Renewable energy vs. the electric grid - Solar, Wind and Land: Conflicts in Renewable Energy Development - page 157

areas, the model is more prone to inefficiency in the context of renewable
energy development. Utility-scale wind and solar energy projects tend to
be in relatively remote locations, so the costs of transmission expansions
necessary to connect them to the grid tend to be greater than for connecting
conventional power plants. Using a “developer pays” model to fund trans-
mission expansions for renewable energy projects is thus more likely to
lead to “free rider” problems in which developers strategically wait to build
their own projects in a remote region until some other developer has built
a nearby line. 42 By waiting and being the second or third wind or solar
energy project in a rural area, a patient renewable energy developer may be
able to connect its own project into the newly-extended grid for a fraction
of the cost it would have otherwise incurred. For obvious reasons, this sort
of strategic waiting can inefficiently slow the pace of renewable energy
development.
In contrast, some jurisdictions employ more of a “beneficiary pays”
or “socialization” approach to fund new transmission lines. Under this
approach, utilities generally finance most of the transmission improve-
ments necessary to connect new renewable energy projects into the grid,
even when such projects are not utility-owned. The utilities' customers—
the beneficiaries—then ultimately pay for the infrastructure through their
regular electricity bills. 43 Laws applicable in the U.S. state of Texas have
long used a version of this sort of funding regime. 44
Advocates of the “beneficiary pays” approach generally take the view
that a well-functioning national electric grid is just as important as inter-
state freeway systems for automobiles or other interstate infrastructure
projects that receive socialized funding and should thus be treated in the
same way. Because this approach does not require renewable energy devel-
opers to directly fund transmission lines, even when their project is the
first in a given area, it also evades the strategic waiting problems that can
sometimes arise under “developer pays” regimes.
Unfortunately, “beneficiary pays” funding schemes can also be prone to
controversy because it is not always clear who truly benefits from a new
transmission line and should thus help to pay for it. Consider, for instance,
a hypothetical transmission line project designed to increase intercon-
nection between the windswept U.S. state of Montana and population
centers in southern California. For purposes of determining who should pay
for it under a “beneficiary pays” model, who would be the “beneficiaries”
of this new line? Californians? Montanans? Someone else?
One cannot resolve the question of who “benefits” from a new trans-
mission line by merely following the flow of the electric current itself.
Given the complexity and interwoven nature of the United States' “Western
Interconnection” grid system, it is impossible to route specific electrons
generated on wind farms in Montana to particular California homes and
businesses several hundred miles away. The reality is that much of the
electricity generated at the wind farms would likely flow to electricity users