Thanks for the ‘heads up’ from David Miron (Colombia 1963-65)
The Wall Street Journal
June 22, 2019
Updated June 22, 2019 12:01 am ET
Adapted from “SUPERPOWER: One Man’s Quest to Transform American Energy” by Wall Street Journal reporter Russell Gold, to be published by Simon & Schuster, Inc., on June 25.
When Michael Skelly first visited the Oklahoma panhandle in 2009, he gazed at a giant grid with squares of corn and grassland. There were few houses, one every mile or so. Half had been abandoned decades ago by homesteaders who gave up to the elements. This pancake-flat landscape, he thought, held the key to overturning one of the greatest misconceptions of the climate-change crisis.
For years, the wind and the sun were widely dismissed as niche sources of power that could never fill
America’s vast need for energy. But now the cost of solar and wind power had fallen so much that the U.S. could substantially reduce harmful emissions while also lowering the price of electricity. Put it all on a big enough grid, one that could use the ample sunshine from the desert Southwest to keep Atlanta’s office towers cool, or the persistent wind in the Great Plains to run Midwestern factories, and you’d address the often-repeated critique of renewable energy: The sun isn’t always shining and the wind isn’t always blowing. On a big enough grid, that’s not an issue. There is wind somewhere and the clouds don’t cover the entire U.S.
In Oklahoma, Skelly knew the wind rarely stopped blowing. A midcentury travelogue joked that homes had a “crowbar hole…designed to check on the weather. You shove a crowbar through the hole: if it bends, the wind velocity outside is normal; if the bar breaks off, ‘it is better to stay in the house.’ ”
You could build renewable energy here, he thought, on a scale that could change the country and maybe even the planet.
There was a snag and it was a big one. We have 21st-century technology to produce the power, but we still have a 20th-century power grid that can’t move it from the windy and sunny parts of the country to the urban markets. The American power grid isn’t set up for it. It’s old-fashioned and parochial when it needs to be continental and forward-looking. It’s like the nation’s roads before President Dwight D. Eisenhower championed the construction of the Interstate Highway System seven decades ago.
Michael Skelly at his home in Houston this month.
Like Eisenhower, Skelly had a plan: He wanted to begin building a new power grid that could carry inexpensive renewable electricity from places such as the Oklahoma panhandle to the east and west. An electricity superhighway that would save customers money while reducing pollution and carbon emissions. An interstate system for electrons.
Skelly had a history of getting things done. When he was in the Peace Corps in Costa Rica in the mid-1980s, he helped set up a microcredit program to let fishermen develop new markets for their catch. One lesson Skelly took from the project was the importance and influence of money. After getting a degree from Harvard Business School, he returned to Costa Rica in 1992, this time to build a tram to take tourists into the rain-forest canopy. He had never built anything before.
When he needed a heavy-lift helicopter to move the towers for the rain-forest tram, Skelly flew to neighboring Nicaragua and looked up a friend from Harvard, a former Sandinista guerrilla with connections to the head of the country’s air force, Col. Manuel Salvatierra. Skelly parked himself in Salvatierra’s office for a week until he had a deal to rent a military helicopter. It delivered the towers into the rain forest and the tram got built.
Renewables on the Grid
In 2000, Skelly moved to Houston for his first job in the wind industry, developing wind farms for what became Zilkha Renewable Energy. The industry was at the tail end of a lengthy metamorphosis. It went through decades of debacles—wind turbines that broke down constantly and solar panels that produced ridiculously expensive electrons. But wind turbines had grown larger and more durable—and their costs were falling. The solar industry had begun an era of globalized production that was driving down costs. Renewable energy was not just for dreamers who wore sandals. It was starting to attract Wall Street capital and be taken seriously.
At the same time, the operators of the nation’s regional grids were moving cautiously. They worried that a sudden drop in wind could destabilize the grid. Slowly, they grew comfortable adding more renewable energy. In 2003, there were 1.2 gigawatts of wind power on the Texas power grid, offering roughly the equivalent amount of power as one of the two units at the South Texas Project, a nuclear plant near the Gulf of Mexico.
“I remember folks saying, at that point in time, that we would have to do some things radically different if we got about 15 gigawatts,” said Dan Woodfin, the grid’s senior director of system operations. But Texas reached 15 gigawatts, or 15,000 megawatts, in 2015, and the sky didn’t fall. There are now more than 22,000 megawatts of wind and nearly 2,000 megawatts of solar on the Texas grid—and the number keeps growing.
Other grid operators had similar experiences. Nick Brown, president of the Southwest Power Pool, the grid operator for several Great Plains states, testified before Congress a couple of years ago that his organization was handling 17,000 megawatts of wind without any issues. “I will tell you as an engineer, with training in operations and planning, if you had asked me 10 years ago if we would have been able to reliably accommodate even half of that, I would have said no. Period. End of discussion,” he said.
In the early 2000s, as chief development officer for Zilkha Renewable, Skelly helped plan and build wind farms from New York to Washington state. Zilkha Renewable grew quickly. In 2005, it was bought by Goldman Sachs , which sold it a couple of years later to Energias de Portugal SA for $2.15 billion, a handsome profit.
It was becoming clear that there was no shortage of wind, and that it was the grid that was the barrier to the dream of alternative energy. There was plenty of wind in the Great Plains and solar in the southwestern U.S., but that’s not where demand for power was located. That power needed to be moved from one part of the country to another. For Skelly, the next adventure was tackling the grid itself.
He essentially wanted to build several long extension cords. One end would be plugged into the Oklahoma panhandle; the other end would reach east until it crossed the Mississippi River. As his plan took shape, the price of wind and solar generation kept falling to the point where it cost less than power generated by conventional coal or natural gas.
Academics were starting to ask what would happen if the U.S. added lots of low-cost renewable energy and managed to move it around. One 2016 study by the National Oceanic and Atmospheric Administration’s research laboratory concluded that by 2030, the U.S. could cut its carbon-dioxide emissions by 80%, using only existing technologies. And the cost of power wouldn’t rise. In fact, it would be cheaper. That scenario didn’t rely on some hoped-for storage breakthrough, just the construction of a network of transmission lines similar to Skelly’s plans.
A different group of researchers, at the National Renewable Energy Laboratory, examined whether it was even possible to run the U.S. on 30% renewable energy. (In 2016, wind and solar generated about 8% of electricity; now it’s about 10.5%.) They built the largest and most sophisticated model of the U.S. electricity system on a supercomputer called Peregrine to find out. Their answer? It was both doable and wouldn’t raise power prices or destabilize the grid. But to get the biggest carbon reduction and lowest generating cost, they, too, found that the U.S. needed to build a new overlay of transmission lines—a system of moving large amounts of power from one point of the existing grid to another.
“We have put to bed the ‘Is this possible?’ question,” said Aaron Bloom, who led the NREL researchers. Thirty percent was doable, they concluded. “The question is 50% and beyond.”
Skelly figured that if he could build an Oklahoma-to-Tennessee line, the proof of concept would unlock more private investment. He co-founded Clean Line Energy Partners, secured institutional funding and set out to realize his vision.
Chickens and Eggs
He soon discovered hidden booby traps. One had been set all the way back in 1935 by a company then called Arkansas Power & Light . Back then, it found inexpensive sources of power—waste steam from a lumber mill, for instance, or a seam of coal—and constructed transmission lines to spread the electricity to nearby cities. As it expanded, Arkansas Power agreed to electrify the state’s farming communities in exchange for a state-regulated monopoly franchise. Once secure, the company pushed for rules to ensure no one else could follow.
Skelly wanted to build a transmission line across Arkansas, but the rules required Clean Line to be a utility. However, to be a utility, it needed to own or operate power equipment. It was a Catch-22 of Arkansas Power’s devising. The state had successfully dug a moat around the utility, and hadn’t built a drawbridge. It was a “chicken-and-egg paradox,” in the words of a state regulator, one that would haunt Skelly and his colleagues for years.
Then there was the land issue. In a few places, Clean Line might need the federal government to use eminent domain to be able to build the transmission line. Some Arkansans weren’t happy with that. Julie Morton, a former television weather reporter, wasn’t interested in Skelly’s arguments about national grids, reduced carbon emissions and low power prices. “Arkies,” she said, “we’re as poor as dirt, but we have land, and that is our core. When you start messing with that, you are messing with our heart and soul.” She didn’t want Skelly and Clean Line acquiring any right-of-way easements.
What started as an idea, with Skelly and a couple of others hunched over a kitchen table, soon grew into a company with dozens of employees. Skelly told them never to refer to the company as a startup. They would encounter powerful utilities and politicians in coming years, he said, and as Clean Line employees they needed to take themselves seriously.
The company made good progress. Clean Line gathered state approvals and prepared to file for a federal blessing. Fifteen wind developers expressed interest in building in the Oklahoma panhandle to deliver power on the proposed extension cord. Skelly approached the Tennessee Valley Authority, a federal power agency. In 2009, he told them he could deliver electricity at $70 a megawatt-hour. By 2014, wind technology had improved so quickly that he was talking to the TVA about $40. His offer price would soon be significantly cut again, to below what the TVA paid for coal power.
Skelly was regularly visiting TVA’s headquarters and received a warm reception from the TVA head. Negotiations seemed to be going well. But the TVA was getting a decidedly different message from Tennessee Sen. Lamar Alexander, a Republican who had a longstanding dislike for wind turbines. He had bought a vacation property on Nantucket Island, off the Massachusetts coast, in 2001. The week he closed on the property, news broke about Cape Wind, a plan to build 170 wind turbines in the middle of Nantucket Sound. A year later, after being elected to the U.S. Senate, he introduced a bill that would make life difficult for offshore wind developers. Over the next few years, he kept up his campaign against them. “The windmills we are talking about today are not our grandmother’s windmills,” he warned. Sen. Alexander would make sure that Skelly and Clean Line didn’t have it easy.
But as the months passed, Skelly and Clean Line made huge progress. The audacious plan to build the largest renewable-energy project in North America, and deliver it power-hungry customers in the southeast, was coming together.
A transmission line heading east from a substation in Hitchland, Texas, southeast of Guymon, Okla. Michael Skelly thought the pancake-flat landscape held the key to overturning one of the greatest misconceptions of the climate-change crisis. PHOTO: GEORGE STEINMETZ FOR THE WALL STREET JOURNAL
The Week From Hell
Then, in February 2015, Arkansas’s two Republican senators mounted an attack, initiating what came to be known around the Clean Line offices as “the week from hell.”
Sens. John Boozman and Tom Cotton introduced a bill designed to make it impossible for Skelly to build a single transmission line. The senators said that while decisions of eminent domain were sometimes unavoidable when building power lines, they should be in the hands of local officials, not Washington bureaucrats. Sen. Boozman said he was hearing from constituents opposed to the line and wanted to give state officials a veto over it. “We felt like it was important that they had a say in it,” he said.
Skelly was trying to connect different grids and share power in a way that created stability and enabled clean, inexpensive power to flow across state lines. But while he was envisioning an interstate, the senators wanted to allow every state to put up roadblocks. Their legislation would require the federal government to get approval from the governor or public-service commission of each affected state before it could use eminent domain to build a transmission line with a private company.
A few days later, the Arkansas senators’ proposed bill scared off a needed Clean Line investor. A couple of managers at New York private fund Global Infrastructure Partners called Skelly. “They said to put the pencils down. We are done. This isn’t going to work out,” Skelly said. “Investors hate regulatory risk. And we served up a plateful that week.”
Back in 1954, when President Eisenhower laid out his interstate plan in Detroit’s CadillacSquare, he took off his hat and waved it. “We are pushing ahead with a great road program,” he told the crowd, “a road program that will take this nation out of its antiquated shackles of secondary roads all over this country and give us the types of highways that we need.” Within a few years, cars and trucks zipped without stop from state to state.
For Michael Skelly, it wouldn’t quite turn out that way. He wasn’t the president; he just had a big, bold idea. It was the type of infrastructure project that the U.S. struggles with, even when privately financed. Along the way, he found that the obstacles to a cleaner, cheaper electricity future have more to do with politics than technological limits.
With three senators speaking out against it, the project had a whiff that repelled investors. Another setback came in Missouri, where regulators blocked needed approvals to proceed with a separate transmission line there. But then a major victory in Washington: The Energy Department decided to participate in the project after years of deliberation.
Skelly expected to come to terms with landowners for at least 95% of the parcels. Eminent domain would be required for the rest. If he had been building a natural-gas pipeline, he would have finished the process in a matter of months.
He still needed the TVA to buy a portion of his wind power. Clean Line offered a 20-year deal at record-low prices. Bill Johnson, then the TVA’s president, didn’t show the deal to his board and said TVA’s analysis showed that Clean Line didn’t save the utility any money over the proposed contract. He declined to make the analysis available.
In the end, tantalizingly close to being built, Skelly’s project stalled. In late 2017, Clean Line agreed to sell the Oklahoma portion of its project to Florida utility and power developer NextEra Energy. Other buyers snapped up other projects, which look likely to be built. The company Skelly had helped build would be stripped for parts like a car in a junkyard.
His vision of a supergrid of direct-current power lines zipping cheap energy around had faltered. Someone else would have to carry that project over the finish line.
In the months after the company folded, Skelly talked to various people about what he would do next. “I am feeling a little heartbroken,” he said.