Welcome to Grid Brief! Here’s what we’re covering today: The Biden administration’s ambitious plans to overhaul the U.S. power grid, FERC’s recent decision affecting PJM’s capacity market, and Enbridge’s green light for a major solar-plus-storage project in Wyoming.

White House Pushes Grid Modernization Workaround

The Biden administration has announced a new initiative with 21 states to modernize the U.S. power grid, aiming to tackle the growing strain from rising energy demands. This effort focuses on deploying grid-enhancing technologies (GETs) and advanced conductors to maximize the capacity of existing transmission lines. Participating states, all led by Democratic governors, will prioritize these efforts through legislative and executive actions, aiming to mitigate power outages and integrate more renewable energy.

Despite the push, congressional gridlock remains a barrier, with Senate Majority Leader Chuck Schumer acknowledging the difficulty of passing transmission reforms due to GOP opposition. To bypass this, the federal government is providing technical assistance and loan programs, leveraging executive actions to expedite grid improvements. Utility companies like NextEra Energy (NEE), Dominion Energy (D), and National Grid (NGG) are already using these technologies, which could potentially lead to a more resilient and efficient grid. However, critics warn that without balanced policy measures, these efforts may offer only temporary relief and fail to address deeper systemic issues.

Financial Implications: Federal investments are expected to benefit companies like NextEra Energy (NEE), Duke Energy (DUK), and American Electric Power (AEP), while infrastructure firms like Quanta Services (PWR) and MYR Group (MYRG) could see increased demand. Dominion Energy, for instance, is deploying the world's largest dynamic line rating project with a $33.7 million grant from the DOE's $10.5 billion Grid Resilience and Innovation Partnerships program.

FERC Upholds PJM Capacity Market Decision, Doubling Costs for Delmarva Region

The Federal Energy Regulatory Commission (FERC) has unanimously upheld PJM Interconnection’s plan to revert to the original results of its last base capacity auction for the Delmarva region. This decision, following a federal appeals court ruling, will significantly increase capacity costs for the Delmarva Power South zone, affecting parts of Delaware, Maryland, and Virginia.

FERC’s ruling means that customers in the Delmarva zone will now pay $288.4 million for capacity in the 2024/2025 year, more than double the previous costs. The decision rejected a rehearing request from a coalition of local utilities and regulators, including American Municipal Power and the Delaware Public Service Commission. This move is supported by major power plant owners like Constellation Energy, NRG Energy, and Vistra, who benefit from the higher capacity prices.

The ruling underscores the contentious nature of capacity market adjustments and the ongoing debate over fair pricing mechanisms in regional electricity markets.

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Conversation Starters

• $31M for Grid Simulation Tools

  The DOE announced $31 million in funding for projects to enhance power system simulation software and integrate inverter-based and distributed energy resources like solar and wind. This initiative aims to modernize the grid by improving coordination of diverse assets, ensuring reliability and resilience. It's a big step towards a smarter, more distributed energy future.

• Enbridge's $1.24B Solar-Plus-Storage Project

  Enbridge has received the green light for its $1.24 billion Cowboy Solar I & II Project in Wyoming, set to deliver 771 MW of solar power and 269 MW of battery storage. This massive project underscores Enbridge's push towards renewable energy and decarbonization efforts. The first phase kicks off in March 2025, targeting operation by early 2027. Fluence Energy Inc. will supply the battery system, while American Hyperion Solar LLC provides the solar panels. Despite some local opposition, the project promises job opportunities and aligns with Enbridge's net-zero goals.

• Storage Projects Face Costly Interconnection Challenges

  Energy storage projects in the U.S. are hitting roadblocks due to outdated interconnection processes that fail to account for their unique capabilities, causing financial strain and delays. According to a Clean Energy States Alliance webinar, reforms are needed to align fees with system capacity and implement annual cluster studies. Despite FERC's Order 2023 aimed at reducing these issues, the impact remains to be seen. With interconnection costs for storage projects averaging $335/kW compared to $24/kW for natural gas, the financial hurdles are steep. Streamlining applications and automating processes could alleviate bottlenecks and help more projects come to fruition.

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