Would he do it all again? “Heck yeah,” says Skelly, who’s now a senior adviser at financial advisory and asset management firm Lazard Ltd. “It’s going to be impossible to build new renewables in Kansas unless we do something with the grid,” he adds. “When California runs the numbers to see what 100% carbon-free looks like, all of those scenarios lean on imported renewables.”
Developers in other countries face similar challenges. Germany is under enormous pressure to upgrade transmission architecture by mid-decade to satisfy a surge in renewable capacity. The country is building a so-called “super autobahn” grid comprising four main high-voltage strands running from the North Sea and Baltic platforms to the Alps. When ready, the grid is expected to have a total length of about 5,800 kilometers (3,600 miles), equivalent to the distance between New York and Paris. Last year, the companies behind the construction projected the project would cost at least €60 billion ($67.9 billion).
China, meanwhile, recently completed a 22.6 billion yuan ($3.2 billion) ultra-high voltage line that will transport only clean energy—believed to be the first such power line in the world. Long-haul lines are also part of China’s post-coronavirus economic stimulus plan.
The ideas being pitched in the U.S. include federal tax credits like the ones that kick-started America’s wind and solar industries. These could encourage research and development in the sector and accelerate economies of scale, says Mike Garland, CEO of Pattern Energy, which has transmission projects in the works that would cross state lines. (Pattern is now developing a former Clean Line transmission project.)
The Trump administration is preparing a nearly $1 trillion infrastructure proposal as part of its push to revive the world’s largest economy, according to people familiar with the plan. A preliminary version would reserve most of the money for traditional infrastructure work such as roads and bridges, the people said.
Minneapolis-based Direct Connect Development Co. thinks it has a solution to some of the obstacles that have bogged down some multi-state projects: a high-voltage line underground that follows the path of an existing railroad corridor. The company is planning a $2.5 billion project to link Iowa and Illinois, neighboring states that nevertheless don’t sit on a single power grid. Iowa is part of a grid with ample wind resources, while Illinois is also tied to a grid that hasn’t greened as much.
The project, dubbed SOO Green, would deliver 2,100 megawatts of renewable energy—enough to power an estimated 1.2 million homes. It has financial backing from investors including Copenhagen Infrastructure Partners and Siemens. State and federal permitting is underway, and Trey Ward, Direct Connect’s CEO, anticipates the project will start commercial operations by the end of 2024. “It’s easier to build solar and wind in the upper Midwest than the Eastern corridor,” he says. “This is what you’ll need to replace the spinning mass of gas turbines.”
Regardless of how it happens, BloombergNEF U.S. analyst Ethan Zindler calls new power-line development “mission critical” for the country’s transition to cleaner power. “If you want a shot at 100% carbon-free, you’re simply going to need to transmit solar and wind power from America’s Saudi Arabia of renewables—the Southwest and the Midwest—to the cities,” he says.
--With assistance from Brian Parkin, Dan Murtaugh and Naureen Malik.
This article was provided by Bloomberg News.