Go West (June 2024)

Hey ya'll! This month I thought I'd take a minute to chat about the Western Interconnection and its unique characteristics. Thanks for being part of my community. Feel free to invite other energy professionals you feel may be benefitted from this newsletter to subscribe or to follow me.

****************

The phrase "Go West, young man" is often attributed to the American author and newspaper editor Horace Greeley. In an 1865 editorial in the New York Tribune, Greeley wrote, "Washington is not a place to live in. The rents are high, the food is bad, the dust is disgusting and the morals are deplorable. Go West, young man, go West and grow up with the country."

The phrase has since become a cultural touchstone, spurring adventurers, entrepreneurs, businessmen, and pioneers seeking new opportunities, taking risks, and starting anew. It has been used in various forms of media, including literature, music, and film, to symbolize the American spirit of adventure and the pursuit of a better life.

An Introduction to the Western Interconnection

Being a local boy from Texas, it may not surprise you that I'm bullish about the opportunities for energy expansion in the West, especially the area known as the Western Interconnection (WI), sometimes referred to as the WECC or WECC. (WECC is actually the NERC-delegated Regional Entity that oversees the WI, not the area itself). Below is a map of the WI. In trying to quickly describe the WI, I usually say "draw a line from El Paso Texas, up to the Canadian border and include British Columbia and Alberta; then go out to the California coast, and down to northern Baja California, Mexico."

Here are some key facts about the big "machine" we call the Western Interconnection:

• There are 156,000 miles of transmission lines;
• About 88 million people are served by load serving entities in the WI;
• There are about 168 GW of peak demand, as of 2022;
• There are 448 NERC-Registered Entities, 324 Generation Owners, 52 Transmission Operators, 37 Balancing Authorities, 4 Reliability Coordinators, and two entities operating energy imbalance markets (CAISO, SPP)

Opportunities for Growth

The WI offers immense opportunities for developing and expanding energy generation, storage and transmission infrastructure, due to several key advantages, including:

1. Abundant renewable resources: The western states boast vast solar, wind, and geothermal resources. The extensive land availability and favorable climate conditions make this area ideal for utility-scale renewable energy projects.
2. Growing demand: As the population and economy in the western U.S. continue to grow, so does the demand for electricity. Increasing electrification, state energy goals, and increasing demand from population growth create a strong market for new energy projects, generally ensuring long-term viability and return on investment.
3. Supportive policies: Many western states have implemented policies and incentives that encourage the development of clean and traditional energy projects. These policies, such as renewable portfolio standards and tax credits, create a favorable regulatory environment for energy developers looking to invest in the region.

Increased Challenges to Reliability and Complexity of Interactions

After having worked for WECC for 10 years as an enforcement and energy infrastructure lawyer, I'm convinced that the opportunities for growth in the WI continue to be strong and will likely only increase in the future.

However, there are significant challenges as well, due in part to the growing demands for electrification (including from more data centers and EVs), changes in energy policies requiring more renewables into the WI, interconnection queue backlogs, a transmission system that is very near or at capacity in certain areas, and regulatory differences in non-RTO-ISO regions and RTO-ISO regions in the WI. For example, NERC’s 2023 ERO Reliability Risk Priorities Report identified energy policy as a reliability risk factor—the first time policy has been listed in the annual report. The report notes that energy policy requiring more renewable energy can drive changes in the planning and operation of the bulk power system and can create an environment that introduces risks to reliability and resilience.

Opportunities and Challenges in the West

Each month in LinkedIn, I share various weekly posts related to the planning, development & ownership of complex, capital intensive, and high yield utility scale generation, storage, and transmission assets in WECC.

With this newsletter, I hope I can weave some of those posts together to give those operating or seeking to build in the West, a better lay of the land.

This month for example, I posted about how a "New WECC Study Reveals Opportunities for Independent Power Producers in the West, especially California Mexico Borders."

Do you build transmission lines? I remember that about 12 years ago, transmission lines and paths only faced limited risks from interactions with nearby existing lines. Now? Not so much. Check out this LI post out for more information about how getting ahead of reliability and capacity issues in the Western Interconnection---perhaps even strategizing with experienced transmission lawyers, developers and engineers as you plan your line, before they add delays and costs to your project, is vital for transmission line planning.

Data center developers in the west, are interconnection logjams posing risks to your ability to obtain or deliver adequate generation? Check out this post about how I've advised some data center developers to look behind the meter for solutions.

That’s all for this month. Thanks for being part of my community.

If you find this newsletter insightful, the best compliment you could pay me would be to?share it with one person who you think would benefit from it (subscribe here).?

See you again next month.

Ruben

P.S. If you're ready to dig deeper, feel free to...

1. Reach out to me via email at [email protected] with any questions.

2.?Set-up a no-obligation Google Meet here

3. Follow me on LI and share a post you think others may find helpful.