrating the new generation of decentralizing energy technologies.

Some advocates estimate the full cost of a new national transmission grid at $100 billion. In these tough credit markets, as states and the federal government design financial incentives that make it easier and more financially attractive to build high-voltage transmission lines, they undermine the potential for energy efficiency and decentralized production. Richard Cowart, director of the Regulatory Assistant Project noted back in 2002, "Over-investing in transmission will tend to support remote generation and undermine the value of distributed resources. Under-investing in transmission will have the opposite effect."

2. Building new transmission lines requires the federal government to increasingly pre-empt state and local authority, which may undermine a generation of advances in state electricity regulation.

To accelerate the construction of ultra-high-voltage transmission lines, the federal government may well have to pre-empt state and local authority, because states and localities and their citizenry will not look kindly on tens of thousands of miles of new transmission lines crossing their lands to deliver power to distant communities. Indeed, it is the fear of popular opposition to such transmission lines that fuels the drive for pre-emption.

Billionaire T. Boone Pickens, the country's most visible proponent of a national transmission system, bluntly told Congress a few months ago that he is "disconcerted that state public authorities ... are required to consider the benefits of the project to the citizens of their state." He worries that, "Where state utility commissions are limited by state law to considering benefits to citizens of their state, eminent-domain power may not be available to transmission developers wishing to cross the state without providing transmission service to local generators or local electricity users." He wants Congress to give the Federal Energy Regulatory Commission "exclusive jurisdiction" to site new transmission lines.

An increasing centralization of authority over electricity planning has been slowly occurring over the last 15 years. It was speeded up with the passage of the 2005 Energy Act that requires the Department of Energy to designate "national interest electric transmission corridors." Once designated, state regulatory bodies have one year to approve an application for a new transmission line, or the federal government can step in and issue the approval.

Corridors of Power

It is instructive to see how the federal government has exercised this newly acquired authority to designate national interest transmission corridors. In late 2007, DOE released its first group of designated transmission corridors, setting off an immediate outcry by the affected states. Governments and regulatory agencies in Pennsylvania, Virginia, Delaware, Maryland and New Jersey all petitioned for a rehearing. DOE rejected their petition.

Over the last 30 years, grassroots activism has pushed state energy regulatory agencies away from their traditional focus on encouraging bigger power plants and higher-voltage transmission lines and toward a new decision-making matrix called "least cost planning." Utilities are required to examine and pursue alternatives like increasing energy efficiency or installing smaller, dispersed power plants before they can build new traditional power plants or transmission lines. Recently, states also require utilities to take into account environmental costs and to give renewable energy a priority.

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David Morris is the author of three books on the history and future of the U.S. electricity system. The most recent is Seeing the Light: Regaining Control of Our Electricity System. David is vice president of the Institute for Local Self-Reliance.

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