Transmission Impossible?

This Week's Trend In Brief:

• Earlier this week, FERC finalized its long-anticipated regional transmission rule that aims to speed up new interregional transmission lines and increase clean energy to meet growing demand amid the explosion of AI, data centers, and mass electrification efforts. 
   

• Democratic lawmakers celebrated the new rule, calling it “essential to the clean energy revolution,” and climate activists who have spent years campaigning for an aggressive and ambitious rule heralded the rulemaking as a mechanism that will allow for rapid decarbonization.
   

• While environmentalists believe the reform will allow for the expedited buildout of clean energy infrastructure, the reality might not be as simple. Even industry officials and policymakers who generally support updating the nation’s transmission capabilities have deep concerns about the rule’s on-the-ground reality, from who will pay the costs to reliability issues. 
   

• As we have noted last fall, even when there is broad agreement on a policy objective like the need for more interstate transmission, progress can be “overshadowed by diverging views of the details that matter most among interested stakeholders.”
   

• Whether this rule allows for the rapid expansion of clean energy like advocates hope or not, public affairs professionals in the energy industry must be aware of the shifting landscape and all the stakeholders involved. That’s why companies need a proven playbook to truly understand the networks and influences at play that impact their projects’ fate and prepare accordingly.

Digging Deeper:

 
On Monday, May 13^th, 2024, FERC finalized its long-awaited regional transmission rule that aims to speed up new interregional transmission lines and increase clean energy to meet the ever-increasing need to power “the prodigious energy demands of AI, cryptocurrency, electric vehicles, and building decarbonization.” In its announcement, FERC claimed the grid expansion rule would help “transmission providers to plan for the transmission we know we will need in the future” and address “how transmission providers must conduct long-term planning for regional transmission facilities.” FERC also said the rule will help “determine how to pay for [transmission facilities], so needed transmission is built.” While the rule was met with celebration from climate advocates and policymakers hoping to expedite the building of clean energy infrastructure, many details and questions divide stakeholders on the rule.
 
Democratic lawmakers and climate activist groups heralded the rule as a major step towards decarbonization. Senator Chuck Schumer (D-NY) argued the rule is “essential to the clean energy revolution envisioned in the Inflation Reduction Act” and claimed it “will lower costs and improve reliability, getting clean energy from where it's produced to where people live.” Senator Ed Markey (D-MA) celebrated the rule, asserting it “literally will bring power to the people” and clarify “where to build transmission and who should pay… so cheap, clean energy can get to our doorsteps.” Climate activist groups that have long advocated for a strong transmission rule celebrated FERC’s rulemaking. NRDC proclaimed the rule “brings everyone to the starting line for scaling up the clean energy transition,” while Earthjustice praised FERC “for meeting the moment with reforms that will modernize and vastly expand transmission to meet the existing and growing demand for clean energy.” Other clean energy advocates also praised the rule as “an important milestone” that “will lead to much-needed expansion in transmission capacity on the U.S. grid,” even while contending the rule should “cannot be the finish line.”
 
While environmentalists believe the reform will allow for the expedited buildout of clean energy infrastructure, the reality might not be as simple. Even industry officials and policymakers who generally support updating the nation’s transmission capabilities have voiced deep concerns about the rule’s on-the-ground reality. Senator John Barrasso (R-WY) argued the rule “is bad news for American families and does nothing to improve electric reliability” as it “will force customers – often in rural states – to pay for new transmission lines even when those lines don’t provide any meaningful benefit to them.” R Street Institute’s energy and environmental policy director Devin Hartman contended the rule “will not give a definitive prescriptive fix to most transmission issues” and warned “folks should not fall in the trap of thinking regional transmission is going to get fixed” by the rule’s approval. FERC commissioner Mark Christie in his lone dissenting opinion argued the rule would “facilitate a massive transfer of wealth from consumers to for-profit, special interests,” contending it was a move “to impose a major policy shift that favors renewables… beyond FERC's mandate.” While there is consensus that the U.S. must bring new power online to meet rising energy needs, conflicting strategies of how to get there can hinder efforts to add these new power sources to the grid.
 
As we have noted before, even when there is broad agreement on a policy objective, progress can be “overshadowed by diverging views of the details that matter most among interested stakeholders.” Some industry representatives see the rule as “the most important energy policy in the country,” while others believe reliability issues with renewable energy may make bringing projects online to power the U.S. more challenging at a time when the demand for power has never been greater. Republican attorneys general also voiced concern, alleging the rule was “fatally flawed” because it goes beyond FERC’s authority, which opens to rule to legal challenge. While the left and the right both agree there is a need to bring new energy online, efforts to find common ground “remain in limbo” as “Democrats want to speed up the pace of adding solar and wind to the grid while Republicans in return want faster and easier permitting for fossil fuel projects and pipelines.”
 
Whether this rule allows for the rapid expansion of clean energy like advocates hope or not, public affairs professionals in the energy industry must be aware of the shifting landscape and all the stakeholders involved. The rule does not take effect until 60 days after its publication, “and then grid operators and transmission planners will have 10 to 12 months to outline how they intend to comply with the new rule.” In the meantime, concerns linger regarding the practical implications of its implementation and legal challenges remain possible. As policymakers, climate activists, and industry continue to debate how best to implement the energy transition, public affairs professionals must ensure they understand all the stakeholders and how they will shape the ongoing debate in public and private. Companies hoping to build clean energy infrastructure need a proven playbook to truly understand the networks and influences that could impact their projects’ fate and prepare accordingly.

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.

MTrans?