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Biden announces DOE financing aid, DOT siting help for new power line

28 April 2021

Saying grid expansion is needed to meet clean energy deployment objectives and address reliability issues raised by the February power crisis in Texas, the Biden administration on 27 April announced the availability of $8.25 billion to finance construction of power lines as well as new guidance to overcome siting issues along federal highways.

"After the Texas transmission debacle this winter, no one can doubt the need to invest in our electric grid," said Gina McCarthy, Biden's national climate advisor. "The steps that the departments of energy and transportation are taking today, when combined with the grid investments outlined in [Biden's proposed infrastructure legislation], will turbocharge the building of major new electricity transmission lines that will generate new jobs and power our economy for years to come."

US Secretary for Energy Jennifer Granholm said the Department of Energy's (DOE) aim is to make financing available for projects that improve resilience and expand transmission capacity "so we can reliably move clean energy from places where it's produced to places where it's needed most."

The White House said DOE's Loan Programs Office will accept applications from transmission developers for up to $5 billion in federal loan guarantees, including $3 billion under its Title 17 Innovative Energy Loan Guarantee Program, which Congress approved more than a decade ago to back energy projects using innovative or low-carbon technologies. The agency is providing another $2 billion in loan guarantees under its the Tribal Energy Loan Guarantee Program for projects that are wholly or majority-owned by federally recognized tribes or Alaska Native Corporations.

DOE is making another $3.25 billion in federal financing support available under the Transmission Infrastructure Program (TIP) approved by Congress years ago for grid expansion by Western Area Power Administration (WAPA), which operates power lines across the West to market electricity from federal hydropower dams.

The department said projects eligible for the $3 billion under the innovative energy loan program included big-ticket items such as high-voltage direct current systems, offshore wind transmission, and power lines sited along rail and highway routes that follow new siting guidelines the Department of Transportation (DOT) issued.

Both TIP and the DOE loan program help energy project developers access lower-cost private capital by providing additional assurance to lenders and investors that they will not lose money by participating in potentially risky multi-billion-dollar infrastructure initiatives, which often face environmental and community roadblocks.

Notably, DOE in recent years generally has used the loan guarantee program to back low-carbon projects rather than transmission, but the department cited a previous example — a $343 million loan guarantee given to the One Nevada Transmission Line project in 2011 under the Obama administration. The 235-mile, 500-kilovolt (kV) line began commercial operations in 2014 and can carry 600 MW of wind and solar power to the grid running north-south between Ely, Nevada, and Las Vegas.

"One Nevada Line is part of the transmission backbone that will bring growing wind and solar power generation in Wyoming, Idaho, and Nevada to California and other major-load areas," DOE's loan office said in a fact sheet. "One Nevada Line also integrates northern and southern Nevada, which is critical to ensure the reliability and integrity of the Western grid for decades to come."

WAPA has helped develop several transmission projects, including the 109-mile Electrical District No. 5-Palo Verde Hub line, which added up to 410 MW of bi-directional capacity to the grid in solar-rich Arizona and includes 254 MW connecting to the Palo Verde market hub that serves consumers in Arizona, Southern California, and Nevada. WAPA says the line was energized in 2015 and is actively repaying its federal loan.

The agency also backed a $162-million loan to build the Montana Alberta Tie Line (MATL), a 215-mile, 300-MW bi-directional line between Lethbridge, Alberta, and Great Falls, Montana to serve fast-growing wind generators.

WAPA said its loan to the Montana project was paid back, but the project ran into deep trouble under its original developer — Canada-based Tonbridge Power — and DOE's inspector general at the time criticized WAPA for poor management of the TIP program. The MATL project was bailed out when Enbridge, the Canadian pipeline giant, bought the project in 2011. Berkshire Hathaway Energy last year purchased the line from Enbridge.

The MATL problems caused DOE to temporarily pull back on the TIP program, but WAPA more recently has continued pursuing several other big projects in the West. Those include the $2-billion SunZia Southwest Transmission Project, a 515-mile, 500-kV line designed to deliver up to 3 GW from renewable generators in Arizona and New Mexico to population centers in the Desert Southwest, and TransWest Express, a 725-mile project to bring 3 GW of primarily wind power from south-central Wyoming to a hub in southern Nevada linked to major urban centers in the Southwest.

Rights-of-way

The newly issued DOT guidance on transmission siting is aimed at helping power line developers overcome persistent problems in winning state approval for their proposed routes, largely due to complaints from landowners and communities unhappy about intrusive lines that provide them with few benefits.

Railroad and highway rights-of-way (ROW) have long been seen as an attractive solution to the problem because they can provide long stretches of empty land that bypass communities and largely eliminate the need to take private land through eminent domain.

The guidance suggests state transportation agencies could benefit from expanded use of highway ROW through agreements with energy project developers that could cut state costs or provide them with new revenue streams.

The White House said the benefits of expanded transmission development also were made clear in a report issued 27 April by Americans for a Clean Energy Grid, an independent group lobbying for more administration action to advance grid expansion needed to serve renewables.

The "Transmission Projects Ready to Go" report said there are 22 high-voltage transmission projects in advanced planning stages that would benefit from increased federal financing and siting support, potentially unlocking around 60 GW of new clean energy capacity and creating around 600,000 new jobs.

Biden already has proposed substantial transmission aid in his $2.2 trillion infrastructure package, including new tax credits for construction of high-voltage power lines and creation of a Grid Development Authority within DOE to support "creative financing tools" for the sector.

Reporting by George Lobsenz, "The Energy Daily."

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