Building an Interconnected Grid with Invenergy
Shashank Sane is the Executive Vice President for Transmission at Invenergy.
Invenergy is North America's largest, privately held renewable power generation company. They have developed more than 200 power generation projects around the world and are responsible for more than 31 gigawatts of power on four continents, with the majority of that being renewable energy projects, including wind and solar.
In his role as EVP of Transmission, Shashank is responsible for the company's efforts to create connectivity between solar and wind farms and end customers, and he's particularly focused on large-scale interstate transmission projects. Transmission is a topic that climate and energy experts will say is critically important. Our transmission infrastructure in the US has been built over more than a century. And yet, the Department of Energy recently estimated that the US needs to increase our transmission capacity by over 50% by the year 2035. That's a monumental jump. We're grateful to Shashank for volunteering to come on the pod and talk with us about transmission, how it works, why it's needed, and how projects get done.
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Episode recorded on Oct 16, 2023 (Published on Dec 4, 2023)
In this episode, we cover:
[02:22]: Shashank's journey to Invenergy
[04:46]: His early experience at the company, Invenergy Edge, and acquiring Grain Belt Express
[08:11]: Shashank's experience at Lehman Brothers in 2008
[10:05]: Overview of Invenergy's approach to developing projects
[13:51]: Definition of "transmission"
[22:21]: Why more transmission is needed to enable renewable growth
[26:40]: Transmission issues in the U.S. and the need to improve grid resilience
[35:04]: The lack of federal oversight of the national grid
[37:02]: Modifying the Grain Belt Express project to better serve Missouri
[46:49]: Other major transmission projects Invenergy is developing
[48:24]: Working with community and landowners before routing transmission lines
[52:23]: The need to recognize the value of inter-regional transmission
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Cody Simms (00:00):
Today, on My Climate Journey, our guest is Shashank Sane, Executive Vice President for Transmission at Invenergy. Invenergy is North America's largest, privately held renewable power generation company. They have developed more than 200 power generation projects around the world and are responsible for more than 31 gigawatts of power on four continents, with the majority of that being renewable energy projects, including wind and solar. In his role as EVP of Transmission, Shashank is responsible for the company's efforts to create connectivity between solar and wind farms and end customers.
(00:38):
He's particularly focused on large-scale interstate transmission projects. Transmission is a topic that climate and energy experts will say is critically important, and I realized I didn't know much about it at all. Our transmission infrastructure in the US has been built out over more than a century. And yet, the Department of Energy recently estimated that the US needs to increase our transmission capacity by over 50% by the year 2035. That's a monumental jump. I'm grateful to Shashank for volunteering to come on the pod and talk with us about transmission, how it works, why it's needed, and how projects get done. But before we start, I'm Cody Simms.
Yin Lu (01:23):
I'm Yin Lu.
Jason Jacobs (01:25):
And I'm Jason Jacobs. And welcome to My Climate Journey.
Yin Lu (01:32):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (01:37):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help. Shashank, welcome to the show.
Shashank Sane (01:52):
Thanks, Cody. Thanks for having us here.
Cody Simms (01:54):
Well, this is a huge topic that we really haven't covered a lot on My Climate Journey, and I was so excited when we saw that you were interested in speaking with us all about transmission and what that means. And so clearly a key part of driving the energy transition, driving grid resilience, at least as far as I know. I think you're going to help me understand more about it today.
Shashank Sane (02:19):
Yeah, well, we'll try and unpack as much as we can.
Cody Simms (02:22):
Well, great. Well, let's start with you. You are currently the Executive Vice President of Transmission at Invenergy, which is a... I think it's North America's largest privately held renewable power generation company, if I'm not mistaken. You've been in this role now, it looks like, for a couple of years, but you've been at the company for north of 10. So maybe walk us through your journey and what led you into this particular problem area.
Shashank Sane (02:50):
Yeah, happy to talk about that. It's one of those things where definitely didn't draw it up this way when I first started at Invenergy 10 years ago, or certainly not earlier in my career, but a very interesting space to end up in. I came to Invenergy and into the renewables industry without... because I was super driven to change the world or solve the climate crisis. That's been a great side benefit of coming here. But the energy industry to me has been something that's been fascinating throughout my entire career, going back to my early days in investment banking. It's really a fascinating place where a lot of different forces come together.
(03:28):
There's technological innovation happening every day. There's these grand global markets that drive supply and demand. There's policy at play, and then there's this overarching energy transition happening. And so that was really what drew me to the energy industry, broadly speaking. But then, joining Invenergy 10 years ago, it's been a amazing ride of opportunity as a company overall. But then it's been a great personal journey as well. When I first came to the company, it was really on the finance side. I was doing a lot of work on our financial structure, how we fund ourselves as a company, spent some time on our M&A side working on both buying new projects as well as selling some of our existing projects.
(04:13):
But a few years ago really got more onto the operational side of things and wanted to take all the experience from financing and doing deals to actually building the projects. It was really one of the reasons I came to Invenergy in the first place. Coming from the financial services and from the consulting space, I wanted to see things actually happen, see things actually get built. You don't have a lot of chance to see steel on the ground when you're working in investment banking. So that was really the driving factor that brought me to the operational side of the business here and then about two years ago, a little over two years ago.
Cody Simms (04:46):
Actually, and interrupting you, it looks like some of the work you were doing there was helping either large industrial facilities or things like EV fleets with access to significant amounts of power when they needed it, which seems like a huge problem in and of itself. How do you co-locate power with these new clients who are wanting more of it and want it to be renewable going forward?
Shashank Sane (05:09):
That's exactly right. One of the first things I did on the operational side was launching a business called, we call it Invenergy Edge, which was really focused on, as you said, working with customers, the industrial customers, the fleet customers on how they're going to meet their power needs going forward. Those power needs are going to be increasing dramatically as we move forward, both with increased computing needs but also with increased electrification of their fleets.
(05:32):
So if you're a consumer packaged goods company and all of a sudden you're transitioning your whole fleet to be electric vehicles, the energy footprint of your distribution facilities is going to increase dramatically, exponentially even. And so we built a business focused on how they can solve those energy needs, those energy challenges at the facility level, which was a great experience, and we see a lot of opportunity there. As a company, we're not necessarily as focused on that part of the market now. We realize as Invenergy, our bread and butter, our area of expertise is really on the large-scale infrastructure, the grid level side of things, which is where...
Cody Simms (06:09):
So this would be the initial focus that you were doing with Invenergy Edge, I guess you would call, quote-unquote, behind-the-meter projects. And you sort of have realized, "As a company, actually, what we want to build is large utility-scale stuff."
Shashank Sane (06:23):
Exactly. Which is where the prime focus of the company has been since we started over 20 years ago. So, since our founding, it's been largely focused on grid-scale, utility-scale projects. And so, Invenergy Edge, I think, was a great concept but maybe didn't fit exactly within the core competencies of the company at the time. The transmission business on the other hand, is kind of right in line with everything that we do. So historically, we've been power plant developers, wind farms, solar farms, natural gas power plants, battery storage, and it was really about three years ago that we got into the transmission space.
(06:58):
Initially, through acquisition. We acquired the rights to Grain Belt Express from another developer, and that was really our first foray into the standalone transmission space. We've been developing transmission lines on a smaller scale really throughout the history of the company. Anytime we build a power plant, we have to connect it to the grid. And so we would build a line anywhere from a few hundred feet to a hundred miles to connect that plant to the grid. But Grain Belt was our first foray into building transmission lines purely for the purpose of building transmission lines.
(07:28):
And so now, since then, we've developed a portfolio of [inaudible 00:07:32] four major projects at least that we're publicly addressing right now. And then, I took the lead of that business in early part of 2021 as we were really creating a business around it. We saw the opportunity that was there, decided that we needed to make a full-scale effort to focus on that business. And so, since that time, I've been building out the team and having a great challenge doing so.
Cody Simms (07:56):
Fantastic. And as I said, we're going to spend most of the conversation talking about transmission, what it is, how it works, where are the challenges, where are the opportunities. I do want to set a little bit more context just around Invenergy overall and the size of the project portfolio.
(08:11):
But before we do that, I have one more background question for you, which I can't resist asking which is it looks like your very first job out of college was at Lehman Brothers up until 2008, which is I think we all know what happened to Lehman Brothers then. What was that ride like, and how in the world did you reorient your career having gone through that? I ask as someone whose first job out of college was in the dot-com boom and bust cycle of '99 to 2001. So I've lived it in my own sort of early formative years as well.
Shashank Sane (08:39):
Yeah, I guess the first thing I would say is it's always good to have that sort of experience in your 20s rather than in your 30s or 40s or 50s. So glad to have gotten that hopefully out of the way early in my career. But as you noted, it was certainly a wild ride. The first three, four years there were really outstanding, and the company was doing really well. I was learning an incredible amount. One of the things that I think I always look back on very fondly about that experience is I was surrounded by just tremendous people. I mean, the people I worked with there were some of the smartest I've ever worked with. Incredibly driven, incredibly passionate.
(09:14):
So a great network of people from that time, and really look back fondly at the experience. The last few months there weren't so great, but again, the benefit being that I was early in my career, and thankfully, at that time, I'd already made the decision that I was going to go to business school. And so in that process, before all the bankruptcy stuff happened. And so, thankfully, it was a relatively painless situation for me personally, but certainly not for a lot of my coworkers and people around me. So a very tough experience to go through for a lot of people, but fortunately for me it was not too bad.
Cody Simms (09:50):
Well, it sounds very similar. I still have lifelong friends from those early years in my dot-com boom and bust days. Anyway, sorry. It just seems like an interesting thing to have dug into a little bit. And then, Invenergy, so you've ultimately found your way there. You've been there for more than a decade.
(10:05):
And from a company perspective, it looks like just some basic stats on your website, over 200 projects that the company has developed, over 31 gigawatts of power that the company has helped bring online and global across multiple continents, though it seems like the bulk of the projects are North America based. Maybe explain a little bit about the types of projects that Invenergy has mostly been involved in.
Shashank Sane (10:29):
Yeah. No, I think you've certainly covered the stats pretty well, but I think we take a lot of pride in just being a true leader in the overall energy transition that's taking place. And I think one of the key parts of that energy transition is that there is no single solution that's going to fix everything. We need to be looking at how do we create a low carbon-sustainable energy grid for decades to come, and how do we do that in a way that ensures that the lights stay on, and that costs are maintained, and that we have a clean, affordable, reliable grid.
(11:02):
And so that's really the reason that we approach the business the way that we do. We don't have a specific technology. We are developing wind. We're developing solar. We're developing battery storage. We're developing transmission lines. We're in offshore wind. We're developing hydrogen. It's going to take all of the technologies that we have in order to really drive towards that low carbon reliable grid that we need. And so, historic predominant share of the business has been on the wind side.
(11:31):
So the 31 gigawatts that you talked about, I think a little over 16 gigawatts of that are wind-oriented, but we've also developed over six, I think, close to seven gigawatts of solar projects as well. And so it's really about having deep technical expertise around both the technologies as well as the grid to be able to deploy the right solution in the right place that makes sense. We're not here to be cheerleaders or any particular technology. We want to find the right technology for the right situation and then have the technical expertise to deploy it.
Cody Simms (12:05):
And does the company exclusively do clean energy projects or renewable energy projects? Have you done fossil fuel-based projects in the past as well?
Shashank Sane (12:12):
We have developed natural gas power plants in the past as well. That was a big part of the business for many years. And I think the reality is that there will still be some level of natural gas on the grid for some time to come. Certainly, we want to all reduce the carbon intensity of the grid and deploy zero-carbon solutions as much as possible. But I think with the balance of maintaining reliability and resilience, there will still be a balance there, probably for some period.
Cody Simms (12:40):
I know this isn't the area you specifically focus on, but I'm curious how projects tend to emerge in the first place. Does a developer like Invenergy say, "There's good land here for a wind farm. Let's go talk to the landowners and see about building a farm," or does it typically come bottoms up where then a project is, essentially, proposed to you and you decide if you want to finance it?
Shashank Sane (13:03):
It's really more the former. Our core competency, I'd say, really is around true greenfield development. So it is looking at a blank map and just starting from scratch about where is there a good renewable resource, where is there the opportunity to interconnect into the electric grid.
(13:21):
Where is there a supportive local community? Where is there a customer that we can ultimately sell it to? So it is really all about starting from scratch, thinking about those project fundamentals, and how can we put them together into a successful project at the end of the day.
Cody Simms (13:37):
And obviously a big part of that, as you just mentioned, is how do we get grid interconnectivity to these projects. That is, as I understand it, is what we're talking about when we talk about transmission. It's a fancy way of saying big power lines. Is that accurate?
Shashank Sane (13:51):
You got it. Yeah. I mean, the transmission lines are the lines that bring energy from where it's produced to where it's needed. There's electric lines all over the place, right. They're bringing it to your home, into businesses all around the country.
(14:04):
But when we talk about transmission, it's really those high-capacity, long-distance lines that are bringing energy from where it's produced to where it's needed or to share it between two different areas, not necessarily the ones that are feeding homes and businesses around the country.
Cody Simms (14:19):
I grew up in Kansas, for what it's worth. So out in Western Kansas, let's say there's a big wind farm that's been developed, and then you've got power that needs to go from there to Wichita or Kansas City or all the way to Chicago, for example. What do those transmission lines tend to look like? Are these DC, AC, where is it sent, and then where is it ultimately converted to be something that would actually then, ultimately, show up at my house?
Shashank Sane (14:45):
Traditionally, the electric grid is all AC, alternating current. Same thing that you get when you plug your clients into the wall. And so when you think about the electric grid, overall, an AC electric grid is basically like a big pool. So energy gets dropped in at one place and comes out in somewhere else on the electric grid, but you can't necessarily trace this electron went in here and came out over here. It's getting injected into this big pool of energy, and then people are drawing out energy in different places all along the grid, wherever it's needed. So that's the traditional model of just the AC grid that's out there, and that's still the predominant share or almost exclusively what is out there in terms of power lines.
(15:28):
They're all AC. What we're seeing more of these days are DC lines, and that's really where our business of developing transmission lines is focused is on DC, direct current lines. And there's a few reasons why we've been focused on DC lines, and you see some other DC lines getting built around the country. The main reason is because DC is most efficient for transmitting large amounts of electricity over long distances. And so if you want to bring... We typically talk in megawatts or gigawatts when we're talking about large sums. So if you want to bring gigawatts of energy from your example, Kansas to Chicago, that's hundreds of miles that you need to transmit that energy, and that's gigawatts of energy that you want to move from where it's being produced in Kansas to where it's needed.
(16:14):
The advantage of doing that with DC is that you'll have lower losses along the way. So whenever you're transmitting energy over long distances, there is going to be some element of losses along the way. The electricity that's being sent, so you lose some of as heat and resistance and things like that. The amount of energy you lose when it's AC will be significantly higher than if it's DC for that same distance. It's just a more efficient technology for transporting energy that far. You can also move more energy in a smaller footprint with DC than with AC. So, for some of our lines, what we can do on a single tower of DC transmission, it would take three towers of AC transmission. And so, as you're thinking about the land impacts of the transmission lines, we're able to minimize the land impacts by just having one tower instead of having three towers.
(17:06):
So a number of different reasons. I think those are a couple of the reasons that we think about DC. The other one that we often point to, and this is less about the amount of energy you move. But more about the reliability that you can bring to the grid is that DC is also controllable. So, in my example, when we're talking about AC as a big pool when you put energy in, it kind of just disperses and goes wherever into the grid, and it's more difficult to control. DC transmission line can be precisely controlled to move energy in this direction for one second and then move it in the other direction a second later. And you can move exactly the amount of energy you want at any given time. So it's just a much more controllable way to run the grid than AC power.
Cody Simms (17:48):
DC, at some point, needs to be converted into AC to be used by American homes in sort of the typical use case. So then you would ultimately, in addition to building the power line transmission, you have to build some kind of substation converter. When you think of a transmission project getting financed, I presume it's that entire thing that you're talking about.
Shashank Sane (18:10):
Yeah, that's exactly right. So any place that you want to tie into the broader electric grid, which, as we talked about, is all AC alternating current, you need a converter. You need to convert it from the DC that's moving along the lines back into the AC that could intertide to the broader electric grid.
(18:24):
So anytime you want to have one of those stations, yeah, you need to build a pretty big piece of infrastructure at that location, which is really the downside of the DC pathway of, given all the benefits I talked about earlier, why wouldn't we just build everything DC? It's because you need to build the converter stations to convert it back to AC, and those are pretty substantial in cost.
Cody Simms (18:45):
And you mentioned that, historically, the US grid has mostly been AC. Historically, how has all of that been financed? If I'm looking around my city, I presume a lot of that is actually owned by the electric utility or by the city itself, but I don't know that for sure.
Shashank Sane (19:03):
You're right. When you look around, certainly all the lines that are around the city or even when you go out into the country, and you see the bigger power lines out there, for the most part, those lines are owned by the local electric utility. Here around Chicago, it's ComEd. One of the Exelon companies. It may be Ameren in certain places or Excl, TV, the big utilities that are out there. They are mandated to own and operate the local electric grids in their particular service territories. And so they propose different lines to get built either for energy economic reasons or for reliability reasons.
(19:44):
And then they take those to their regulators. Their regulators say, "Yeah, this line is needed. Go ahead and build it." And then who pays for it is ultimately the electric customers in that territory. So, as a ComEd ratepayer, part of my electric bill is paying for the transmission lines in our territory here. So, as individual utilities, that's how they do it. And then, if you sort of zoom out one level, then you get into what are the RTOs, the Regional Transmission Organizations.
(20:13):
So here around Chicago, we're part of the PJM RTO, a different part of Illinois' part of the MISO RTO, and [inaudible 00:20:22] is a number of different utilities that have gotten together to pool their transmission assets and manage them as a broader region rather than just their specific service territory. But the same logic applies where, within PGM or within MISO, there will be transmission lines that are approved for the efficiency of the overall region, and then the cost of those lines gets distributed amongst all of the customers in that region.
Cody Simms (20:49):
And then one last question just on the basics of grid and transmission, and then we'll move into a different line of questioning. But just from a physical appearance perspective, can I eyeball what is a DC line versus what is an AC line? Is it pretty easy to spot the difference between the two?
Shashank Sane (21:07):
There are definitely some differences that you could notice as you're looking at them. Probably the biggest one is that if you see a DC line, there will only be two conductors instead of three. So any AC line that you have AC is what they call three-phase. So there's three different phases of an AC line.
(21:23):
So any AC transmission line will have three different wires. At a minimum, you may actually see six if it's two circuits, but it'll be in groups of three. For a DC line, they actually come in pairs, a positive and a negative [inaudible 00:21:37], as they call them. So that's probably the easiest way to distinguish the two. But if you drive around the country, honestly, you won't really see many or any DC lines out there with only a couple exceptions.
Cody Simms (21:50):
Got it. Super helpful. Okay. So now, with that kind of context established, thinking about what needs to happen going forward, we've all heard one of the big things that need to happen is the unlocking of more transmission. I think the New York Times editorial board wrote an article in May of this past year that said that the US needs something like 47,000 gigawatt miles of new power lines by 2035, which is like over a 50% expansion.
(22:21):
The grid that has been built out over a hundred-plus years, and to do it in 12, which seems insane to me. A question I have for you at the highest of levels is why are we all of a sudden now... if we said a clean electron is a clean electron, why are we now talking about needing to ship it halfway across the United States versus creating power plants near where power needs to be consumed?
Shashank Sane (22:44):
No, that's absolutely the right question to start with. If we rewind a little bit again to just the history of the grid. The history of the power grid in this country was built to take energy from a big central generating station, so a big coal facility or a big nuclear facility, big natural gas-fired facility, and then bring that into the load center. So you would build a nuclear plant 1,500 miles away from Chicago, and then you would build a transmission line to bring that energy into Chicago. And that's, generally, how it works all around the country.
(23:18):
You have these regional power plants that serve the load centers within their regions, and then you have transmission lines to bring them there. And then, there is some joining of adjacent regions from a transmission perspective. You have, like I said, PJM and MISO, and there's another region called SPP where they've built transmission lines to connect the different utilities within those regions to share energy. Rather than having everyone be self-sufficient, they've created a scenario where they're sharing amongst the neighbors.
(23:48):
But I think when you hear these projections about the amount of transmission that we need to build over the next decade-plus, the reason that's driving that is twofold. One is that the composition of a renewable centric zero carbon grid looks very different from a power generating perspective than what I described earlier with big central coal, gas, nuclear type facilities. Instead of having these big centralized facilities, you're going to have wind and solar and batteries spread out all around the country, and not just all around the country, but you're actually going to concentrate them in where you have the best resource. You don't want to necessarily build wind farms all over the country.
(24:31):
You want to build wind farms where there's the best wind resource. And for the most part, that sits right in the central part of the country, starting up in North Dakota and coming right down the middle there through Nebraska and Kansas, Oklahoma, Texas, New Mexico. That whole region has the best wind resource in the country and some of the best in the world. Similarly, you have solar that is strongest in the southwest part of the country, Arizona, New Mexico, that whole area, California. And so you want to be able to utilize those great resources, those higher capacity factor as we talk about them resources and then take those and bring them out to where the users are.
Cody Simms (25:09):
The high-level math would say something like, "Five or 10% increase in production because you're in a windier area or a sunnier area is worth the cost of all the upfront infrastructure you have to build to connect that plant to wherever it's trying to go."
Shashank Sane (25:25):
Yeah. And it may be more than 5% or 10%. In some cases, it's 30% more wind that you'll get in Western Kansas versus in Illinois or somewhere like that. Or the other part of it is you may not even have access to a wind resource in Ohio or Pennsylvania somewhere like that, as opposed to what you can do in Kansas or Oklahoma.
Cody Simms (25:49):
Sure, because you've got mountains or whatever you've got.
Shashank Sane (25:52):
The terrain doesn't support it. You need big tracks of land to be able to do it. So it's more difficult to build wind. Forget the quality of the wind, you know, the resource strength at all. You may not even be able to build it in certain regions. And so the infrastructure that you're building to access those, yes, probably pays for itself just in the access of those resources.
(26:13):
But the other real reason that we need to build all this new transmission is partly driven by all this transmission that's been built for the current grid, a lot of it is 40, 50, and 60 years old, so there's just a natural replacement cycle that needs to go on that we can't keep living off of this infrastructure that was built decades ago. And so if we're going to update the infrastructure, we should update it to what is reflective of the current grid.
Cody Simms (26:40):
That's the phrase we hear thrown around of, quote-unquote, grid resiliency, which is just it's falling apart and or at risk for cyber terror attacks or causing at risk for wildfires or whatever it may be.
Shashank Sane (26:53):
Age is one part of it, but then the way it's designed is the other part of it. So, as I talked about earlier, you have a grid is built in these little segments. One of the challenges I always have talking with people, particularly coming from outside the US, who ask about the US power grid is they just give an open-ended question of, "Tell me about the US power grid." And the easiest answer to that is there is no US power grid. The US power grid is made up of a dozen or more small pockets of electric grids throughout the country.
(27:22):
And what that results in is that when we've got extreme weather or other circumstances that impact one part of the grid, it's very difficult to share energy from one part of the grid to the other. If we look at what's happened in some of the winter storms recently, whether that's Uri a couple of years ago, we all know what happened in Texas with the blackouts there, or we look at what happened with Winter Storm Elliott just this past December, and there were some blackouts in the southeast part of the country. Both of those situations, there was not a shortage of energy in the country at large.
(27:54):
What there was a shortage of was getting that energy from where it was to where it was actually needed. In the case of Texas, Texas doesn't have a lot of connection to the broader electric grid throughout the country. And so, they weren't able to import energy from the rest of the country when generating resources within Texas were having challenges. In the case of Winter Storm Elliott this past December, same thing. You had the southeast part of the country that was having extreme cold weather events, and so all types of generating resources, coal, gas, nuclear, everyone was having challenges in the southeast part of the country, and they just couldn't import enough energy from other parts of the country [inaudible 00:28:33] excess.
(28:34):
One of my favorite anecdotes is that when there were actually blackouts in the southeast part of the country, there was wind energy in Kansas that was being curtailed, meaning it wasn't allowed to produce at its full output because there was no user for it where it was being produced. And so that is clearly and purely a transmission issue that you had more than enough energy in one part of the country, and you had another part of the country that was having blackouts. That shouldn't happen.
Yin Lu (29:00):
Hey everyone, I'm Yin, a partner at MCJ Collective here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning, and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community.
(29:30):
A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early-stage investments have been made, as well as ongoing events and programming like monthly women in climate meetups, idea jam sessions for early-stage founders, climate book club art workshops, and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks, and enjoy the rest of the show.
Cody Simms (30:01):
And so it seems like you're talking about the grid previously was quite local. You had these monolithic power production facilities that were relatively local to where they were being consumed. We're now moving to this more distributed model where a project may live in Kansas and feed electrons to wherever. We keep using Chicago as an example.
(30:20):
That's where you live. Sure. I'm from Kansas. It works well. What is the order of magnitude project size difference generally? If you took a natural gas plant or a coal plant or whatever that was previously... or a nuclear plant that was previously powering Chicago, how big were those historically? And when we talk about a new wind farm or a solar farm, roughly how big are those?
Shashank Sane (30:43):
The dynamics of that are changing. The historical plants, a big coal plant or a nuclear plant, typically those are going to be one gigawatt, two gigawatt, or 1,000 megawatt, 2,000 megawatts. Very big. Gas plants are a little bit more flexible. You'd see them maybe as small as 500 megawatts up to a thousand or more megawatts. We think about it as the big generating station, centralized power generating stations. And historically, I think what you would see is renewable facilities a bit smaller than that.
(31:12):
Solar plants, 50 megawatts, 100 megawatts, a wind farm, 100 megawatts, 200 megawatts, something in that region. I'd say that's changing substantially going forward. I think the technology has improved to a place where you can generate more energy off of the same amount of land, and so even the same size facility is going to produce more than it did historically. Wind turbines are getting bigger, solar panels are getting more efficient. And so you're seeing renewable facilities of the same scale as those facilities that I talked about earlier.
(31:44):
We, as Invenergy, we are building a solar facility in Texas that is north of a thousand megawatts. We just completed the biggest single-site wind farm in the country in Western Oklahoma at 999 megawatts. And now some of the projects that we're developing or the transmission lines that we're developing are being designed to access renewable facilities that are in the multi-gigawatts scale. So we're not even talking about single gigawatts anymore.
Cody Simms (32:13):
I have to ask, 999, was there some limit that it could not be a one-gigawatt project?
Shashank Sane (32:18):
It's a good question. I wasn't that close to that one, but I'm sure there's a very good reason why it was not a thousand megawatts.
Cody Simms (32:24):
Okay. And so hearing all of this in the context you laid out earlier, boy, it seems like we're at the classic American history I studied back in high school, which is like state's rights versus federal authority because now, instead of a big project being built in Illinois to be consumed in Illinois, we're talking about things that are crossing state lines. And all of a sudden, now it doesn't become the purview of any one state legislature that can decide to approve something or not. It becomes the purview of multiple governmental bodies. And I presume herein lies the challenge.
Shashank Sane (33:02):
You're spot on. As we think about these long-distance multi-state type infrastructure projects, it is the purview of many different regulators. You have everything down from the individual townships and counties to the states you're going through, and then there may be a federal element to it as well.
(33:21):
And so, as we think about these projects, it is really critical to make sure that they are designed and implemented with all of those different stakeholders in mind. We can't do something that is going to alienate any group of those stakeholders because, ultimately, they are important to the project. And so, as we think about our project, it is with many different lenses in mind, from the individual landowner to the state to what does this mean from a national energy policy perspective.
Cody Simms (33:51):
Is it fair to say that in oil and gas, in terms of pipeline development, this is a relatively solved problem, or is that inaccurate?
Shashank Sane (34:01):
Yeah, it is different. There's probably a hundred years of history [inaudible 00:34:06] we could go through in terms of why it's different. But from the pipeline perspective, it is different in that FERC has the jurisdiction to provide siting and construction approval for interstate pipelines.
Cody Simms (34:19):
Describe FERC for listeners who don't know what FERC is.
Shashank Sane (34:23):
Yeah, so FERC is the Federal Energy Regulatory Commission. It's a independent commission under the DOE that really is responsible for regulation of energy markets in the country, both electric and gas. And so there is a difference in their mandate between the electric and gas industry, though, as I just noted. On the interstate gas pipeline side, they do have primary siting authority for where interstate gas pipeline gets sited. As it pertains to electric transmission, though, they don't have that ability.
Cody Simms (34:54):
Now, what we've seen from all sorts of pipeline demonstrations and whatnot, they can't just force it to happen, but they have a lot of authority to help it happen, I guess, right?
Shashank Sane (35:04):
Certainly. Well, no regulatory body can do anything in isolation, whether it's a state regulator or it's FERC. They're all going to open any proceeding up for public comment. They're going to seek stakeholder feedback. They're going to talk with landowners. And so there's a lot of input that comes into any of those processes. But ultimately, the question is, who does the decision sit with? And in the case of interstate gas pipelines, it sits with FERC, whereas with electric transmission, it sits with state regulators.
Cody Simms (35:32):
So there is no federal agency that essentially owns responsibility for coordinating power transmission across state lines, interstate power transmission. Is that accurate?
Shashank Sane (35:43):
That's right.
Cody Simms (35:44):
Is that being discussed? I would've thought as part of either Bipartisan Infrastructure Law or Inflation Reduction Act, given how much focus was on all these initiatives, that would've been a problem solved in one of those pieces of legislation.
Shashank Sane (35:58):
It's been one of the things that certainly has been talked about as a need, but it has not been solved as part of any of those packages. There have been some things that have been done around the edges to give Department of Energy some rights to designate what they're calling National Interest Corridors just to create more attention on where there's a specific need for more national policy-oriented transmission.
(36:22):
And there's some ability for FERC to have what they're calling Backstop Siting Authority. But we still need to go through the state process, and I don't see that it's imminently going to change where the states are still the primary vehicle to approve transmission lines.
Cody Simms (36:37):
What's typical pushback? We've talked about the project. We haven't really dug into it, but you're responsible for the Grain Belt Express, you said at the beginning of the call, which maybe you could describe it better than me. But it's a major power line from Kansas to Chicago, which is why we've been using that example, I think. For the states in between, Kansas and Illinois, what would they need to approve, and what would be their hesitancy on why they might want to approve it?
Shashank Sane (37:02):
Well, maybe we'll just spend a quick second going over Grain Belt to give the background there. So, as you know, Grain Belt is a major infrastructure project connecting the western part of Kansas through Kansas, Missouri, Illinois, and ultimately to the Indiana border. The idea of Grain Belt is exactly what we were talking about earlier is that western Kansas has some of the best renewable resource, wind resource in particular in the world, and that wind resource has been largely underdeveloped because there's not enough of a transmission, network transmission infrastructure in that part of the country to get the energy where it's needed.
(37:35):
There's not huge demand for energy in Western Kansas, and so you need the electric infrastructure to get it out of there. And so, Grain Belt will be a 5,000-megawatt source of infrastructure to transport that energy out of Western Kansas into Missouri, Illinois, Indiana, ultimately. So the project's been under development for over a decade. I said that we acquired it in 2020. At that time, it had already been under development for quite a long time by a prior company called Clean Line Energy.
Cody Simms (38:08):
Under Development. Does that mean lines are being physically built, or does it mean rounding up financing, rounding up, permitting, or a little bit of both?
Shashank Sane (38:15):
The permitting, getting the land together, all that, nothing was built today. And so the prior developer had spent years trying to get the line permitted, get the rights to build it, get the land to actually site the project. When we acquired it in 2020, one of the things that became quite apparent to us is one of the challenges they had in siting the line was the issue that you talked about earlier of passing over states, passing over Missouri without... and them asking the question, "What's in it for us? You're going to build this huge transmission line that's going to cross over the state. What's in it for the people of Missouri?"
(38:51):
And that's oftentimes what it comes down to when we're talking with really any of the stakeholders involved in a transmission project, from the individual landowner to the states that we're passing and we need approval through is that what are the benefits to that local constituent? Because in order for us to be able to work constructively with them, we need to have a real benefit that we're showing them. And as Grain Belt was originally conceived, it was going to deliver most of the energy. It was actually conceived as a 4,000-megawatt line with 3,500 megawatts going all the way to Indiana and only 500 megawatts being dropped in Missouri.
(39:28):
That became apparent to us through our conversation with stakeholders as a real challenge with the project. And so through the first couple years that we owned the project, project development, we were thinking about ways that we could improve the benefits to the stakeholders in Missouri. And so what we ultimately did was we increased the overall size of the line from 4,000 megawatts to 5,000 megawatts. And then, we changed the distribution from being 3,500 megawatts to Indiana and 500 in Missouri to being evenly split 2,500 megawatts into Missouri and then 2,500 megawatts to the Illinois-Indiana border.
(40:05):
What really that brings is then a more equitable sharing of the benefits of what the line will bring. And the line will bring access to very low-cost, high-quality renewable resources from Kansas, and then it'll also bring a great amount of reliability to the electric grid. So as we're seeing the challenges with more extreme weather happening every year, it seems like, having more of those reliability resilience benefits delivered locally is a very important thing for the communities that we're working with.
(40:37):
So we announced those changes a little over a year ago in the summer of 2022, and we've been seeking all of our approvals from the state level through the last year plus. And actually, as of last Thursday, we're pretty excited to say that we got the last of our approvals that we need from the Missouri Public Service Commission, and so we now have all four states approved from the siting and regulatory approvals that we need, which is pretty awesome accomplishment we think.
Cody Simms (41:06):
Congratulations. As I think through the evolution of that project when the project was originally conceived as a relative point A to point B project, I would presume that is more efficient. You have less loss on the line because you have less places where the power is splitting off. You're not having to build as many.
(41:24):
We talked about you're sending power over these really long lines, and then at some point, you have to convert it and build a substation to convert it to AC, which adds cost and complexity to the project. Are those the reasons why initially you might approach a project trying to keep it as straightforward and simple as possible, and then ultimately you have to make presumably some concessions to provide power along the way, which increases cost to the project as you do so?
Shashank Sane (41:50):
Yeah, I think certainly the easiest technical setup would be just point A to point B, and you can design the system to be very simple like that. I think adding something in the middle increases the complexity of the technical solution to some extent. It certainly increases some cost to the project by having multiple conversion stations. But I don't necessarily think about it as much as a concession in terms of what we did in Missouri.
(42:19):
More so, there was a demand in the market. We were responding to the market signals here that there was not only a demand in Missouri for more of the energy and reliability to be centered in that state, there was also a demand for access to those renewables that could be developed and built in Kansas. And so part of it was making sure that we have the right package of benefits to show the impact in Missouri, but part of it was also just listening to the market and hearing where there was a demand signal and figuring the line to meet that demand.
Cody Simms (42:53):
Super helpful. You mentioned that you increased the total capacity of the project as part of this. Does that then feed on the front end your ability to go create more power generation projects as well?
Shashank Sane (43:06):
Right. So increasing the line from 4,000 megawatts to 5,000 megawatts means there's just that much more opportunity in Kansas for that many more megawatts of wind and solar assets to be built out there.
(43:19):
Grain Belt is an open access line, so there's multiple companies developing wind and solar projects in Western Kansas, and so there'll be multiple different power plants connecting into the project, multiple different renewable resources. Some of those may be developed by Invenergy, some of those by other parties, but it's really a great market access opportunity for all participants out there.
Cody Simms (43:43):
And so, what I'm hearing you say there is that it enables open access and interconnectivity. Then, not only does that mean you're generating power in Kansas and feeding it through Missouri to Indiana and Illinois, presumably. But that also means back to the resiliency conversation we were having, that if all of a sudden there is some winter storm events or whatnot and you need to divert power from one place to another, it gives utilities some more control on being able to help one another outside of their own local jurisdiction. Is that accurate?
Shashank Sane (44:17):
In concept that is 100% correct, so one of the most exciting things about Grain Belt is not only will it provide access to all those renewables in Kansas. But we're actually going to connect four of those regional transmission organizations, trans four of those RTOs that I talked about. So we'll have a connection to SPP in Kansas. We'll have a connection to MISO in Missouri. We'll also have a connection to AECI, which is a smaller electric co-op region in Missouri. And then we'll ultimately have a connection to PJM at the Illinois-Indiana border.
(44:50):
And what the line can do at that point is it technically can withdraw power, can inject power into any of those four markets that I just mentioned, depending on who has an excess, who has a shortfall, and really serve as a reliability backbone across the whole midsection of the country to share energy amongst all those marketplaces. Now, I said in concept and technically feasible because a lot of the challenge that we face right now is that this is such a new novel concept that the rules and the regulation for a line like this just are way behind where the technology is. There aren't rules in place that create a value for the reliability that we're talking about here.
(45:37):
No one's thought about what is a 5,000-megawatt power transfer between SPP and PJM worth? What is it worth to have that there as an insurance policy, as a standby, knowing that those markets can rely on it when it's needed because it hasn't existed? And so a lot of what we're trying to do at FERC and with state regulators is advance that discussion, you know, force that discussion for everyone to come to terms with what does it mean to have something like this in the toolkit of all the markets to manage the reliability on their systems because they just haven't done it.
Cody Simms (46:13):
Back to the numbers cited earlier from that New York Times report, which I think was pulling from the DOE, so these aren't just the New York Times making this stuff up. It was 47,000 gigawatts by 2035, a little more than that. And you are now saying you've just received all the necessary state approvals for five gigawatts.
(46:32):
That's a significant chunk. It would also lead me to wonder if how many more of those projects that are a decade plus in development are getting close. Is this number less daunting than maybe it sounded when I first brought it up 30 minutes ago?
Shashank Sane (46:49):
Yeah, it's daunting no matter how you slice it, but I think we are seeing a lot of progress on that. Just in Invenergy, we've got four major projects. Grain Belt is the biggest of those, but we've got a project in New Mexico that is close to four gigawatts that we're developing in New Mexico called North Path. We have a project in New York that we're developing along with a couple of partners there called Clean Path New York, that's 1,300 megawatts. We have a project in Oklahoma that we're developing that's close to two gigawatts, so we're trying to do it as much as we can.
(47:23):
I think part of the challenge has been the lack of focus on these long-distance inter-regional type projects. As we talked about earlier, there isn't a body that has oversight for the full National Grid. And so what you've seen is a lot of local and regional type projects developed, but these big long haul inter-regional projects haven't been a big focus. And so it takes companies like Invenergy, or we're seeing some of our other competitors that are looking at these long-distance HVDC lines.
(47:54):
Thankfully, we're starting to see some of those enter into construction. There's a project in New York called Champlain Hudson that's now under construction. There's other projects. There's another one in New Mexico called SunZia that's getting closer to construction. But these are projects that, similar to Grain Belt, have been under development since the early 2010s or maybe even the late 2000s. And so we need to get better at moving these faster. They can't take 15 years to get done, otherwise, we'll never achieve those goals that you talked about.
Cody Simms (48:24):
And when it comes to looking at the local context of this, a local county in Kansas that this line needs to pass through, what's the typical process of... Presume you have to get some kind of easements or you just do eminent domain from the local landowners to run the line through their property? What does that tend to look like?
Shashank Sane (48:43):
So we spend a lot of time working with the communities before we ever even establish a project route. So we spend a lot of time soliciting feedback from local landowners, soliciting feedback from local county officials, local stakeholders on what's the best route that we can take through a particular area. And then, depending on the state, we'll then go for a state regulatory approval for the state to say, "Yes, this is the route for this transmission line," which is what happened in Kansas.
(49:12):
The original siting approval was actually done by the prior developer, Clean Line, many years ago, but they followed a similar process. And one of the things that we are trying to do as Invenergy is also really establish what are those best practices in terms of working with landowners and local stakeholders. We want to be viewed as partners. We want to be constructive in terms of how we site the lines and how we work with landowners to accommodate individual kind of restrictions on their land.
(49:41):
Ultimately, it needs to still lead to a route that is reasonable, commercial and minimizes impact. We'll work with landowners to a great extent possible in the routing and siting of a process. And those are multi-year endeavors that we do of gathering feedback, revising routes, implementing changes to ultimately get to what is the most optimal route for a project.
Cody Simms (50:06):
Does there tend to be some form of compensation to local landowners as the project gets built across their property?
Shashank Sane (50:11):
Yeah, yeah. Certainly, any easement that we get from a landowner is compensated, and we work with them. We work with all the stakeholders, figure out what is the right compensation for the line, but it is absolutely compensated to them.
Cody Simms (50:25):
And I presume we've seen a significant amount of federal matching dollars in some way, shape, or form through Bipartisan Infrastructure Law and the Inflation Reduction Act to go help financing around these projects. Is that a correct assumption?
Shashank Sane (50:41):
To some extent. As part of the Inflation Reduction Act, there was an extension or a program to bring back the production tax credits and investment tax credits for the wind and solar industry. So those certainly have a benefit for the renewable assets that will interconnect into Grain Belt. There wasn't really a lot of money directly targeted towards the transmission space. There were some grant programs that were implemented that they're still working through. There was a program called the Transmission Facilitation Program that was enacted and still working through. But in terms of...
Cody Simms (51:17):
I have that here in front of me, so $2.5 billion in DOE-authorized borrowing capacity, it looks like.
Shashank Sane (51:25):
That's right. So two and a half billion dollars sounds like a lot of money when you think about these multi-gigawatt, hundreds of miles type projects. It doesn't actually go all that far. So those were, I think, good programs as a start, but there wasn't a major tax credit or anything like that targeted towards the transmission industry. One thing that was part of the Inflation Reduction Act was increasing the capacity of the Loan Programs Office at the Department of Energy to provide more loans to the market.
(51:56):
It's something that we're looking at. It's been publicly out there that Grain Belt Express is looking at a loan from the Loan Programs Office for Grain Belt, but I equate to just a credit facility or a debt facility from another lender. They happen to be a very large lender with the ability to lend large sums, like is necessary for Grain Belt, but the analysis they're going to do, the terms they're going to have are right in line with the traditional debt market.
Cody Simms (52:23):
If you could wave a magic wand on how to make all of this more efficient and effective going forward, what are the big changes you'd like to see?
Shashank Sane (52:35):
I think the biggest thing for me is increased recognition and visibility on the need for more inter-regional transmission. I think there's a great sense out there of how much transmission is needed. You talked about some of those numbers earlier that are highlighted in the New York Times or other places, and I think the individual markets do a pretty good job of designing and building transmission within their footprint. MISO. There's been a lot of talk recently that MISO has a 10 billion dollar plan to build more transmission within the MISO footprint, and PJM has plans within their region and SPP within their region.
(53:14):
But what really is non-existent right now is a recognition of the need to build these interregional lines, of which Grain Belt is a prime example. And not only is there a lack of recognition of the need, there is a lack of recognition of the value that that's going to bring to the system. And I think if we can all recognize the value that they can bring to the system, I think a lot of the other stuff will become easier.
(53:41):
The permitting process can be long, but I think if developers are responsible and respectful in how we site lines and we go through the process, I think that we can work through that and get through the siting approvals that we need and get the lines permitted. But I think it really comes down to everyone recognizing that these lines are needed and that they can bring a tremendous amount of value to both local grids and the national grid. And once people recognize the need for it, I think a lot of the other elements become easier.
Cody Simms (54:12):
Who in particular do you think needs to be convinced that this should happen? The global we should recognize feels quite broad. Is it a federal policy lever that needs to get pulled? Is it a more financial capital coming into the space that needs to get pulled? Is it mayors of big cities saying, "Hey, I need clean energy from over there to come here." What does that look like?
Shashank Sane (54:35):
I think it's probably a little bit of everything. But most specifically, federal policy around driving towards a national grid, a nationally intertide grid is going to be really important, whether that's coming from legislative action or FERC or otherwise. But then also making sure that that message and that the value of that is disseminated down to the local level.
(54:59):
The individual landowner doesn't necessarily care about some federal policy that says, "We need a better intertide electric grid." They want to understand, "Why do I want a better intertide electric grid?" So we have to be able to convey that message and to be able to show the value that that would bring in terms of reducing the likelihood that the next time there's a huge winter event that their lights are going to go off or that their heat is going to turn off, and that there'll be a major issue with that.
Cody Simms (55:28):
Well, Shashank, this has been so helpful. I feel like we're just scratching the surface of this incredibly complex topic. Anything that we should have dived into today that we haven't covered?
Shashank Sane (55:39):
I think the last one that we talked about is really, the big one for me is that the need for transmission in this country is huge, but the need for inter-regional transmission and a way to recognize the value of that is what is going to drive the most value. And so, in the absence of a national electric grid, we got to figure out who's going to build that and, hopefully, at Invenergy, we're going to be right at the forefront of it.
Cody Simms (56:04):
Well, Shashank, I so appreciate you for joining us, and congrats on what sounds like a big week recently in terms of the state-level approvals for Grain Belt Express. And thanks for taking some time to share with me and educate me and educate all of us on how transmission works and what's changing in this world, and why it matters.
Shashank Sane (56:24):
Awesome. Well, I really appreciate you having me on. Good conversation. Hopefully, your listeners find that interesting.
Jason Jacobs (56:31):
Thanks again for joining us on My Climate Journey podcast.
Cody Simms (56:35):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem-solving capacity.
Jason Jacobs (56:44):
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Cody Simms (57:07):
Thanks, and see you next episode.
