A recent Oct. 28 Hartford Business Journal article (“NU’s $338M CT transmission line shelved”) explained that the regional electric grid operator has hit the pause button on plans to proceed with the $338 million Central Connecticut Reliability Project, which was intended to help improve grid performance and reliability. Unfortunately the article chooses to focus only on the narrow set of financial benefits of building transmission projects in the state and thus overlooks the much more significant benefits — economic and environmental — that can be reaped if the region chooses different, more flexible and innovative means to support grid reliability in the 21st century.
Today’s outmoded planning practices strongly favor large-scale, expensive transmission line expansions, just as they have for the past 50 years. They ignore cleaner and lower-cost options and fail to provide economic signals or adequate procedural opportunities to accommodate new advances in energy technologies. Not all new transmission investment is unnecessary. Some new transmission investments will be needed to meet regional policy goals of opening opportunities to access indigenous power supplies such as wind and solar. Others will be needed for reliability. But it is hard to sort out the transmission investments that are truly necessary for reliability from the transmission investments that could have been avoided.
Alternatives to building expensive new transmission lines to support reliability do exist. Non-wires options, or non-transmission alternatives (NTAs), can be cheaper than new transmission lines and can include clean generation like geographically targeted energy efficiency, rooftop solar, microgrids, and efficient combined heat and power, all of which can reduce grid stress. As these customer-side resources continue to mature and gain momentum, NTAs are becoming increasingly cost-effective. Adopted alone or in combination, NTAs can help states like Connecticut achieve their renewable policy goals, while reducing strain on the grid and replacing or deferring the need to construct new transmission and distribution infrastructure. For example, the regional grid operator has recently determined that energy efficiency investments in Vermont and New Hampshire have eliminated unneeded infrastructure investment, saving the region $416 million in transmission upgrades.
NTAs also represent smart and economic solutions to some grid reliability needs. They are smaller and quicker to deploy than transmission lines, and so they can be customized to the particular reliability need being addressed on a far shorter time frame than large, expensive transmission lines. Moreover, NTAs can offer other positive economic benefits for Connecticut. For example, a study by ENE found that every $1 invested in the state’s cost-effective electric energy efficiency programs can create roughly $5 in increased gross state product for Connecticut.
And although the HBJ article points to the loss of construction jobs from decreased transmission spending, ENE analysis has found that for each million-dollar investment in electric energy efficiency, Connecticut would see an employment increase equal to 41 full-time jobs.
So what will it take to get the region to rely on NTAs instead of transmission lines to ensure grid reliability? First, grid planning must identify opportunities for pursuing NTAs and give energy stakeholders a meaningful chance to weigh in early in the process.
In late 2012, the regional grid operator examined NTA options like generation and energy efficiency or demand response that could help address the same grid need to be addressed by the Central Connecticut Reliability Project. But since then, the regional grid operator has announced that it plans to change the way it conducts these NTA studies going forward, and it is unclear whether or how these studies will be included in the plans to reexamine the Central Connecticut Reliability Project this year and next. The grid operator must continue to conduct these studies, and give developers time to propose responsive NTA solutions.
Grid planning also has to be up to the task of providing the right economic signals to encourage the region to choose NTAs that can help achieve renewable policy goals. Economic incentives are stacked against NTAs. Utilities look to transmission projects for significant revenue streams. Thanks to Congress and regulators, electric utilities are rewarded with high returns on investments in new transmission lines but not on NTA investments. In 2008 federal regulators approved a 12.4 percent guaranteed return for Northeast Utilities’ investment in the Central Connecticut project. Those same laws and regulations have made it politically easier for individual New England states to pay a share of costly transmission construction rather than the full cost of less expensive NTAs.
More must be done to help advance NTAs in Connecticut and the region. We can have a more resilient power grid and still control costs, but if planning continues to use 20th century solutions to address grid needs, we may find ourselves overpaying for a grid insufficient to meet the demands of a 21st century economy and climate.
William E. Dornbos is Connecticut director and Michael G. Henry is senior counsel and sustainable transmission project director for ENE, a nonprofit advocate of innovative policies that tackle environmental challenges and promotes sustainable economies.
