Photo 127637 © Roman Milert | Dreamstime.com
dreamstime_l_127637
dreamstime_l_127637
dreamstime_l_127637
dreamstime_l_127637
dreamstime_l_127637

DOE Aims for More Capacity Contracts for New Transmission Projects

Feb. 9, 2024
The contracts are meant to boost investment in transmission and get critical transmission lines built when they might not have otherwise.

The U.S. Department of Energy is seeking proposals for another round of its Transmission Facilitation Program, a fund to help large-scale, new construction transmission projects come to fruition.

In a press release, the DOE said up to $1.2 billion from the revolving fund, which is supported through the Biden administration’s infrastructure law, is available in this request for proposals.

This funding method employs capacity contracts to speed up transmission construction. With capacity contracts, the DOE would commit to buy up to half of the full capacity of a transmission line.

Encouraging investment in transmission lines is complicated not just for engineering, siting, environmental and labor reasons, but also for economic reasons. It is difficult to bring a project to the construction phase until there are already customers signed up to buy the power the line will transmit. With a commitment from the DOE to buy capacity, investors may be more likely to join the project.

DOE will sell its capacity rights in these projects to other customers to recover its costs.

According to the DOE, the federal money should help activate further investment for transmission line projects via state governments and the private sector.

“There’s no way around it: to realize the full benefit of the nation’s goal of 100% clean electricity by 2035, we need to more than double our grid capacity,” said U.S. Secretary of Energy Jennifer Granholm. “President Biden’s historic clean energy legislation is helping modernize the nation’s transmission to deliver reliable, more affordable energy to every American community in turn driving down costs for American families and generating good paying jobs for American workers.”

DOE’s most recent National Transmission Needs Study estimated that the U.S. needs to must more than double its existing regional transmission capacity by 2035. The American power grid also needs to expand existing interregional transmission capacity by more than fivefold to maintain reliability, boost resilience and ease congestion, according to the report.

The Transmission Facilitation Program is administered by the Grid Deployment Office and authorizes DOE to borrow up to $2.5 billion to assist in the construction of critical transmission lines that otherwise would not be built or to incentivize building proposed lines with higher capacity.

The first phase of these Transmission Facilitation Program requests for proposals went out in 2022, with the DOE negotiating to provide up to $1.3 billion to a package of three new transmission lines.

The selected projects are Cross-Tie 500kV Transmission Line (Nevada, Utah), Southline Transmission Project (Arizona, New Mexico), and Twin States Clean Energy Link (New Hampshire, Vermont). 

In the near future, DOE’s Grid Deployment Office expects to release a separate RFP focused on public-private partnerships to build transmission infrastructure that connects isolated microgrids to the grid in Alaska, Hawaii, and U.S. territories. 

Voice your opinion!

To join the conversation, and become an exclusive member of T&D World, create an account today!