Powering Progress — DOE's Transmission Bid (Take 2) and PJM's Grid Reform Endeavors
Transmission Bids for Green Spending at DOE
What’s the issue?
The Department of Energy (DOE) has recently issued a call for bids as part of a $1.2 billion initiative aimed at expediting the expansion of electric transmission infrastructure through capacity contracts, with the DOE acting as the "anchor customer." This marks the second Request for Proposals (RFP) of its kind, following the initial round which led to the selection of three transmission projects receiving $1.3 billion in funding.
Why does it matter?
The national conversation about obstacles to constructing new electrical infrastructure in the U.S. frequently focuses on complex permitting and local opposition. But permitting is just one wobbly leg of a three-legged stool. The other two—comprehensive planning and funding incentives—are equally vital. So when Uncle Sam steps in with $2.5 billion dollars to help stabilize that third wobbly leg, it is worth examining the winning projects, their potential grid impacts, and how developers plan to navigate these challenges.
What’s our view?
While the projects selected in the first round are interstate, they do not bridge the gap between the three major grids or traverse the boundaries of regional entities responsible for grid reliability regulation. This is likely due to the ongoing challenges in constructing true interregional transmission lines. The projects that are “ripe” must avoid as much controversy as possible to be “picked” by DOE. Hopefully, DOE will find true interregional projects in the second round, but it will probably select more projects in other regions (Northwest, Midwest, Southeast) that minimize the permitting burden and can connect additional renewables.
PJM Attempts to Bolster Grid Reliability Through Capacity Market Auction Reforms
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What’s the issue?
In October of last year, PJM submitted two related, but independent, filings with FERC in an attempt to reform its capacity market through its existing tariff with the ultimate goal of bolstering grid reliability in the midst of the energy evolution. The first tariff filing focuses on capacity market reforms to help accommodate the energy transition while maintaining resource adequacy. The second focuses on potential enhancements to PJM’s current capacity market rules.
Why does it matter?
PJM’s goal is to use these reforms as the first of (likely) a series to ensure grid reliability to its customers. One of the key changes to the tariff relates to adjusting the methodology and assumptions used for forecasting resource adequacy in light of the changing generation mix and therefore affecting supply requirements, which is not unique to PJM.
What’s our view?
Other major grid operators may and should consider some of the changes that PJM is suggesting, especially those that adjust methodologies for forecasting resource adequacy to better consider the potential effects of more renewable resources in their generation mix.