Renewable energy vs. the electric grid - Solar, Wind and Land: Conflicts in Renewable Energy Development - page 156

would be most valuable to the region. The BPA used “cluster studies” to
analyze the 153 requests it received and ultimately identified four major
transmission project routes capable of being constructed at embedded cost
rates. 34 Roughly 74 percent of the requested transmission capacity in this
first open season was for proposed wind energy projects in the region. 35
Authorities in Mexico have used similar strategies to help better optimize
transmission siting in that country. 36
Of course, open season programs have their own limitations as well.
Among other things, they are only effective to the extent that they have
buy-in from all jurisdictions whose lands are involved. Still successful uses
of this format by the BPA and Mexican authorities suggests that it can be
a useful strategy for more efficiently planning long-distance transmission
routes for renewable energy development in some remote areas.
Disputes over transmission infrastructure funding
Even if an interjurisdictional transmission line project has all necessary
government approvals, it still may never materialize if stakeholders cannot
agree on how to fund its construction. Extra-high-voltage transmission lines
and supporting facilities are incredibly expensive. Estimations for one recent
project in the United States put the cost of such lines at $1.7 million to $2.1
million per mile. 37 As other commentators have noted, disputes over who
could cover these costs can be“just as much of a barrier” to the development
of an interstate transmission line project as disputes over siting of the line
itself. 38 It could cost up to $34 billion to expand transmission facilities
enough to enable renewables to meet 33 percent of the annual electricity
load in the western United States alone. 39 An estimated UK£110 billion of
investment would be needed to adequately upgrade the U.K.'s electricity
infrastructure. 40 Given the magnitude of these costs, it is no surprise that
there is ongoing controversy about who should pick up this hefty tab.
A fundamental question frequently debated in disputes over transmission
project funding is whether renewable energy developers should foot the bill
or whether utilities should cover it. Laws in some jurisdictions have histori-
cally required energy developers to pay for the transmission infrastructure
needed to serve their projects. For example, Australia has traditionally used
a “developer pays” approach for transmission infrastructure, asking gener-
ators of electric power to finance the costs of connecting their generation
facilities to the grid. 41 This strategy is akin to the relatively common practice
of requiring developers of new residential subdivisions on the outskirts of a
town to pay much of the expense of building new public roads to connect
the new subdivision to existing city streets. Theoretically, such requirements
are reasonable and equitable because real estate developers can pass along
much of these costs to homebuyers.
Although this “developer pays” model may be an effective way of
financing transmission facilities for conventional power plants near urban