The $2.5 billion SOO Green transmission project ticks many boxes for being an ideal proposal to help advance the energy transition, a key Biden administration priority.

The innovative transmission line would run underground along railroad rights of way, delivering 2,100 MW of wind power from the Midcontinent Independent System Operator (MISO) into the PJM Interconnection, the regional transmission organization (RTO) that runs the grid and wholesale electricity markets in 13 Mid-Atlantic and Midwest states, plus the District of Columbia.

Electricity on the high-voltage direct current (HVDC) project would be able to flow in two directions, bolstering grid reliability if generating plants in MISO's footprint unexpectedly go offline during a deep winter freeze or other event.

Direct Connect Development Co., the project's developer, says its biggest hurdle isn't landowner objections, environmental concerns or permitting disputes — typical snags for major infrastructure projects that are avoided by burying the line. It is PJM and its rules that don't accommodate a new type of project.

"The only significant challenge we're facing is outdated regulations and market rules imposed on us by unaccountable grid operators that are protecting the narrow interests of their members and preventing innovative infrastructure solutions like the controllable HVDC transmission line from accessing the market," Steve Frenkel, Direct Connect vice president, said.

The SOO Green project, owned by SOO Green HVDC Link ProjectCo., faces two major hurdles at PJM. First, the grid operator is studying the project's potential effects on the grid through its interconnection process, which is used for generating facilities and is backlogged. Also, SOO Green's market entry is being blocked by capacity import requirements the company argues shouldn't apply to controllable HVDC transmission lines.

SOO Green: a national model?

Direct Connect contends SOO Green could be a model for taking advantage of the rail system that crisscrosses the United States. It would run about 350 miles underground next to a railroad between Mason City, Iowa, and Yorkville, Illinois, avoiding visual complaints and siting disputes with landowners, according to Frenkel.

The SOO Green project would use innovative technology that helps meet several needs, including delivering low-cost wind power into PJM. It would also improve grid reliability amid growing concerns about extreme weather and, as a merchant project, investors would bear the transmission line's financial risks, not utility ratepayers, Frenkel said.

The project would include voltage source converter stations built by Siemens Energy at each end of the line to convert alternating current (AC) power to DC power and vice versa. The grid is AC, but DC power lines are more efficient than AC lines. For the transmission line, SOO Green plans to use cross-link polyethylene cables, which have little line loss compared with AC power lines.

The converter stations can respond to a grid operator's dispatch orders almost instantaneously, according to Frenkel. They could provide reactive power, dynamic voltage support, black start and other grid services typically offered by power plants, according to SOO Green.

As part of an open season to find customers for its project, SOO Green is in talks with renewable energy developers in MISO and with potential customers in PJM, according to Frenkel. "Despite the challenges that are not unexpected with an innovative project that's groundbreaking, we have very strong positive reception from the marketplace, both in terms of the energy developers we're talking to on the sell-side and large energy buyers on the buy-side," he said.

Support from Illinois, Iowa politicians

While it faces challenges at PJM, SOO Green has the support of most of Iowa's congressional delegation and four Illinois House members.

"The SOO Green project is exactly the kind of interregional transmission project our country needs to build a reliable and resilient clean energy grid," Rep. Sean Casten, D-Ill., and three other Illinois House members said in a Dec. 16 letter to the Federal Energy Regulatory Commission.

The lawmakers urged FERC to fully consider SOO Green's arguments in two complaints against PJM pending at the agency. Most of Iowa's congressional delegation wrote a similar letter in October.

"When existing rules slow or block the development of such projects, the public is denied the economic, environmental, and grid infrastructure benefits that such projects can reliably deliver," they said. "Similar economic, environmental and reliability benefits can be realized nationwide if projects like SOO Green can proceed expeditiously without undue barriers."

Roadblocks at PJM, MISO

Last year, SOO Green filed two complaints at FERC over what the company says are rules that haven't kept up with innovative options such as the company's HVDC project.

In a complaint filed in June, SOO Green said PJM's process for considering merchant transmission lines was flawed and was delaying the power line by years. PJM studies proposed merchant transmission projects through its generation interconnection process, which SOO Green argued is unfair. It should be reviewed through PJM's transmission planning process, according to the company.

SOO Green filed a second complaint in September, arguing that PJM's rules for importing capacity from outside its footprint block market entry without providing significant reliability benefits. In part, the company said PJM's rules are designed for an AC system, not a DC transmission line that can be directly controlled by the grid operator.

Separately, SOO Green is opposing a proposal by MISO to allow incumbent transmission owners to pay for any grid upgrades needed to bring online a merchant HVDC transmission project. The company estimates the proposal would increase its costs by $30 million to reflect the return on equity utilities would earn to build the upgrades.

The Natural Resources Defense Council, the Union of Concerned Scientists and the Sustainable FERC Project supported SOO Green's second complaint against PJM. The grid operator, its independent market monitor and two power plants owners — Exelon Corp. and J-Power USA Development — asked the commission to dismiss both of them, arguing they would undermine grid reliability and the capacity market.

PJM: ‘Solution provider' 

While it will be up to FERC to decide the merits of the complaints, they highlight the role grid operators play as new technologies emerge during the transition away from fossil-fueled power plants. In the cases of energy storage and aggregated distributed energy resources, FERC has ordered grid operators to open their markets to those resources.

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"We're here to facilitate … provide the data, provide the facts, provide the analytics ... We're not policymakers.

Ken Seiler

PJM vice president for planning

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PJM's role during the energy transition is to be a "solution provider" and a "thought leader," according to Ken Seiler, PJM vice president for planning.

"We're here to facilitate … provide the data, provide the facts, provide the analytics, provide the analysis and studies in order to inform our stakeholders and our community in the industry around what is really needed to maintain a reliable and resilient power grid," Seiler said. "We're not policymakers."

There are two 660-MW HVDC lines connected to PJM – the Neptune and the Hudson projects. "We have rules around how to apply that technology," Seiler said. "Some people may not agree on the rules, but it's rules that … we believe will serve us well to maintain the reliability of the system."

The two lines export power out of PJM, unlike the SOO Green project, which aims to mostly deliver electricity into the PJM region.

PJM is looking at HVDC technology to bring offshore wind onto the grid, Seiler said.

In a sign of the changes PJM is dealing with, the grid operator has nearly 200,000 MW of proposed generating projects in its interconnection queue, with 95% of them wind, solar and batteries, according to Seiler. PJM is revising its interconnection process, which includes studies on how planned projects would affect the grid, so they can move through the interconnection process more quickly, he said.

As it evolves during the energy transition, PJM must respond to its various stakeholders, which include utilities, states, power developers, consumers and environmental groups, and their competing interests. 

"Unfortunately somebody wins, somebody loses, or they don't get what they want," Seiler said. "What we really try to do there is really advance, from an independent party view … what is best for the system as a whole and what is the most cost-effective solution as a whole for the grid."

RTOs, stakeholders and governance structures

In the last quarter century, RTOs and the regional wholesale power markets they operate have been platforms for innovation, according to Jeff Dennis, Advanced Energy Economy managing director and general counsel. However, their market rules often don't recognize emerging technologies. 

"The RTO's role really needs to be in identifying those market rule barriers and then really quickly moving to resolve them," Dennis said. 

Stakeholder processes can be a barrier to changing those rules, according to Dennis. "They are lengthy, they're resource-intensive and oftentimes the folks who are developing and deploying new technology, they're new entrants, so they're not folks who have traditionally participated in these [processes.]"

Also, the RTOs and ISOs must make sure incumbent interests don't use stakeholder processes to block out new market entrants, according to Dennis.

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"These [RTO] governance structures that were created 20 years ago ... they're not designed for these current challenges we face in responding to climate change and increasingly uncertain environmental conditions."

Stephanie Lenhart

Senior research associate, Boise State University

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When RTOs were formed in the late 1990s and early 2000s, they were set up for the technologies and the stakeholder interests that were in place at the time, according to Stephanie Lenhart, a senior research associate with Boise State University's Energy Policy Institute.

"As you have these novel technologies coming on, you see that there's a need not just for new participation models, but also new governance structures," Lenhart said. "These governance structures that were created 20 years ago in an effort to improve reliability and increased market competition and create more affordability, they're not designed for these current challenges we face in responding to climate change and increasingly uncertain environmental conditions."

Energy storage, which can be treated like generation or transmission, didn't fit existing market rules or typical governance structures when it emerged, Lenhart said. 

Similarly, the SOO Green project may not fit within existing roles at PJM, according to Lenhart. "It's bringing in new interests and new stakeholders that aren't necessarily part of that governance decision-making process," Lenhart said. "It's new, innovative technology, but they have to really figure out technically how they're going to operate it and make it work."

Adding to the complexity, the SOO Green project would cross the seam between PJM and MISO.

"That's an area where you've had long-standing questions about how those things are going to work and not a lot of process around making decisions," Lenhart said.

Are RTOs up to the task?

RTOs are poor vehicles for facilitating the energy transition, according to Tony Clark, a senior advisor at Wilkinson Barker & Knauer and a former FERC commissioner.

RTOs were designed around establishing electricity prices to decide which power plants should be dispatched and, along with reliability, where power lines should be built, Clark said, echoing a paper he and Vincent Duane, a Copper Monarch principle and former PJM senior vice president, issued in November.

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There's just really no one hand on the tiller … and so it ends up being a very slow bureaucratic process.

Tony Clark

former FERC commissioner

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As RTOs like PJM work to incorporate clean energy goals into their markets, they are being asked to do something they weren't made for, according to Clark.

For example, new power lines will likely need to be built to add significant amounts of wind and solar, Clark said. If only market factors were being considered, those lines likely wouldn't be under consideration, he said.

Also, RTO governance structures, reflecting various stakeholder interests, are cumbersome and move slowly, he said.

"They're sort of quasi-public, quasi-non-profit, quasi-stakeholder-driven," Clark said. "There's just really no one hand on the tiller … and so it ends up being a very slow bureaucratic process in which there's sort of a lack of locus of accountability. It becomes almost like the U.N., where there's lots of debates, but there's no real teeth anywhere and nothing gets done." 

There are two broad options for facilitating the energy transition, according to Clark.

One is to increase stakeholder involvement, potentially through public ownership of the grid, Clark said. But that approach would only weaken RTO accountability and would be counterproductive, according to Clark.

His preferred option is to use transmission companies, or transcos, such as American Transmission Co. and ITC Holdings, to build out the grid to support the energy transition. In some areas, they could be part of vertically integrated utilities, according to Clark.

"The idea is that if you're going to keep the lights on, if you're going to plan across broader regions, if you're going to build transmission, then the way to do it may be to power an entity to be able to go out and do it," Clark said. "But then you regulate it and you regulate it like a utility," Clark said.

In the meantime, SOO Green intends to try to work out its differences with PJM and MISO. "We're optimistic that we can sort out the issues with the RTOs and address their concerns so that this project — and others like it that our nation needs to reach our clean energy and climate goals — can move forward," Frenkel said.