Gridlock on the Road to Renewable Energy Development: A Discussion About the Opportunities & Risks Presented by the Modernization Requirements of the Electricity Transmission Network

In November 2006, the American Council On Renewable Energy (“ACORE”), along with the Renewable Energy and Energy Efficiency Caucuses of the United States Senate and House of Representatives, convened the national policy conference, “Renewable Energy in America: Phase II Market Forecasts and Policy Requirements” (“Phase II”). Several speakers at Phase II argued that continued private sector financing of renewable energy projects will substantially depend on the expansion of the electrical transmission network. The argument follows this logic: developing renewable energy to the point that it can power America\u27s growing energy needs will require substantial investment from private sector investors. These investors will hesitate to invest money unless they are confident that they will be able to profit by selling the energy on a national market. Unfortunately, the current network of transmission facilities faces serious technological challenges in each major part of the electricity value chain, from power production to power delivery and end-use. The difficulties involved in transporting energy from where it is produced to where it is needed reduce incentives to invest in renewable energy. Investors fear that these projects may not be profitable because of transmission congestion. While this situation somewhat resembles a “which came first, the chicken or the egg?” dilemma, it is apparent that at some point, new transmission facilities will need to be built and existing facilities will need to be upgraded if renewable energy is going to become a major source of power in America. This paper explores the problem and solution while operating under the main premise that it should be a national priority to do whatever it takes to optimize the domestic production of energy from clean, renewable resources. Particularly, the transmission network should be upgraded. Furthermore, because industries need investment to get going, this development must be supported by a combination of private sector investment and federal and state government incentives and investment