Renewable Energy May Get a Boost from New Electric Grid Rules

New rules passed last week by the Federal Energy Regulatory Commission may spur the renewable energy sector to grow even faster than current trends, while also bringing clean energy to regions and customers that have historically been dependent on fossil fuel-based power.

"The impact is pretty big," said Gene Grace, senior counsel with the American Wind Energy Association. "It has the potential to be somewhat of a game-changer in terms of planning and cost allocation."

Existing power lines run from where electricity is generated -- power plants -- to where it is distributed and consumed, and in many cases were originally built and maintained by the same utility. Renewable energy is typically generated in remote regions, requiring new transmission lines that are connected to the grid.

The new FERC rules will force transmission planning to be done by a larger number of regional players, laying the groundwork for new power lines that will span states and neighboring jurisdictions. The cost will be more widely spread among various stakeholders, and the planning must also take into consideration public policy requirements, such as renewable portfolio standards.

"The bottom line is it will force larger-scale plans to be produced everywhere," said Bill White, manager of the National Clean Energy Transmission Initiative for the Energy Future Coalition. "It also requires these planning regions coordinate with neighboring regions."

The FERC rulle will go into effect 60 days after it is published in the Federal Register. Every public utility transmission provider must file compliance plans within a year of the effective date; interregional transmission coordination and cost allocation plans must be filed within 18 months of the effective date.

Clearly, the new rules are boon for the renewable energy sector. "By doing this, FERC is really taking the lid off the industry," White said. "It's been growing quickly but now it will grow faster."

But the move will also benefit consumers and businesses, White said, since it will open up the grid to enable regions to access lower-cost energy from further distances.

"That will reduce prices for them and reduce exposure to volatile fossil fuel prices," White said. "All of those things will be really good for the average customer and business who uses power."

Ultimately, the new rules may make it easier for companies to meet their clean energy goals as part of their sustainability strategies. In 2005, for example, Walmart set a goal of being 100 percent powered by renewable energy, but in a nod to the difficulty, the retail giant has never assigned a target year to the commitment, which it calls "aspirational." Timberland wants to use 60 percent renewable energy by 2015, while Johnson & Johnson plans to increase green power generation to 50 megawatts.

"Having this infrastructure in place so they can have access to lots of fairly priced renewable energy will make it easier for them to meet those commitments," White said.

Improved access to more sources of energy will also reduce the possibility of power disruptions, Grace said. "Businesses will get cheaper power, just like consumers, but they will also have more reliable power."

Many utilities support the new rules but not all, White said.

"The groups most vocal about the rulemaking are mainly utilities who want to prevent transmission lines from being built to keep their market closed," White said. "Where utilities have relatively high prices, if markets get opened up, cheaper power may come in and they'll make less money."

Though Grace characterized the new rules as a positive move, he warned that the full impact won't be known until the compliance plans are filed within the next 12 to 18 months. To really move the needle forward on clean energy, a national renewable portfolio standard and subsidies on par with fossil fuels are needed.

"We think this is a step in right direction," Grace said, "but don't want to make it seem like this alone will be the thing that will transform the renewable energy industry."

Image CC licensed by Flickr user Tarter Time Photography.