A new report by the Wind Energy Foundation (WEF) has identified the potential for a serious gap between corporate America’s near-term demand for renewable energy and the electricity grid’ ability to meet that demand.
REM talked to Rob Threlkeld, Global Manager Renewable Energy at General Motors and John Kostyack of the Wind Energy Foundation (WEF) to find out more.
Large companies in America are increasingly signing deals to buy wind and solar power. While that is undoubtedly positive, there is a growing problem in that the large and growing demand may be one that the US clean energy sector may not, at present, be able to satisfy. The main issue is transmission lines, but it seems that transmission planners aren’t taking this into account when drawing up future plans.
A new report released today (16th January 2018) by the Wind Energy Foundation (WEF) explores the problem in greater detail, making a series of recommendations for resolution. Rob Threlkeld of General Motors and John Kostyack of the Wind Energy Foundation (WEF) explain further.
Can you give me an idea of the size of the demand for clean energy and what the near-term goals are?
John: We didn’t attempt to capture all of the renewable energy demand in this report, but we focussed really on one of the big exciting new trends and that is the demand coming from large corporate buyers. That’s the focus of the report, and I’ll give you some numbers. We looked at a coalition of companies, known as the Renewable Energy Buyers Alliance, of which General Motors is a member, over 100 US corporate buyers, and they have commitments to purchase 60 GW of new renewable energy capacity in the US by 2025. Those commitments were made over the past five or so years, so really counting forward from 2013, and since then, 9 GW have been procured. So, our report is really focusing on the remaining 51 GW of demand. We could give you other demand figures, but those are the critical ones for the purposes of this report.
Rob: As John noted, the Renewable Energy Buyers Alliance is a consortium of many corporates including utilities, and other suppliers and developers in the renewables space, and it’s really taking a look them. How do we collaborate more together to expand the landscape for renewables? This report highlights that the next key step is really building the transmission and support to allow that. In the case of General Motors, we have the RE100 Coalition, which incorporates well over 100 companies that are pushing to get to 100 percent renewables and in our case, in General Motors, it’s 100 percent renewables by 2050. So, it’s also engaging about, how we build out and support the overall general drive of corporate operations and even including utilities in this space with renewables.
What have the main factors been in driving forward the growth in demand for clean energy over the last year or so?
Rob: Even over the last couple of years, the significant cost decline of both wind and solar have gotten down to the point where its actually providing cost savings and price stability, in many cases, is why we’re pursuing renewables. It’s really the drive economically than the environmental attributes associated with it, greenhouse gas reductions are another component of it, but the driving force really has been the economics, and how fast both wind and solar have come down in cost.
Where are the strongest and lowest-cost renewable energy resources located in the US?
John: In this report, we decided to focus on the central United States and the states that we focussed on, 15 between the Rocky Mountains and the Mississipi River. The reason we chose that is because that is where the strongest wind resources are in the country. Also, which is surprising to some, is that it has some very valuable solar resources as well. To give you a couple of figures, in this region, there is 88 percent of the country’s wind potential, and 56 percent of the country’s utility-scale solar PV potential. Your question really gets to the heart of why we wrote this report, the big challenge for renewable energy in this country, particularly these corporate buyers, is getting access to these valuable resources. They’ve proven to be affordable, the technology is all there, the only remaining challenge is connecting these resources to the marketplace. Right now, we do not have an adequate plan in process for this, to get the transmission connected to these resources.
What are the main challenges to these, or to get to the nub, what is the heart of the problem with this?
John: The heart of the problem is that we have a system of decision making for planning and building transmission that is centred around these organisations known as Regional Transmission Organisations. They are not covering the entire US but they represent a large portion of the US, especially in the eastern portion of the country. They are doing the planning that makes transmission possible, but, unfortunately, failing to take into account this large corporate demand. If you want to get the transmission built, and provide access to these very low-cost wind and solar resources, they are going to have to change their practices at these Regional Transmission Organisations and get them factoring in the large corporate demand.
Rob: On this corporate side, it’s really focusing on these economics, with the US competing in the global market, we’re looking for the lowest costs possible, and getting it from those resources is critical.
What are the main opportunities for everyone with an interest in the sector? What will the main benefits be?
John: The barriers to getting access to these resources would be lower. Right now, essentially, it’s really difficult to finance new renewable energy projects without a clear sense of how the transmission build works. So, we have the technology today to have a truly national grid where a wind or solar plant in the middle part of the country can deliver its energy anywhere, from a technical standpoint. The real question is how we get that infrastructure built. Once we have the infrastructure, then we have the ability to send very low-cost, clean, renewable energy to wherever the market demand is at.
Rob: Really this is part of the natural evolution of the process that has helped wind and solar come down in price, and corporations setting energy reduction targets, because energy reduction is an easy way to reduce your costs. With renewables coming down in price, then we start to look at how we source these renewables in a competitive environment and get the lowest cost renewable resource. Then the utilities came on board, offering green shares to corporates that are interesting in procuring renewable energy, and I think that you see the evolution from corporate procurement and utility procurement and the collaboration that’s happening between the two, it’s really the next part of the roadmap for successful renewable energy deployment across the United States among the corporates and the Regional Transmission Operators. It’s really continuing that process of renewables continuing to come down in price.
What are the main recommendations of the report?
John: We have two. One is for the Regional Transmission Organisations to change the way they operate and to have a formal process for integrating the demand from the large institutional buyers, especially the large corporate buyers. Second, really with companies like Rob’s, we’re recommending that they start participating in these processes. We’re urging the large corporate buyers to take a look at the Regional Transmission Organisations and raise awareness within those organisations about their demand, and the fact that they have these commitments and are planning on following through with them. Therefore, we need to begin planning the transmission to meet that demand.
What kind of reception has the report received so far?
John: Everyone who’s seen it so far, the reception has been “yes, this is obvious, this is what we need to happen”. I’ve personally done a lot of advocacy in my career where the goals seem a little too ambitious, but this seems eminently doable. We’re talking to these Regional Transmission Organisations, that understand planning and modelling, and all we’re suggesting to them is that they need to update the models to account for this demand. If they want to, they can factor in the risks that not all this stated demand will be procured, but certainly some of this demand will result in procurement and so having these entities update their processes, to us, seems very achievable. That’s been the reaction so far. Nobody’s reacted with scepticism asking how we’re going to pull this off.
Rob: This is the next logical step. These corporates are engaging more and more in the policy and planning processes. This seems like the logical next step and is very achievable.
What are your hopes for the next couple of years?
John: If you look at the target of 60 GW by 2025, our hope is that by 2025 we will have a truly national grid that can deliver truly affordable renewable energy to the companies that want to buy it on behalf of their customers. The main thing I want to leave you with is that the really big story over the last ten years has been the dramatic cost reduction, and so we have the opportunity to provide affordable energy to large companies that are seeking it, tomorrow, but there are storm clouds ahead and if we’re looking out into the coming decade, our goal to continue delivering it is at risk. Only if we build the transmission infrastructure will be able to achieve that goal.
Further background information:
The WEF report looked at a range of different scenarios, and found that existing and planned transmission facilities may not be sufficient to deliver the amount of renewable energy companies have already committed to buying. For example, using a conservative set of transmission-building assumptions, the report found that planned transmission build-outs would meet only 42 percent of corporate renewable energy demand in a high-procurement scenario, or 78 percent of the demand in a low-procurement scenario.
According to Rob Threlkald, GM’s ability to access renewable energy is key to the company’s decisions about where to expand new facilities.
Given these findings, the report recommends that corporate buyers and other large institutional customers take the following actions:
Encourage transmission planners and state Public Service Commissions to increase access to affordable, renewable energy by approving upgrades and expansion to transmission lines.
Participate in regional and inter-regional transmission planning conversations to ensure future transmission infrastructure meets customer demand for renewable energy.
Urge the Federal Energy Regulatory Commission to continue to work to improve the interregional planning process, consistent with Order 1000.
The report was produced by David Gardiner and Associates on behalf of WEF. David Gardiner, president of the company commented that “any company aiming to buy renewable energy should engage in the transmission planning process Access to the lowest-cost renewable resources depends on transmission, and corporate renewable energy buyers need to communicate their procurement goals to transmission planners”.
The Wind Energy Foundation is a non-profit organisation dedicated to raising public awareness about the importance of wind and other renewable energy sources through communication, research, and education. This report was produced as part of the multi-sector A Renewable America campaign.
David Gardiner and Associates is a strategic advisor to organisations seeking a sustainable future, focused on climate change, clean energy, and sustainability.
Image: John Kostyack (Left) and Rob Threlkeld
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