Advanced Energy United is looking at macro trends impacting the electricity system in 2023 and beyond. This is the fifth in a seven-part series looking at what lies ahead – part of a broader look at what lies ahead for policymakers, customers, and utilities following government incentives and market shifts in 2022. Read the rest of the series here.
Transmission and wholesale energy markets will have a moment.
As renewable energy deployment accelerates, developers are running into major bottlenecks related to transmission and interconnection. Over 1 terawatt of clean generation sits in the queue today. As a result, the Federal Energy Regulatory Commission published Notices of Proposed Rulemaking in 2022 to address transmission and interconnection issues. The Inflation Reduction Act (IRA) and the 2021 Infrastructure Investment and Jobs Act (IIJA) also created programs to finance, plan, and site new transmission projects and took aim at addressing several of these challenges. However, major barriers remain, including staunch local opposition to new projects and disagreements over how to allocate the costs among project beneficiaries.
Meanwhile, progress continues on creating an organized wholesale market in the Western United States – a process likely to play a central role in planning any future transmission system. Existing markets, namely the California Independent System Operator (CAISO) and the Southwest Power Pool (SPP), compete for the western utilities with new offerings like CAISO’s Extended Day Ahead Market (EDAM) and the SPP’s Market+. At the same time, the Western Power Pool has developed a Western Resource Adequacy Program (WRAP) that has already won over 11 northwestern utilities and PacifiCorp, a western giant.
Looking ahead: In 2023, states may begin proactively exploring the adoption of processes and guidelines that create clarity around cost allocation for both renewable generation development and transmission and distribution upgrades. Some may hope to streamline their siting and permitting processes, especially around the collection of community and environmental justice feedback at the start of projects to prevent delays or major changes later on. States will also be familiarizing themselves with the plethora of new federal programs to support transmission and regional energy market development to be ready to apply for relevant pools of funding. It’s important to note that many of those programs have eligibility requirements, such as the consideration of equity, long-term planning, and regional benefits.
Additionally, a new level of regional coordination and cooperation will be needed to upgrade and build out the necessary transmission system for a clean electricity grid. This is particularly the case in the eastern states investing big in offshore wind, and in western states looking to join a regional transmission organization (RTO). In 2023, look for more interstate forums that bring key decision-makers together to discuss big, challenging, and inescapable transmission and market questions.
Advanced Energy United Managing Director Hannah Polikov and Policy Principal Angela Kent contributed to this series.
Next up: Part 6: Equity and Environmental Justice Take Center Stage: an energy transition for all