EARLIER THIS MONTH my company, Anbaric, announced a new partnership with the Ontario Teachers’ Pension Plan that enables funding to create up to $2 billion in renewable energy transmission and microgrid projects.
At first glance, we make an unusual team – a transmission company and a reputable institutional investor with $171 billion in assets. But when you consider the realities of North America’s energy future, the investment makes abundant sense. Energy from a variety of sources – particularly wind, hydro, and solar – needs to come in greater quantities and our outdated legacy grid isn’t ready to take the newly generated power to customers. We’re on the cusp of a power revolution, one that will only be possible with an overhaul of our energy transmission infrastructure built by innovative partnerships with patient and responsible investors. A smarter, efficient, and inclusive grid is our destiny.
New transmission for new energy is a challenge some states have addressed better than others. For Massachusetts, despite its progressive energy agenda, the lack of modern energy transmission is a particularly pressing problem. New England has failed to modernize the grid to meet the demand to bring more renewables to market. The basic grid we have today was built in the era of vertically integrated monopoly utilities that built and owned both generation and transmission. Over the decades, the grid was continuously modified to take coal, oil, nuclear, and then gas-fired power to market.
Those old power plants weren’t required to pay for the transmission: Utilities built the grid and then recovered their cost through rate-making proceedings before their state public utility commissions. The system was built under old rules where everyone paid regardless of where they got their electric power. That changed with restructuring in the mid-1990s to create competitive energy markets where transmission costs are socialized only when needed to keep the lights on.
We are now at the threshold of a new era. Massachusetts has decided to build offshore wind at a very large scale. By “going big,” the cost of offshore wind will go down. Even though the focus is on offshore power generation, Massachusetts should also issue an RFP for offshore energy transmission. We need to implement an idea that has been around for years — build transmission to where large-scale renewables are available, and then let renewable developers compete to get access to that capacity. The formula has been applied very successfully in Texas and in California, and those two states are light-years ahead of Massachusetts in their renewable energy programs. It’s ironic that a man who called the science about climate change “a contrived phony mess” – former Texas governor and now Secretary of Energy Rick Perry – has done more to grow renewable energy in Texas than his counterparts in Massachusetts. Texas provided a competitive RFP for wind-oriented transmission. Companies competed. Winners were selected. Then, as the transmission was being built, Texas issued RFPs to buy new wind that would flow down those lines. The result? Deployments of more than 20,000 megawatts of new wind, prices for wind that are ridiculously low, and huge benefits to Texas consumers and the environment.
To be sure, Texas has advantages: It is a single state with ample land and its own energy policy. Well, Massachusetts has ample ocean and its own energy policy. If it doesn’t build offshore transmission right, it will not solve the question of how to deliver renewable energy resources to the market.
In the next few months, Massachusetts will issue RFPs for large amounts of both onshore and offshore renewable energy. The onshore RFP, unfortunately, ignores the transmission part of the equation; the RFP’s terms are akin to asking Ford or General Motors to build the highway system over which their cars travel. Transmission, like roads, is basic infrastructure, but Massachusetts is passing the obligation to build that infrastructure to the wind developers. No previous generation technology – coal, oil, gas, or nuclear – was required to do this.
Let’s not make the same mistake with the RFP for offshore wind. Instead, let’s truly unlock a new industry, a new era for clean power right off our shore, by designing the offshore transmission system first. Transmission can either be the key to unlocking this vibrant, competitive sector, or an afterthought that could result in a tangled mess of transmission lines all scrambling for the best onshore locations.
A future with abundant and affordable carbon-free energy beckons. The success of other states should not be lost on Massachusetts: If you build the transmission, the clean energy will come.
-Ed Krapels is the CEO of Anbaric Development Partners, a clean energy transmission company.