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This week, Clearing Up’s Dan Catchpole sits down with the Department of Energy’s Acting Deputy Assistant Secretary Michelle Manary to talk about DOE’s $2.5 billion program to jumpstart new transmission construction.
NewsData's "People in Power" is an exciting new biweekly podcast that explores issues in the energy industry, featuring expert guests from a wide range of backgrounds. Hosted by veteran energy journalists Jason Fordney and Abigail Sawyer of California Energy Markets and including appearances by writers from sister publication Clearing Up, People in Power will explore trends such as development of a Western wholesale electricity trading market, the transition to a more electrified world of new infrastructure and transportation, renewables integration and reliability, wildfire response and mitigation, and many other topics. "People in Power" draws from an unprecedented pool of expertise and insight in a way never seen before! It's available on all major podcast platforms as well as at www.newsdata.com.
Intro:
Welcome to NewsData's Energy West, a podcast about the energy
industry today and where it's going tomorrow.
Dan Catchpole:
Welcome, everybody. I'm Dan Catchpole with NewsData's Clearing
Up.
And this week, instead of doing our regular weekly wrap up,
we're sitting down with,
Michelle Manary:
Michelle Manary.
Dan Catchpole:
Michelle, can you introduce yourself?
Michelle Manary:
Sure. I am Michelle Manary.
I am the acting deputy assistant secretary for the Grid
Deployment Organization at Department of Energy.
Longest title ever.
I think Michael Pessin beat me just a little, but.
But, yeah. So basically my group, I'm on a two year assignment
from the Bonneville Power Administration, loaned over to DOE,
to help stand up the transmission, kind of permitting, planning,
technical assistance and
deployment of the infrastructure bill.
Dan Catchpole:
I mean, I do have to ask, did you get extra large sized business
cards?
Michelle Manary:
No, I just cut some of the words out.
Dan Catchpole:
So in the bipartisan infrastructure law that passed in the in the
fall, one of the programs in it
is the transmission facilitation program that falls under your
in your office.
You guys have 2.5 billion revolving fund here or borrowing
authority to help jumpstart some of the transmission
that that is going to have to be built if we're going to bring
in all this intermittent renewable energy, optimizing all that
new generation.
Can you give us an overview of this transmission facilitation
program?
Michelle Manary:
Sure. It's a mouthful.
So we call it TFP because we're going to acronym it.
Dan Catchpole:
That works better.
Michelle Manary:
So the the goal of the facilitation program really is to help
those large inter-regional
transmission projects, 1000 megawatts or more, or major rebuilds
of existing projects that bring in 500 megawatts or
more. So it's really focused on the the larger scale and the
transmission side.
Or the third aspect is connecting microgrids in Alaska, Hawaii
and the US territories to transmission grid.
So it's really focused in those three areas.
And the thinking is transmission takes such a long lead time to
build that a lot of
folks by the time you get all your kind of not only your
permitting and your siting but also all the customers and
everything signed up, it's just a long time.
It's you know, ten years is usually kind of th, you know, kind
of the poster child.
It could be plus. But so really what Congress did is brought
forward on the infrastructure
law, something that helps accelerate those, the transmission
builds.
And how it does that is it offers developers and it could be
utilities, it could be third party
entities. There's eligible entity is very broad, but it provides
a kind of a mechanism where they can
come alongside the Department of Energy.
The Department of Energy is authorized to subscribe up to 50% of
the lines capacity up to
40 years. So those are our guardrails on projects that will
result
in public benefit.
And so when you talk about public benefit, that can be
resiliency, it can be reliability, it can be bringing clean
energy in.
And clean energy can take a lot of different forms.
It doesn't have to be renewables.
It can be carbon capture, it can be small microgrids, anything
like that.
Dan Catchpole:
And you guys, to flesh some of this out, you have a notice of
intent and request for information coming out in the next few
weeks. That's going to flesh out a lot of that, right?
Michelle Manary:
Correct, it's going to propose.
You're right. We're going to have a notice of intent with a
request for information because we have some certain specific
questions we would like, followed by a 30 day comment period.
And so we really want to make sure we get this right.
And so we're going to come out and propose kind of the
structure, what's going to be required in order to apply what the
applicant needs to submit.
Kind of the timing, the staging.
We're going to looking at staging the program and just asking a
bunch of questions because there is three
distinct elements in this program.
So an eligible entity can come in and ask for a capacity
contract.
So it kind of, so the government comes and says we'll buy, so up
to 50% of the capacity on this line,
Dan Catchpole:
Anchor tenant.
Michelle Manary:
Anchor tenant once commercialized.
So we can do that.
Or they can come in and ask for a loan up to 50%.
Or they can come in and ask for a public private partnership,
which means DOE comes alongside them, owns plans, develops the
transmission line with the entity, and owns up to 50% of that as
well.
Dan Catchpole:
Like BPA had planned on doing would be...
Michelle Manary:
Exactly. It'd be very similar to that.
It's just DOE Headquarters.
But. Unlike BPA was planning on doing that.
You guys, I know you said 40 years, but your goal is to...
Recycle this money, get in and get out.
Dan Catchpole:
It's a revolving fund.
Michelle Manary:
It is a revolving fund.
Dan Catchpole:
Borrowing authority, so once you lend it, you can't lend more
until you've recouped that money.
Michelle Manary:
Correct. So you're right.
The main goal for Department of Energy is to make wise
investments with the taxpayer money that we get to
help accelerate the transmission development, these
inter-regional offer.
But that literally from as soon as the ink is dry, our goal is
to get out of these contracts.
And so that is our main goal.
And so we're going to make investments that make sense that
there's a good return on kind of and get out as
soon as we can. So what it does is it allows the markets to grow
into it, the demand to grow into it, the load to grow into it
during that construction period.
And so by the time usually by looking like if we it depends if
it's public private partnership or capacity contract, you're
looking at a number of years that the developer still has to get
steel in the ground and wires in the air.
And so all that time we're remarketing as well.
And so the one of my kind of overall goals is I would love to be
out of that contract by the time the thing gets
energized.
Dan Catchpole:
It sounds like then one of the real, when we 10-20 years from
now, when we look back on this program, we say, was it a
success? It sounds like a lot of that is going to depend on how
spot on your due
diligence is.
Michelle Manary:
Correct.
Dan Catchpole:
Can you, is this a good project?
Can you get out of it?
Does it deliver on that public interest goal?
Michelle Manary:
Correct.
Dan Catchpole:
So what are you doing to make sure, how do you make sure that I
mean...
Michelle Manary:
So we're going to do twofold.
Most likely we're going to have the eligible entity provide a
lot of that information, so they not only have to do the
engineering specs and everything, but a market study and
everything they needed anyways to make sense for that project to
go. We'll be asking for that as well.
We're also going to double check a lot of that stuff.
So we're going to we're going to do our due diligence on that.
So not only will we make some of the phone calls, make sure the
permitting is right or the due diligence, we could also even do
our own third party, have someone else do an independent market
study.
That's one of the things that we are trying to develop right
now.
But we will because we'll have to do a due diligence in order to
make sure that we validated that these are
in the national interest.
So not only does it have to be a good return or a good in a kind
of high likelihood that we can resell this in the future, but it
has to be of natural national interest.
And so we'll have, we're going to ask a lot of that from the
entity that's actually applying.
And then we're going to go...
we or contract out to do our due diligence on that.
Dan Catchpole:
So this program is going to apply across the country.
Now we, Clearing Up [and] our sister publication, California
Energy Market, we cover the West, obviously.
So how does this program apply differently across the country,
or is it just one size fits all?
Michelle Manary:
Yeah, good question. So it'll be different because one of the
things I've learned in my time at DOE is every region is
different. And so whether you're inside an existing RTOs or ISO
is very different than if you're outside of one.
And so in the West, it's most akin to a point to point.
It'll look like a point to point contract.
But we're also going to have to change like if they're in
markets, if some of the market entities.
So one of the classic examples is MISO and SPP just put out last
year kind of a study, a seam study.
So these are some of the great interregional projects we need,
but there's not quite the demand for it yet.
And so depending if they come in or one of the other classics of
an RTO and a non-RTO, you know, kind of an
ISO and RTO and then another utility come together that's
outside of there, there's going to have to be some sort of
difference in contract structure.
The approach the basic goal is still the same.
We're just going to have to adapt to whatever entity is managing
and operating the transmission in that region.
Dan Catchpole:
Okay.
Michelle Manary:
So it will have different flavors, is that what you're asking?
Dan Catchpole:
Yeah. And you know, so I mean, this is onshore and offshore is a
potential.
Michelle Manary:
Yeah, it's wires.
Dan Catchpole:
And there have been some studies that have been coming out in
terms of potential offshore capacity that are really just kind of
mind boggling, especially in the West Coast recently.
But actually, I want to ask, go back to the NOI and RFI for a
second.
So you went through some of what's going to follow after that
comes out.
So is there based on your timeline right now, when do you hope
to be able to start taking applications?
Michelle Manary:
Yes, I would love to do it by late summer.
So that's kind of the goal.
So but it depends.
So if we come out with, when we come out NOI and RFI, if there's
not a lot of big significant kind of
comments, feedback, if people are like, "Yeah, it's generally
good," we can probably turn it around in 30 to 60 days
internally, and then get something out as solicitation on the
street.
If there's some big issues, of course it'll take some time.
But our goal is to start getting that first solicitation by late
summer.
Dan Catchpole:
Okay, great. So start working on your application everybody.
And your office will have some support for folks, correct?
Michelle Manary:
Yes, yes. Yes.
Dan Catchpole:
Fielding. Can you give listeners the elevator pitch on what help
is there?
Michelle Manary:
Yeah. So we do.
We have support where there's a core team that is made up of a
number of members that we can call to help if you have any
questions. I also I'll get the right folks together.
But yeah, we have a team, a small team that's there to help
folks through.
A lot of times I call it the pre-application process that if
they have questions or just sit down.
We're also going to do some webinars as well as share through
webinars and that stuff, draft contracts
or things that we're doing.
So we're going to try to give the industry as much forewarning
and and time to ask questions, but still be in a
timely manner. Keep it going forward.
Dan Catchpole:
So one of the challenges facing the industry is that the models
that we use to forecast what we need to build
were built for the ecosystem, an environment that looks that
increasingly doesn't look like the world we're
going into. So how do you adapt for, I mean, how does that
affect
making sure that you make good investments?
Michelle Manary:
Right, scenario planning baby.
Dan Catchpole:
Right. I mean, like we've got huge amounts of renewables that
have to be built offshore.
So where is this stuff going to be sited?
And then if small modular comes on and small modular nuclear
reactors come onto the system, what does that displace?
I mean, I do not envy your job.
So how do you make sure that you make good investments?
Michelle Manary:
Yeah, that's actually a very good question because it is all
changing.
And I think states are grappling with that.
The feds are grappling with that.
One of the things is transmission planning.
You know, it was a little more static.
Actually, it was a lot more static in the past.
It's going to be scenario based, and you're really going to have
to look at a number of different scenarios and look at the builds
or the reconducting or the upgrades, whatever it is, or new
technology that makes the most sense in a lot of those scenarios.
And one of the areas that DOE is also, my group is funding, is
the National Transmission Planning Study, which is where we are
through PNNLL and NREL, the two national labs.
Dan Catchpole:
The Pacifical National...
Michelle Manary:
Pacific Northwest National Lab.
Dan Catchpole:
and National Renewable Energy Lab.
Michelle Manary:
Right. Correct.
They're partnering with us to do some studies with the regions.
So what we're planning to do is knit together about five
different models, everything from your capacity expansion model,
kind of the looking, where things are, where it need, all the
way to a power flow model so we can actually get flow
electrically through. And so we're working with all the regions
not to duplicate what they do.
We're going to take what they do and knit them together.
We're really focused on those inter regional areas and where you
would need to reinforce those interregional areas and where the
capacity needs to be in a number of scenarios.
So we're working with them on that.
The DOE then we'll have that and others can use it as well as a
foundation to where in the
future, some of we'll focus some of the money, the federal
money.
Dan Catchpole:
So do those scenarios, are they baseline or in the scenarios, are
you incorporating how climate change will affect
demand?
Michelle Manary:
Yeah. And so the basic premise is we're going to do a baseline.
The baseline is today's wires, plus that stuff that's in the
hopper that's in most people's plans ten years out.
That's pretty, pretty firm that's going to happen.
Then we're going to see where our system gets us and where we
need to go.
And that's taking all the state standards, taking all the states
and see there's a gap.
And so what it's going to do is help look at scenarios.
What would help close that gap to actually help Washington and
Oregon and California and Montana, hit their climate standards or
the renewable standards, whatever they want to do.
That's what we're going to focus on.
If you're going to do that, what's the inter-regional
transmission you need?
And the costs.
Part of it is, if you just stays your own state, we're going to
model that and say if you if you just do your own state standard,
what's infrastructure, kind of that you're going to need.
Versus if you think regionally, if you think multi-state what is
that infrastructure needed?
And so we're going to try to give decision makers some of that
data so they can make those trade offs.
Because it's more than just the transmission wires, it's jobs and
everything else, but at least give some data informed decision
making and help basically have some of the federal funding help
funnel it in the they call it
the no regrets or the thing, the items that come up over and
over again in any scenario.
So it doesn't matter if you're going to go full electrification
or medium or low, you need some of this infrastructure in place.
Dan Catchpole:
So, I mean, is there a specific climate change modeling that
you're requiring to be incorporated in?
Michelle Manary:
No, we're taking. So PNNL and RNEL, we're actually incorporating
all the states their own goals.
Dan Catchpole:
So it depends.
But for I mean, in terms of figuring out...
I mean, in terms of figuring out whether or not a project that
looks good with current demand and projected demand.
I mean, as for anybody following the Northwest Power and
Conservation Council's 2021 Power Plan that looks at the
Northwest Regional, and they included climate change
projections a range.
But instead of looking at historical data which does
increasingly doesn't reflect what we're going into that really
shaped by looking at climate projections and more recent data,
they got very different load projections.
So, I mean, is that going to be included in your due diligence?
Michelle Manary:
Yes, we are.
Dan Catchpole:
Are these including model, is this proposal, including modeling
that incorporates how climate change will or could affect...
Michelle Manary:
It's all forward looking. So, yeah, so we will take kind of what
we know today and then look at the future and look at multiple
different futures. I think that's the key, is this project kind
of banking on a come for one
scenario, or is it beneficial to the nation and the national
interest depending on a
number of scenarios?
And so I think that's one of the key things is that due
diligence is looking at that case and kind of assessing it
and seeing does this, is this going to help multiple scenarios,
multiple approaches, plus the resiliency and reliability?
Dan Catchpole:
And I think we mentioned this earlier, but in case we didn't,
I'll ask.
So unlike the programs or other appropriated money in the
infrastructure
bill, the bipartisan infrastructure law, there's no sunset date
on this.
Michelle Manary:
Correct? On the transmission facilitation program, it was set
up.
It's a borrowing authority that goes on until Congress decides
not to anymore.
But it's unlike the other infrastructure law programs that have
a five year, basically a five year appropriations.
This one keeps going.
And so this is a new program that really is supposed to help
bridge that gap, accelerate, I'd say, transmission
and get it going.
That and helping bridge that transition, just because it takes
so long to build, it helps get folks going to get that
steel in the ground.
And so you're not waiting around and transmission providers and
adding extra time.
Dan Catchpole:
Right. And you guys will come in after the permitting or is there
any?
Michelle Manary:
It depends. So if an eligibility wants to contract from a
capacity contract, buying basically
transmission from them, that one will have a different
requirements and probably come more towards the the latter part
of the permitting.
It doesn't have to be all the way, but it's going, you've got to
actually have done some things.
Whereas they want a public private partnership, that's usually
more at the beginning because the capacity contract does not have
an involved NEPA. And so the federal, national federal NEPA,
Environmental Protection
and so it depends if we actually build with them at the
beginning, it's a very different approach than if
we're offering a capacity contract on the end.
Dan Catchpole:
Now, especially in the West, where there's huge tracts of
federally owned and managed land, that is an
issue with the permitting process just going through all these
different entities.
Is there, is part of this program, is there an effort to
streamline the federal permitting side of it, the part that you
have some say?
Michelle Manary:
Right. So there is a lot of coordination going along around.
So it's more make it efficient.
It's so funny. Some people hate the word streamline, but it's
make it as efficient as possible.
Because what you're dealing with is each of the entities have
their own statutes, their own law, that their Bureau of Land
Management has a very strong mission and that's different than
US Forest Service.
It's different than Department of Defense or Department of
Transportation.
So it's really trying to make sure that when we're asking
applicants for information, that we're doing it as coordinated as
possible. So we don't have three or four different organizations
asking for the same thing in sequence.
Instead saying, "Hey, how can we work together to ask for it up
front?
And we could all use some of it." And it's and so we're really
looking to do that.
Also, some of these local entities, like if you're at some of
the US Forest Service or your land management or something like
that, this falls on their local jurisdiction, making sure they
have people to do it.
And so a lot of times lands on folks that are very thin staffed
and start with and these are major
projects.
And so it's not easy for them as well.
And so part of that is right now is federal agencies trying to
figure out how we do that.
There is just to let you know, on the federal agency, if you
have a project, something like this, there is called
Fast 41 or fipsy.
It's actually a requirement that comes in that's a one stop shop
for federal permits.
And it's not just transmission, it's all types of permitting.
But there is an organization can come in, it's voluntary, and
you can actually have someone lead that process that brings all
the federal agencies together and make some report out in a
cadence.
The developer has to report out also in certain cadence, but
there is a process that developers are using more and more that
actually helps streamline that.
Interesting. So let me add something.
Because so the other thing, the transmission facilitation program
is just one of multiple
of transmission distribution money coming out of the
infrastructure law.
And so a lot of it, so you have two and one half billion for
transmission facilitation program.
You have another 13 billion on kind of your existing grid, your
resiliency, your grid hardening, your smart grid.
And so one of the things that we always say, especially in a lot
of the Department of Energy and transmission, utilize your
existing grid as much as you can.
It's already in the ground.
It's you know, it's your biggest bang for your buck.
And so as entities are looking at applying for some of these
programs or states are doing it, look at multiple
programs and make sure you optimize those dollars.
Don't let a moment in time go by and not take advantage of some
of that federal money coming to help states and
utilities really strengthen and harden their grid.
Dan Catchpole:
And those are the five year programs.
Michelle Manary:
Yes, those are the five year programs that are...
Dan Catchpole:
So get your applications in soon.
Michelle Manary:
Yeah. Notice of intent coming soon.
Get ready.
And so yes all the kind of transmission distribution smart grid
stuff, all of it's coming out within the next, hopefully, four
weeks.
Dan Catchpole:
The 13 billion.
Is that all through your office or is it?
Michelle Manary:
Yes, the grid deployment office.
It is.
Dan Catchpole:
All right. Well, that's all the time we've got today.
I don't want to keep you from everything else that you've got to
attend to running, you know, keeping us on track.
So thank you very much for your time, and we'd love to have you
on later down,
later on down the road when some of the rules are out and maybe
you guys are taking applications and see how everything's
progressing.
Michelle Manary:
Happy to share. I'd be back.
Dan Catchpole:
Thanks, Michelle.
Michelle Manary:
Thank you.
Dan Catchpole:
In other news.
Covid-19 lockdowns in China are delaying three energy storage
projects that Southern California Edison is building to ensure
grid reliability around Los Angeles and in the San Joaquin
Valley.
The projects can dispatch a combined 537.5 megawatts for 4
hours, totaling
2150 megawatt hours.
They're expected to cost a combined $1.2 billion.
They were scheduled to be operational by August, but now
contractor MORASCO says they cannot meet that
deadline. Regulators and utilities in California are relying on
energy storage to shore up resource adequacy
across the state.
However, the supply chain delays are due to short term
manufacturing and transportation lockdowns in China related to
the pandemic. Read more about this story by Linda Daly Paulson
with California Energy Markets at NewsData.com.
Also in CEM, Editor Jason Fordney reports that the California
Independent System operator, or CAISO, is
taking comments through May 31st on its latest proposal to
ensure energy storage resources are adequately compensated
for participating in CAISO's wholesale energy market.
CAISE says the growing amount of energy storage in California
requires a new compensation model that reflects energy storage as
unique features.
For example, the proposed new model takes into account how
charged a battery storage system is when it sells into CAISO's
market. Prices are lower when it's fully charged, and they rise
as the battery's charge goes down.
From Clearing Up this week, BPA is taking offers for up to 200
megawatts of projected surplus wholesale power and
capacity during this coming winter and in summer 2023.
The Bonneville Power Administration has sporadically used these
request for offers in the past for selling smaller amounts of
generation. But now, as utilities look to improve their resource
adequacy and keep lights on when the power market is tight and
demand is high, BPA sees an opportunity to increase its
wholesale revenues.
The wholesale revenues help keep costs low for its power
preference customers.
BPA's Manager of Power Services Long Term Sales and Purchases,
Erik Petrovich, says that this approach is something
the federal agency should keep in its toolbox.
Read more about this story by Clearing Up's Rick Adair at
NewsData.com.
NewsData is also hosting a regional conversation on small
modular nuclear reactors this coming Tuesday, April 26.
The conversation is hosted by NewsData and Clearing Up from noon
to 1:30 p.m.
Pacific Time and hosts include such people as Mark Anderton, a
special advisor to Utah Associated Municipal Power
Systems; Jason Herbert, senior director of External Outreach and
New Nuclear Development at Energy Northwest; Bob Jenks, Executive
Director of Oregon's Citizens Utility Board; Ben Keila, senior
advisor at Northwest Power and Conservation Council;
and Benjamin Rinke, senior Director of Corporate Strategy and
Advisor to the CEO at X-Energy.
That's it from us this week.
Thanks for listening and we'll see you next week.
Outro:
You've been listening to NewsData's Energy West, a podcast about
the energy industry today and where it's going
tomorrow.