Need for New Baseload Capacity, Expanded Transmission Are Huge Challenges for RECs

Article excerpt

Rural electric cooperative utilities will need to double generating capacity by 2020 due to current and projected growth, according to a recent report issued by USDA Rural Development's Utilities Programs. The report, Rural Electric Power Generation and Capacity Expansion, notes that because of the significant lead time needed to add baseload capacity, many cooperatives are already behind the curve.

Baseload is electricity generated 24 hours a day, seven days a week and fueled by coal, nuclear energy and, sometimes, natural gas.

In addition to the need to add generation, the report sees lack of transmission capacity as another cause for concern. This is a key constraint in development of renewable energy resources in rural areas because the transmission grid, which delivers energy from points of generation to demand centers, is operating at capacity.

Peak demand climbing

Peak demand for electric power is expected to increase by more than 135,000 megawatts (MW), or 17.7 percent during the next 10 years. Capacity is projected to increase by only 77,000 MW, the report predicts.

Rural electric generation and transmission (G&T) cooperatives generate approximately 5 percent of the nation's electric power. Recent surveys conducted by the National Rural Electric Cooperative Association indicate that a 10-year capital requirement of $65.5 billion is needed to meet planned capacity. This includes $49.9 billion for new generation, $10 billion for transmission and $3 billion for environmental requirements.

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A number of factors have affected the ability of electric utilities to plan for future growth. These include: rising construction costs, legal challenges to environmental permits, uncertainty relating to carbon dioxide emission limits and the inability of USDA Rural Development's electric program to fund baseload projects.

Noting that a balanced approach is necessary to maintain system reliability, sustain economic growth and allow time for development of new technologies, the USDA report says that a mix of strategies must be developed. The report's findings have been echoed by those of other industry organizations.

The Edison Electric Institute, a trade association representing for-profit electric utilities, released its own report in November. EEI notes that "all types of new-generation capacity will be needed, including natural gas, coal, nuclear and renewables. Nearly 40 gigawatts of new renewable capacity will be needed just to meet state requirements."

Capital spending to upgrade distribution and transmission facilities nationwide may surpass investment in new generation, the study found, EEI says. Spending on "smart grid" technologies to ramp up efficiency--along with new power lines to integrate renewable electricity sources--will account for much of that spending.

A "smart grid" uses technology to better manage electric generation, transmission and consumption to reduce costs and the impact on the environment, while improving service and operating efficiencies. EEI estimates that utilities will need to invest a minimum of $1.5 trillion during the next 20 years to meet basic infrastructure requirements.

Broad energy portfolio needed

The Electric Power Research Institute (EPRI) has said that a full portfolio of sources is necessary to meet both energy and environmental needs. EPRI calls for a balanced approach to limit carbon emissions, while maintaining system reliability, sustaining economic growth and providing time for development and deployment of technologies. …