The US Department of Energy is seeking public input on the structure of the $2.5 billion Transmission Facilitation Program (TFP), which was created by President Biden’s Bipartisan Infrastructure Law. The initiative was created to help build out critical new transmission lines across the United States.
The launch of this new program, the largest infrastructure law investment in solely transmission, is one of the first down payments on over $20 billion of investments under DOE’s new Building a Better Grid Initiative. The TFP is an innovative revolving fund program that will provide Federal support to overcome the financial hurdles to large-scale new transmission lines and upgrade existing transmission as well as the connection of microgrids in select States and US territories.
The current electric grid was not developed with today’s electrification needs in mind. Expanding transmission capacity through new and upgraded transmission lines will improve grid reliability, allow new clean power onto the grid, reduce costs, improve energy equity, and drive economic growth and growth in good jobs. Additional transmission will be required to carry energy from new renewable energy sources across regional lines making it available where it is needed most.
According to the US Department of Energy, expanding and modernizing the electric grid will create good-paying jobs to deliver clean, affordable, and reliable energy to everyone, everywhere, anytime. As well, a reliable, resilient electric grid is critical for withstanding climate change impacts and to achieving the Biden administration’s goal of a national grid run on 100 per cent clean electricity by 2035.
“Expanding and strengthening our power grid means we can get Americans power where and when they need it most, and in so doing deploy the clean energy we need to reach our climate goals and ultimately bring down energy costs,” said US Secretary of Energy Jennifer M. Granholm. “With nearly 70 per cent of the nation’s grid more than 25 years old, the President’s Bipartisan Infrastructure Law is a pivotal catalyst for transmission projects across the nation that will deliver good-paying jobs in the process.”
Independent estimates indicate that the United States needs to expand electricity transmission systems by 60 per cent by 2030, and may need to triple it by 2050 to meet the country’s increase in renewable generation and expanding electrification needs.
Rebuilding and improving aging electric grid is a cornerstone of the Bipartisan Infrastructure Law. More than 70 per cent of the nation’s grid transmission lines and power transformers are over 25 years old, creating vulnerability. Power outages from severe weather have doubled over the past two decades across the United States and the frequency and length of power failures reached their highest levels since reliability tracking began in 2013 — with US customers on average experiencing more than eight hours of outages in 2020.
Under the TFP, DOE is authorized to borrow up to $2.5 billion to assist in the construction of new and upgraded high-capacity transmission lines through three financing tools: loans from DOE; DOE participation in public-private partnerships; and capacity contracts with eligible projects in which DOE would serve as an “anchor customer”.
According to the DOE, these tools represent an innovative approach that can spur valuable new lines that otherwise would not get built. The first solicitation will be limited to applicants seeking capacity contracts for eligible projects that will begin operation no later than December 31, 2027. The initial solicitation will include a deadline for submissions, but the timing of the determination will be based on the time necessary to conduct due diligence on the proposed project.
Through the capacity contracts under this program, DOE will commit to purchasing up to 50 per cent of the maximum capacity of the transmission line for up to 40 years. By buying up to 50 per cent of the planned capacity of a transmission project, DOE can reduce financial challenges often facing new transmission programs or upgrades to existing transmission lines by encouraging and de-risking additional investment.
The DOE says a goal of this program is to continue buying capacity until customer demand has increased enough to cover those costs. Then DOE will re-market the capacity, thereby replenishing the fund.
DOE expects to issue another Notice of Intent/RFI in early 2023 that will incorporate the loan and public-private partnership financing tools in addition to the capacity contracts.
DOE says it is requesting feedback on the proposed implementation approach for the TFP from a wide range of stakeholders. Comments can be submitted via Regulations.gov and are requested 30 days after publication in the Federal Register. Questions about the Notice of Intent can be sent to TransmissionFacilitation@hq.doe.gov.
A public webinar will be held on May 26, 2022, to provide additional information. Registration required.