One of America's biggest wind energy projects is twisting in the wind, and environmentalists are blaming the Tennessee Valley Authority for the failure of the pioneering $2.5 billion effort to bring more renewable energy into the Tennessee Valley.
Clean Line Energy Partners, a Houston-based developer of five major transmission lines for wind-generated electricity, has dropped its interconnection agreement with TVA for one of its most promising projects after the federal utility declined to buy what Clean Line officials said would be cheaper and cleaner power for TVA.
The nation's biggest wind generator, NextEra Energy Resources, has bought the Oklahoma portion of the proposed 700-mile-long Plains and Eastern Line to serve Oklahoma and Midwest customers. But for now, plans to bring wind energy from the windy areas of Oklahoma and Texas into the less-windy Tennessee Valley and Southeastern part of the United States are stalled and unlikely to be resurrected for years.
"TVA killed what could have been one of the biggest and most important renewable energy projects in America," said Stephen Smith, executive director of the Southern Alliance for Clean Energy in Knoxville. "This was one of the best renewable energy deals in the Southeast and could have brought 3,500 megawatts of clean, renewable power to our region at an extremely low cost — cheaper than what TVA is now paying for its power."
TVA signed a memorandum of understanding with Clean Line Energy Partners LLC six years ago to consider the power supply arrangement along the 700-mile transmission line the company proposed to build through Oklahoma and Arkansas. The high-voltage, direct-current transmission line, if built, would carry wind-generated electricity from western Oklahoma, southwest Kansas, and the Texas Panhandle to TVA, Arkansas and other eastern markets.
The Plains and Eastern line, which Clean Line said it could have built and activated by 2020, would have ended in Memphis, where city officials have backed the project to help build on Memphis' reputation as the 21st century distribution hub in America. With the nation's biggest transmission system, TVA could distribute the wind energy delivered to Memphis for its own use across its 7-state region or carry the power to other Southeastern utilities wanting more renewable power.
Political winds blow against Clean Line
But after years of study, TVA said the Clean Line project didn't make economic sense for the nation's biggest government-owned utility, since TVA already has enough power-generating capacity and is on path to get more than half of its power from carbon-free sources. TVA President Bill Johnson said the intermittent nature of wind power would require TVA to build other backup power generators, including natural gas plants, that would offset the promised savings from the wind-generated power sources alone.
"We're looking at a power demand in the future that is flat, or declining slightly, so we don't anticipate needing major additions to power generation for a decade or more," Johnson said.
TVA Chief Financial Officer John Thomas said TVA doesn't want to make long-term contracts for more power since electricity demand could shift up or down from new technologies, including more electric-powered vehicles on the one hand and more distributed, self-generated power on the other hand.
"With the uncertainty of load, the flexibility of having relatively short-term agreements for power is of great value to us right now," Thomas said.
U.S. Sen. Lamar Alexander, R-Tenn., a senior member of the Senate energy subcommittee, took to the floor of the U.S. Senate last year to denounce Clean Line's Plains and Eastern project as unnecessary since TVA doesn't foresee the need for more power in the foreseeable future.
"[TVA's] board should resist obligating TVA's ratepayers for any new large power contracts, much less contracts for comparatively expensive and unreliable wind power," said Alexander, a critic of federal subsidies for renewable energy and a proponent of more nuclear power plants.
Wind gets more efficient, but fewer tax breaks
But Michael Skelly, president of Clean Line Energy Partners, said wind generators are continuing to become more efficient, cutting the production and delivery cost for wind energy to help offset the planned phase-out of the federal production tax credits by 2020. The production tax credit and investment tax credit provided to wind generators helped boost the total volume of new solar and wind generation to 10 percent of all new power additions in 2016.
Skelly said last week he was "disappointed" in the reluctance of TVA to pursue purchases of power from the proposed Plains and Eastern line. He said the project could have cost TVA less than 2 cents per kilowatthour after factoring in the money the utility also would have made by transmitting the wind energy across existing TVA high-voltage lines to other interested power utilities in the Southeast.
TVA charges more than 6 cents per kilowatthour for electricity sold to local power companies such as EPB in Chattanooga, and during peak demand periods TVA has paid more than 10 cents per kilowatthour to buy or generate its power.
"TVA obviously has to make its own decisions about its future power supply, and we understand that," Skelly said. "But for now, we've stopped the process [of pursuing an interconnection agreement with TVA] because TVA required a whole lot of money to continue in this process but they have not wanted to make any commitments to buy the energy off of this line."
Clean Line looks for customers elsewhere
Skelly said Duke Power and other Southeastern utilities have expressed interest in buying more wind-generated power, but TVA was needed to buy and/or readily transmit the 3,500 megawatts the line was designed to deliver to Memphis.
When at full power, the 3,500 megawatts of power coming off the line would be more than three times the power generation of a typical TVA nuclear reactor and enough power to supply about six cities the size of Chattanooga.
"Unfortunately, this represents a significant delay in our ability to deliver this energy in the Southeast," Skelly said of the decision not to actively pursue the project at this time. "TVA's lack of interest has certainly not been helpful."
Skelly said other utilities want to buy wind-generated power, and Clean Line is now focusing on its four other transmission projects in the Midwest and the Western part of the United States. NextEra will use the Oklahoma part of the Plains and Eastern line to begin serving parts of Oklahoma, Kansas with wind-generated power that NextEra plans to develop.
"We are hanging onto our permits and rights of way in Arkansas in the event TVA in the future says it might like this power somewhere down the line, " Skelly said. "But at this point it would take considerably more effort to get this project moving for TVA again."
Is TVA backing away from renewables?
Smith said TVA's reluctance to embrace the Clean Line project runs contrary to its mission to foster innovation and new technology and to serve as a "living laboratory" for energy and economic development.
"TVA was a leader in developing some of the first 500 kilo-volt transmission lines in the country, and this could have made them a leader in helping develop high-voltage, direct-current lines in the U.S. and helping to connect TVA to a whole new supply area with cleaner and cheaper fuel," he said. "We're becoming increasingly convinced that [TVA President] Bill Johnson is anti renewable energy."
Unlike most other utilities that are subject to oversight by state regulatory bodies, TVA determines its own costs and sets its own rates without the need for regulatory approval.
Sandy Kurtz, a board member for the Tennessee Environmental Council, said power consumers, including major corporations such as Amazon, Google and Walmart, want their electricity to come from renewable sources to reduce their carbon footprint and lessen the chances of global climate change.
"This could have been a major step forward in moving toward a fossil-free future, and I just think TVA is terribly short-sighted in not taking advantage of this opportunity," she said.
Johnson insists he is "energy agnostic" and simply wants a diverse energy mix that is both reliable and low cost. Although winds are more abundant and consistently blow in Oklahoma and the Texas Panhandle, such wind generation is still variable and often strongest in the middle of the night, when it is needed the least for TVA.
But Skelly said other utilities have found that their projections about the costs of using a variable source of power like wind have often proven more than expected "and as battery and other storage methods become better, wind will prove even more attractive."
"We think we gave TVA a very good offer, but apparently they did not," he said. "We're still getting a lot of interest from other utilities that want to increase their renewable energy and see wind as a good way to achieve that at a reasonable cost."
Skelly said he and his partners have been working on the Clean Line transmission project for more than eight years and have had to battle local landowners who didn't want to sell their land and regulators in Arkansas who balked at permitting the transmission line rights of way to a developer from another state.
"We've been able to overcome those obstacles, but we always knew when we started it wouldn't necessarily be easy or quick," he said. "But we do think it is the right choice in the long run."