ELECTRIC GRID PROJECTS

The United States must update and expand grid infrastructure and software solutions to meet growing electricity needs and achieve the President’s goal of a carbon-pollution-free electricity market by 2035 and a carbon-free economy by 2050. Early grid infrastructure has outlasted its expected lifetime and continues to operate, but the modern energy economy demands a secure, updated grid.

There is enormous opportunity for the United States to deploy proven grid technologies. High-voltage direct current (HVDC) transmission lines and grid-enhancing technologies (GETs) have been rolled out with great success in Europe and could significantly increase grid capacity and efficiency in the United States. There are also ample opportunities to uprate and upgrade existing U.S. grid infrastructure through reconductoring, including with advanced conductors that can offer up to twice the capacity of traditional conductors.

New models for grid infrastructure, including energy storage systems, microgrids, and VPPs, present additional opportunities for grid modernization.

• Energy storage systems allow energy produced at a certain time, such as during daylight or windy hours, to be used hours, days, weeks, or months later. These systems can also serve important grid functions, including regulating grid frequency and supporting flexibility to balance supply and demand.

• ​​​​​​​Microgrids connect local generation, storage, and other grid services with nearby load centers, creating a clearly defined system that can operate independently from the broader grid.

• VPPs are aggregations of electrified, grid-connected devices, such as air conditioners, solar-plus-storage systems, and plugged-in electric vehicles. When combined, these distributed energy resources (DERs) use or store significant amounts of energy. VPP software can reduce device electricity use during peak grid stress or, in some cases, prompt DERs to supply electricity to the grid, making VPP-enabled DERs a powerful collective tool—a “virtual power plant”—to support grid reliability in an increasingly electrified world.

The federal government is committed to improving the nation’s grid. The President’s Investing in America agenda introduced programs and incentives for grid modernization and expansion, and LPO works with offices across DOE, including the Grid Deployment Office (GDO), to help developers access federal benefits. The President’s Bipartisan Infrastructure Law’s (BIL) Building a Better Grid Initiative invests more than $20 billion across DOE for grid modernization and expansion. The Transmission Facilitation Program, which falls under the Initiative, includes a $2.5 billion revolving fund to support qualifying shovel-ready transmission expansion and upgrade projects and microgrid connection projects.

The 48C Qualifying Advanced Energy Project Credit, expanded under the President’s Inflation Reduction Act (IRA) and administered by the Office of Manufacturing and Energy Supply Chains, provides an investment tax credit for certain advanced energy projects. Grid-related projects, including manufacturing of transformers, materials (including electrical steel, amorphous alloy), power electronics, and other grid components and equipment (including MVDC/HVDC converter station components and switchgears), are an early priority. The IRA also includes incentives for consumers to purchase VPP-compatible technologies like electric vehicles and smart appliances.

However, there are barriers to deployment of grid-related projects. Permitting often presents major roadblocks for transmission projects that can result in lengthy delays. The process is especially challenging for transmission projects in heavily developed areas and for those projects that cross state lines. DOE is working to leverage many tools in its toolbox to help expedite permitting processes while still ensuring robust community engagement. On August 10, 2023, DOE's GDO proposed the Coordinated Interagency Transmission Authorizations and Permits Program to streamline the process and set deadlines for Federal authorizations and permits for transmission development on a two-year timeline while ensuring meaningful engagement with Tribes, local communities, and other stakeholders occurs. DOE also released a draft Standard Schedule that indicates how the Department will consolidate the application review process, including Federal environmental reviews and authorizations for a transmission project, into the two-year timeline. GDO will also administer the National Interest Electric Transmission Corridors designation process, which can unlock critical federal investment and regulatory and permitting tools to spur urgent transmission investments needed in geographic areas where electricity limitations, congestion, or capacity constraints are adversely affecting electricity consumers and communities. Nonetheless, permitting remains a significant hurdle for transmission expansion.

The obstacles continue after permits are issued. Connecting to the existing transmission system is challenging for utility-scale generation and storage projects. Interconnection queues average five years in some parts of the country, significantly delaying deployment of essential generation and energy storage projects. The Federal Energy Regulatory Commission is working to streamline the interconnection process.

LPO recognizes these challenges and can account for them when negotiating timelines and conditions precedent to financial close.

Projects that upgrade existing transmission and distribution infrastructure or implement behind-the-meter energy storage, microgrid, VPP, or software solutions do not typically encounter these permitting or interconnection challenges. However, these projects may encounter other obstacles, including lack of access to debt capital. By financing early deployments of these grid systems, LPO can mitigate this barrier and act as a bridge to bankability for newer grid technologies, setting the stage for future commercial investments in the space.