U.S.’s Biggest Renewable Project Is Under Way, Finally

A wind and power transmission project, called the largest of its kind in the country, has raised $11 billion in financing, kicking off a year when many utilities are expected to step up much needed spending on the power grid.

Pattern Energy Group has started construction on its SunZia project, a wind farm in central New Mexico, where more than 900 wind turbines will generate over 3,000 megawatts of clean energy. A 550-mile transmission line will bring the power to some three million people in Arizona and California.

The problem: The project has been in the works since 2006, when Taylor Swift released her
debut album. It was “fast-tracked” in 2011 by the Obama administration.

Such a sluggish timeline could threaten President Biden’s ambition to reach 100% clean electricity by 2035. A Princeton University study found that if the U.S. continues to expand transmission at the 1% pace of the previous 10 years, that would result in more coal and naturalgas consumption than if Biden’s Inflation Reduction Act hadn’t passed. That is because the law creates incentives for more power consumption by electric vehicles and other clean-energy devices.

The green-energy transition ready for take off in the U.S. is facing a serious obstacle: the permitting process. WSJ takes you inside the country’s soon-to-be largest wind farm to understand the regulatory gauntlet delaying clean energy for millions. 

John Podesta, White House clean-energy adviser, said at an Energy Department conference last year that the country needed to dramatically accelerate work on transmission to reach the administration’s clean-energy goals. “We need to deploy transmission lines at twice the current pace than we’ve experienced in the last couple years,” he said.

Spurred in part by federal clean-energy incentives, a manufacturing renaissance and growth in data centers, electricity demand is surging. Electricity demand is expected to grow a cumulative 4.7% over the next five years, an increase from forecasts of 2.6% growth over that period made the previous year, according to Grid Strategies, a power-sector consulting firm.

The grid isn’t ready for that surge in demand, and current processes for expanding the grid aren’t either, experts said. State and federal red tape often delay large-scale infrastructure projects for years. The average federal environmental review takes 4½ years, according to a 2020 White House report.

Despite widespread agreement in Washington that the permitting system for infrastructure projects is flawed, lawmakers have repeatedly failed to reach an agreement to streamline it. Sen. Joe Manchin (D., W.Va.) failed to secure support for a deal to include permitting reform as a companion to the Inflation Reduction Act. Biden and U.S. lawmakers last year made streamlining the federal permitting process a central topic in negotiations about raising the debt ceiling, but weren’t able to reach a deal with Republicans.

Some are hoping the tide will change in 2024. Sen. John Hickenlooper (D., Colo.) and Rep. Scott Peters (D., Calif.) last year introduced legislation that would require the nation’s three big power regions to be able to transfer 30% of their peak electrical loads to nearby regions, which supporters say would give them more flexibility to move renewable power to areas where it is needed.

Another bill introduced in December by Reps. Sean Casten (D., Ill.) and Mike Levin (D., Calif.) would help spur the expansion of power lines, in part by providing tax credits for transmission projects. Both efforts face an uphill battle among Republicans, who control the House, during a contentious election year.

The Energy Department is deploying billions of dollars to improve and expand transmission. In September it announced grants to tribes, territories and 11 states as part of a $2.3 billion program designed to strengthen the grid and make it more resilient to outages and extreme weather.

The department’s Grid Deployment Office manages about $25 billion from the 2021 infrastructure legislation and the Inflation Reduction Act, according to department officials.

The DOE funds, while helpful, are a drop in the bucket when it comes to the trillions of dollars
it will take to upgrade and expand the grid.

Some developers, such as Pattern Energy, have found success tapping public markets for funds. “We are optimistic that the government can help speed the permitting process, which will be critical to achieving the country’s decarbonization goals,” Pattern Chief Executive Hunter Armistead said. “If good projects can get through development, we believe that efficient capital will be available to bring them into construction.”

The best hope for large-scale transmission change in 2024 likely sits with the Federal Energy Regulatory Commission, which later this year could approve a rule that would change how utilities plan transmission projects. Under the rule, utilities would have to make long-term plans for power transmission based on federal requirements that they provide the best and most reasonable rates for consumers.

That is something few utilities do these days, said Rob Gramlich, president of Grid Strategies. The requirements would push utilities to build more transmission capacity because it would help provide the cheapest power to customers, he said. Critics of the rule, or at least parts of it, say it could clash with oversight of utilities by local regulators and potentially lead to increases in consumer bills.