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As the U.S. government moves ever closer to enacting a new national energy policy, dialogue concerning the potential for a national clean-energy smart grid has moved to the forefront of many high-level discussions. In the past two months, white papers, policy papers, and public discourse and roundtables have focused on proposals for making critical changes to the policy framework for this country's electrical transmission and distribution system. These are radical proposals, some say, while others insist that public infrastructure reconstruction -- in particular, a reconstruction of the electric grid infrastructure -- is "no less urgent than the Marshall Plan."(1)

In January, IEEE-USA, an organizational unit of the Institute of Electrical and Electronics Engineers, released its National Energy Policy recommendations. Within them was a call to build a stronger and smarter electrical energy infrastructure. In addition to recommendations for transforming the network into a smart grid, the IEEE-USA also proposes developing an expanded transmission system. The group's published recommendations are as follows:

• Providing incentives to develop a national transmission system with the needed additional capacity capable of cost-effective and environmentally sensitive electric delivery from major new generation sites and existing generators to major population centers and loads.

• Reforming the state-by-state approval process for routing and siting to ensure that delays in transmission construction do not also delay progress in expanding the use of renewable energy and achieving national clean air goals.

• Revising and optimizing rate structures and cost allocation policies. Current utility rate recovery criteria need to be revised to ensure they support implementation of a strategic expansion plan for the national grid in a way that is equitable to all energy consumers.

• Directing the industry, through the North American Electric Reliability Corporation (NERC), to undertake a national power system survey at five-year intervals to provide long-range guidance on the need for a stronger and smarter electrical energy infrastructure.(2)

In February, two different groups, The Energy Future Coalition (EFC) and the Center for American Progress (CAP), moved forward with projects to generate support for upgrading and expanding the electric grid.

The EFC is a coalition of business, labor and environmental associations, whose steering committee includes Richard Branson of the Virgin Group, former deputy secretary of energy Charles Curtis, former South Dakota senator and Senate Majority Leader Tom Daschle, the Center for American Progress' CEO and president John Podesta, the AFL-CIO's Gerald Shea, United Nations Foundation president and former senator Timothy Wirth, and many others. Its vision statement, released on Feb. 20, outlined the need for two critical investments: efficient, secure and reliable interstate transmission networks that incorporate renewable collection lines and extra-high voltage backbone facilities; and smart grid technologies that will support the new transmission and distribution grid.

The EFC's detailed vision statement notes several key principles, worth repeating here:

• Interconnection-wide grid planning should not duplicate or supplant already ongoing planning efforts at the utility and regional level, but rather should build on them.

• The interconnection-wide planning process should take into account: opportunities for improved end-use energy efficiency, customer demand response, clean distributed generation, and energy storage; opportunities to improve the efficiency of the grid; and opportunities to diversify and transform the nation's power supply resources.

• New transmission plans should dramatically enhance our capacity to meet steep greenhouse gas emission reduction goals by targeting new clean renewable energy resources and limiting interconnection for new high-emitting generation (while still ensuring reliability).

• Use of federal project certification and siting procedures to expedite construction of new grid facilities identified in interconnection-wide transmission plans is critical to reliable and efficient delivery of remote renewable energy to load centers, with a special role for state and local agencies on siting considerations to minimize adverse impacts.(3)

Three days later, on Feb. 23, the Center for American Progress, a think tank founded in 2003 and headed by John Podesta, former chief of staff to President Bill Clinton and a professor at the Georgetown University Law Center, convened its second National Clean Energy Project Summit in Washington to discuss similar issues. (The first summit, a two-day event, was held last August in Las Vegas, specifically focused on energy problems.)

In a two-hour roundtable discussion, a select group of the nation's energy decision-makers, businessmen, labor and advocacy group leaders shared ideas for development of a plan and key guiding principles to lead the transformation of U.S. energy policy and to reduce the nation's dependence on foreign oil. Building on a CAP white paper written by CAP senior fellow Bracken Hendricks, "Wired for Progress: Building a National Clean-Energy Smart Grid", the summit offered a forum for those on both sides of the political divide, as well as those in the public sector, to discuss ideas for building the transmission infrastructure into a national grid, transmission permitting processes, setting green job standards, a new alignment of market rules, and creating a new market framework for electricity.

Hendricks' white paper notes, "(A)t the core of our response to these challenges is the humbling realization that the policy and regulatory structure that we have inherited for managing electricity transmission and distribution is not properly designed to meet the growing demands of a changing society....But to take rapid and meaningful action will require not only new investment, but also more thoughtful regulatory tools and policy approaches to leverage the potential for large-scale investment into a robust 21st-century electricity transmission and distribution infrastructure that is resilient, clean, efficient, and affordable to customers."

Hendricks argues that the current system, split into the Western Interconnection, the Eastern Interconnection and the ERCOT (Texas) Interconnection, is a fractured system further divided by many levels of operation by states, utilities, regions, and different regulatory entities. "This fractured system," he says, "impedes the efficient flow of energy and complicates the introduction of renewable energy resources into our energy mix."

It is expected that draft energy legislation will soon be emerging from the Senate Energy and Natural Resources Committee chaired by Senator Jeff Bingaman. Sen. Bingaman recently confirmed he hopes to have a bill in the next four to six weeks that will address the grid issues, as well as a national renewable portfolio standard.

There is definite consensus that moving toward the 21st century electric grid needed to cope with the challenges of integrating renewable resources, and smoothing transmission congestion and bottlenecks, requires changes in federal regulatory policy and adoption of new incentives. Though there are some differences in the road maps proposed to do it, the general path is becoming much more clearly defined, and stimulus funds may be the first step along the way.

Notes:
(1) "Wired for Progress: Building a National Clean-Energy Smart Grid", Bracken Hendricks, Center for American Progress, February 23, 2009.
(2) "National Energy Policy Recommendations", IEEE-USA Policy Position Statement, January 2009.
(3) "The National Clean Energy Smart Grid: An Economic, Environmental, and National Security Initiative", Energy Future Coalition, February 20, 2009.