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The firm’s report, entitled ‘Unlocking US transmission upgrades – are we on the cusp of real progress?’, was published this week and it made clear that the unpredictability of interconnection queues remains a “severe headache” for wind developers.
“Transmission is the largest single, almost uncontrollable, risk we have in the project development cycle, and it’s typically driving the timing for projects,” according to Michael Rucker, CEO of wind developer Scout Clean Energy, who is cited in the report. “The cost has gone up so much and the process itself has become so unpredictable.”
Wind, solar and storage projects accounted for 95% of the more than 2TW that was waiting in the queue this year, Lawrence Berkeley National Laboratory reported in April and around 300GW of this was for wind projects.
Zombie projects
A key issue is speculative generation projects, also known as zombie projects, which has blocked grid queues in the US as well as the UK. “The bodies planning transmission upgrades have to assume that all of these projects will be built, however unrealistic they might be,” says the Troutman Pepper report. “This is time consuming and expensive.”
For transmission developers, “securing permits is the biggest obstacle”, David Getts, general manager of SouthWestern Power Group told the report’s authors. Streamlining permitting by empowering one federal agency to lead the process would help to alleviate the problem, the report said.
Cause for optimism
However, recent regulatory reforms in transmission “paint a compelling case for optimism”, the report said.
The Federal Energy Regulatory Commission (Ferc) recently issued Order No.2023, a formal endorsement of the ‘first ready, first served‘ concept which “shows little tolerance for developers clogging the queue with speculative projects,” said the Troutman Pepper report.
The Infrastructure Investment and Jobs Act and the Inflation Reduction Act have also provided legislative vehicles to stimulate multi-agency coordination, backed up by a raft of new programmes, initiatives, and grants.
“If the energy sector and its regulators are able to seize the moment, we could see a step change in building out the low carbon grid the US so urgently needs,” said Chris Jones, partner at Troutman Pepper.
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