Renewable electricity needs the widest possible interconnections. There are two major US interconnections, and one smaller one for Texas. The Tres Amigas SuperStation proposed to intertie all three, but Texas pulled out, and the intertie between the Eastern and Western Interconnects was greatly reduced in size.
Solar power is available at sunrise on the East Coast three hours before it reaches the West Coast, and continues on the West Coast three hours after sunset in the East. Wind power peaks at night, but with similar delays from region to region. Thus power is cheaper in one area than in another, a market failure. Whoever can connect them can balance prices across a much larger market, taking a bit of the difference as profit for itself.
This issue is in the purview of NERC (North American Electric Reliability Corporation).
The vision for the Electric Reliability Organization Enterprise, which is comprised of NERC and the six Regional Entities, is a highly reliable and secure North American bulk power system. Our mission is to assure the effective and efficient reduction of risks to the reliability and security of the grid.
For decades Texas has run its own interconnection, ERCOT, specifically to avoid NERC regulations and standards. It has been willing to export power to Mexico, where NERC is not involved.
Arbitrage
The whole business model of Tres Amigas is summed up in the fundamental law of finance.
Buy low, sell high
especially where nobody else can.
Buying low in one market and selling high in another has the technical name of arbitrage. When done correctly, it is very nearly risk-free for the arbitrageur, and is beneficial to almost all other market participants by connecting those who would prefer to buy at the lower price in one market, and those who would sell at the higher price in the other. The overall result is to bring prices in both markets together.
Investopedia: Arbitrage
The Law of Supply and Demand says that in efficient, competitive markets, everything reaches an equilibrium price where all sellers can sell and all buyers can buy. Real markets have various sources of friction that prevents this happening. Arbitrage done right provides the grease to alleviate the friction.
That's the theory, and much of the time, it works well in practice.
Unfortunately various financial shenanigans and outright idiocies are also called arbitrage, so it has gotten a ferociously bad name with the public.
- The collapse of the Long Term Capital Management hedge fund was one of the worst cases ever. They had a brilliant, Nobel Prize winning theory for pricing derivatives, and thus being able to arbitrage them, that they misapplied. They treated an essential variable as a constant until it wasn't, and they lost billions.
- Ivan Boesky presented himself as an arbitrageur, but made his money in insider trading until he got caught and made an example of.
- Enron not only arbitraged energy prices, but manipulated them.
We are going to put aside that disastrous side of the story, and talk about a project, Tres Amigas, to do it honestly and sanely. Electricity can be generated more cheaply in some regions at some times of the day, and we would like to make it available in regions where the spot price is higher.
Our topic is the Tres Amigas Superstation, intended to intertie the three biggest grid interconnects in the US at the point where all three physically come together. It proposed three 5 GW superconducting DC interties between the three, to be built for $1.6 billion. Using DC means that there is no problem with differences in the phase of the power in the three regions, and that the capacity can be huge.
Tres Amigas would use high-temperature superconductor (HTS) wire[1] supplied by American Superconductor Corp.
The Tres Amigas SuperStation plans to act as a power market hub, enabling the buying and selling of electricity among three of North America's largest interconnections[5] above the amount available today. The Texas Interconnection has 5 DC ties to the other grids, totaling 1,100 MW.[4]
The project will provide solar, wind and other renewable developers with the transmission infrastructure needed to transport clean electricity to population centers.[6]
The Tres Amigas super station will be located on a 22-square-mile (57 km2) state plot of land near Clovis, New Mexico,[7] leased for 99 years at $9 million per year.[8]
In 2015, the Southwest Power Pool (SPP) cancelled an agreement with the project.[17]
In February 2017, it was announced that the project was still progressing but would be significantly scaled back from the previous full project estimate of $1.5 billion to $200 million. The project is also subject to possible relocation due to reduced land needs.[18]
Tres Amigas, LLC will unite the nation's electric grid. Utilizing the latest advances in power grid technology, Tres Amigas is focused on providing the first common interconnection of America's three power grids to help the country achieve its renewable energy goals and facilitate the smooth, reliable and efficient transfer of green power from region to region.
Tres Amigas SuperStation - Wikipedia
Jul 30, 2015 - Tres Amigas, a $1.6 billion project meant to connect the three U.S. regional grid systems with a superconducting high-voltage direct current transmission link, has just lost an interconnection agreement with one of its key grid partners.
New Mexico Grid Linkup Plan Scaled Back to $200M Project
Developers of what was once a $1.5 billion effort to link the nation's three major electricity grids through a transmission hub in eastern New Mexico say the project is still moving forward.
Russell Stidolph, the company's chief financial officer, said advances in technology and changes in the project's business model have reduced the amount of money and land required for the project and that Tres Amigas has identified a significantly smaller parcel as a backup site.
The company said progress has been made on a 35-mile transmission line built just west of the Texas-New Mexico border as part of a partnership between Tres Amigas and San Francisco-based Pattern Energy Group. The line will serve major wind farms being developed in the area.
Tres Amigas truncates transmission tie | Utility Dive
Feb 17, 2017 - Tres Amigas LLC has downsized a proposed $1.6 billion transmission link, and now says a smaller version of the project will include a 200 MW transmission link as opposed to 750 MW. The pricetag has fallen to $200 million.
In Related News
NERC: Under 15,000 circuit miles of new transmission expected over next six years
NERC noted that most of the lines through 2029 are coming to address reliability — about 60% — with renewable integration accounting for 1,400 miles of planned transmission.
Missouri Regulators Approve Grain Belt Express Clean Line
The Missouri Public Service Commission (PSC) has OK’d the Grain Belt Express Clean Line, a transmission project that would deliver wind energy from western Kansas to Missouri, Illinois, Indiana and neighboring states.
The PSC approved a request filed by Grain Belt Express Clean Line LLC seeking commission authority and a certificate of convenience and necessity (CCN) to construct, own, operate, control, manage and maintain a high-voltage, direct-current transmission line and associated facilities within eight Missouri counties (Buchanan, Clinton, Caldwell, Carroll, Chariton, Randolph, Monroe and Ralls). The commission’s vote was 5-0.
In granting a CNN to Grain Belt, the commission determined 1) there is a need for the service; 2) Grain Belt is qualified to provide the proposed service; 3) Grain Belt has the financial ability to provide the proposed service; 4) Grain Belt’s proposal is economically feasible; and 5) the service promotes the public interest.
Stop The Corridor-Central Maine Power (CMP) Electric Transmission Power Line!
This intertie would provide more transmission capacity for hydro power from Québec into the US Eastern Interconnect. It is being pushed forward without a proper environmental impact statement, through ecologically sensitive forest and major tourist river regions. Some want to stop it completely, while others want it rerouted and done according to law.