The Federation: Enabling interregional electric transmission development and operation

Abstract

The electric utility industry in the United States continues to seek lower costs by employing increasing amounts of low-cost wind and solar energy. Some states are continuing to require utilities to increase the use of renewable energy in accordance with governmental policy.But as solar and wind resources become an increasingly important share of the power supply portfolio, the result can be serious negative operational impacts on system reliability. Some systems have begun to experience rolling backouts as a result.11Sammy Roth, California Blackouts are Public Utilities’ Commission’s Fault, Grid Operator Says, The Los Angeles Times, August 17, 2020. These rotating blackouts of course create high levels of customer dissatisfaction.Such loss of reliability and customer satisfaction must be addressed. Society will accept neither rotating blackouts nor significantly higher costs. Meanwhile, it still wants 100 % clean energy. How to reconcile these three goals at the same time? The problem is not the increasing levels of renewables. It is just that our utility business models have not evolved to effectively take advantage of them as the industry continues to use renewables to displace fossil-fueled resources.This article describes a new, innovative, and productively disruptive business and operating model that can enable high voltage direct current (HVDC) interregional transmission and the “macrogrid” it represents. Together, they can address the reliability shortfalls by improving the contributions to reliable generating capacity of ever-increasing levels of wind and solar while preserving their economic and environmental benefits.Founded on the principles of continued service reliability, lower costs and lower carbon emissions, the new model does not require a cogent federal energy policy (although that would certainly be useful) or the merging of current Regional Transmission Organization (RTO) or Independent System Operator (ISO) wholesale markets.The approach requires a new business model to position the participants for success in this changing market. It uses a small number of utilities, developers and states voluntarily joining together as coalitions of the willing in their own mutual self-interest. Using interregional HVDC transmission, it would aggregate at the wholesale level widely dispersed, time-diversified renewable energy sources, combine them with energy storage and other firming resources, and offer renewable energy products with various specific levels of reliability and associated prices to the wholesale markets. It would redistribute renewable energy surpluses and deficits caused by their otherwise non-dispatchable intermittency and make their aggregated capacity more reliable.The new business model is called the Federation.