New Rules to Overhaul Electric Grids Could Boost Wind and Solar Power

Federal regulators on Monday approved sweeping changes to how America’s electric grids are planned and funded, in a move that supporters hope could spur thousands of miles of new high-voltage power lines and make it easier to add more wind and solar energy.

The new rule by the Federal Energy Regulatory Commission, which oversees interstate electricity transmission, is the most significant attempt in years to upgrade and expand the country’s creaking electricity network. Experts have warned that there aren’t nearly enough high-voltage power lines being built today, putting the country at greater risk of blackouts from extreme weather while making it harder to shift to renewable sources of energy and cope with rising electricity demand.

A big reason for the slow pace of grid expansion is that operators rarely plan for the long term, the commission said.

The nation’s three main electric grids are overseen by a patchwork of utilities and regional grid operators that mainly focus on ensuring the reliability of electricity to homes and businesses. When it comes to building new transmission lines, grid operators tend to be reactive, responding after a wind-farm developer asks to connect to the existing network or once a reliability problem is spotted.

The new federal rule, which was two years in the making, requires grid operators around the country to identify needs 20 years into the future, taking into account factors like changes in the energy mix, the growing number of states that require wind and solar power and the risks of extreme weather.

Grid planners would have to evaluate the benefits of new transmission lines, such as whether they would lower electricity costs or reduce the risk of blackouts, and develop methods for splitting the costs of those lines among customers and businesses.

“We must plan our nation’s grid for the long term,” said Willie Phillips, a Democrat who chairs the energy commission. “Our country’s aging grid is being tested in ways that we’ve never seen before. Without significant action now, we won’t be able to keep the lights on in the face of increasing demand, extreme weather, and new technologies.”

The commission approved the rule by a 2-1 vote, with the two Democratic commissioners in favor and the lone Republican, Mark Christie, opposed. Mr. Christie said the rule would allow states that want more renewable energy to unfairly pass on the costs of the necessary grid upgrades to their neighbors.

“This rule utterly fails to protect consumers,” said Mr. Christie. He said it “was intended to facilitate a massive transfer of wealth from consumers to for-profit, special interests, particularly wind and solar developers.”

It could take years for the rule to have an effect, and the commission could face legal challenges from states concerned about higher costs.

Nationwide, energy companies have proposed more than 11,000 wind, solar and battery projects, but many are in limbo because there’s not enough capacity on the grid to accommodate them. What’s more, individual developers are currently required to pay for grid upgrades to accommodate their projects in a process that is piecemeal and slow.

Some critics say that’s like asking a trucking company to pay for an additional lane on a highway that all motorists ultimately use. A better approach, they say, would be to plan ahead for broad upgrades with the costs shared by a wide set of energy providers and users.

But the question of who pays for those grid expansions has sparked furious debate.

Officials in states that are less enthusiastic about wind and solar power, like Kentucky or West Virginia, say they could be forced to foot the bill for new multibillion-dollar transmission lines meant to help states like New Jersey or Illinois fulfill their renewable energy ambitions.

To allay those concerns, the commission laid out guidelines around how to split the costs of new transmission projects. Before any lines are planned, utilities and grid operators are supposed to work with states on a formula for allocating costs to customers based on the potential benefits from the new lines.

There is some precedent for this. The grid that handles electricity in 15 Midwest states, known as MISO, recently approved $10.3 billion in new power lines, partly because many of its states have ambitious renewable energy goals that require more transmission. MISO estimated the lines would create up to $69 billion in total benefits, including lower fuel costs and fewer blackouts. The grid operator was then able to split the costs even among states that didn’t have renewable policies but would share in the rewards.

“It’s super hard, and not everyone got what they wanted, but we all agreed that we would sit in a room and figure this out,” said Carrie Zalewski, a former state regulator for Illinois who is now with the American Clean Power Association, a renewable energy trade group.

Mr. Christie said the final rule didn’t give states enough power to object to how the costs would be shared. But Alison Clements, the other Democrat on the commission, said that giving each state a veto was “a recipe for inaction.”

The rule would also require utilities and grid operators to consider new technologies that might cost more upfront but could make grids more efficient and deliver long-term benefits, such as advanced conductors that can carry twice as much current as traditional lines.

Environmental groups and renewable energy companies praised the new rules.

“This is a monumental day in the fight against climate change,” said Senator Chuck Schumer of New York, the Democratic majority leader, who had urged the commission to pass a forceful grid-planning rule.

Over the past year, Mr. Schumer and other Democrats have warned that efforts to fight climate change could fail if the nation’s grids aren’t overhauled. Power plants that burn coal and gas are a major source of the pollution that is dangerously heating the planet. While the 2022 Inflation Reduction Act poured hundreds of billions of dollars into cleaner alternatives like wind and solar power, one recent analysis found that half of the climate benefits of that law could be lost if the United States can’t build new transmission at a faster pace.

It remains to be seen how effective the new rule will be, since that will depend on how grid operators implement it. A 2011 attempt by the commission to encourage transmission planning largely faltered, in part because many utilities were opposed to new long-distance lines that might undercut their monopolies, said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. Because of the decentralized nature of the nation’s grids, there is only so much that federal regulators can do to force operators to comply.

“I suspect this rule will be helpful in parts of the country where there’s already momentum for more transmission development” such as the Northeast, said Mr. Peskoe. “But in places where big utilities are resistant to more transmission, I don’t know if FERC can do that much.”

The new rule affects grid planning within 12 large regions around the country, but it wouldn’t require the planning of transmission to connect those different regions to each other, which some experts say is an even bigger need. The rule would also not affect the main grid in Texas, which is insulated from federal regulations because it doesn’t cross state lines.

The rule also doesn’t address the logistical and political challenges of constructing new long-distance power lines. It can take a decade or more for developers to locate a project through numerous jurisdictions, receive permits from a patchwork of different federal and state agencies and resolve lawsuits about spoiled views or damage to ecosystems.

The Biden administration recently finalized a program intended to cut the federal permitting time for certain large transmission lines in half. But speeding things up further might require action from Congress, where lawmakers have struggled to agree on new transmission policies.

In a separate rule on Monday, the federal energy commission did, however, outline certain situations in which it might override state objections to a small subset of new power lines.

At issue are a set of ten “national interest electric transmission corridors” that the Energy Department has tentatively identified across the country — places where new lines would be particularly beneficial. If state regulators either blocked or delayed a project in those corridors, the federal commission could step in to approve it.

But some experts question how often this would happen, since the commission has historically preferred to collaborate with states.