THE Department of Energy (DoE) is proposing a policy that would allow power generation companies to finance and build transmission infrastructure to help ensure the timely completion and delivery of power projects.
While generation companies may construct their own dedicated point-to-point (P2P) connection facilities, it may also be necessary to allow them to build “associated transmission projects” to directly inject capacity into the grid, the DoE said in a draft department circular.
Under existing rules, generation companies are limited to building P2P connection lines that link their plants directly to the substations. They are not allowed to develop or finance transmission facilities that serve the broader grid — a restriction the DoE now seeks to relax through the proposed circular.
The proposed associated transmission projects include new or expanded transmission lines, substations, or other facilities beyond a generation company’s dedicated P2P connection, according to the draft circular.
“Even with a generation company constructing its own dedicated P2P connection facility, the surrounding transmission grid may still have inadequate capacity or technical constraints [that prevent] the effective and full dispatch of the new generation, rendering the connection futile and thereby delaying the commercial operation and delivery of the committed power project,” the DoE noted.
The department said these “systemic constraints” need to be addressed to effectively integrate new generation projects, especially those critical for the energy transition and energy security.
It also pointed out that delays in carrying out the Transmission Development Plan and the “inadequacy” of the transmission system are the major reasons many committed power projects, particularly renewable energy projects, do not come online as scheduled.
“Delays in the installation and completion of facilities for the transmission system hinder the alignment of generation and grid development programs, constrain the entry of new capacities, and undermine investor confidence, thereby affecting the reliability, adequacy, affordability, and security of the country’s energy supply,” the DoE said.
Under the proposed policy, generation companies would be allowed to finance, construct, and install lines, substations, equipment, and other facilities as part of the associated transmission project.
Power generators would be entitled to recover the actual costs incurred in implementing the project.
The companies would have to enter into an agreement with the transmission network provider to oversee the construction, financing, and turnover of the associated transmission project.
The draft department circular is open for comments and suggestions until Oct. 15. — Sheldeen Joy Talavera