project proposal for a new transmission line project under ... · for a new transmission line...

PROJECT PROPOSAL FOR A NEW TRANSMISSION LINE PROJECT

UNDER SECTION 1222 OF THE ENERGY POLICY ACT OF 2005

SEPTEMBER 2010

TABLE OF CONTENTS

KEY ABBREVIATIONS AND ACRONYMS ............................................................................................................... 7

INTRODUCTION ............................................................................................................................................................ 1

1. The Challenge ....................................................................................................................................... 1

2. The Solution .......................................................................................................................................... 2

SECTION I: STATUTORY CRITERIA ......................................................................................................................... 5

1. General Description of the Entity ................................................................................................... 5

2. Project Description ............................................................................................................................. 6

a. Overview ................................................................................................................................ 6

b. Eligibility Criteria ................................................................................................................... 7

3. Financing Statement .......................................................................................................................... 24

SECTION II: PROJECT CRITERIA .............................................................................................................................. 27

1. Public Interest ..................................................................................................................................... 27

a. Economic Benefits .............................................................................................................. 29

b. Environmental Benefits ...................................................................................................... 32

c. Need for Affordable Energy ............................................................................................. 33

d. Clean Energy Leadership ................................................................................................... 35

2. Resource Description ....................................................................................................................... 36

a. Size and Location of Resource ........................................................................................ 36

b. Schedule of Resource Development .............................................................................. 39

c. Location of Load and Market ........................................................................................... 40

d. Generation Reliability and Related Ancillary Services ............................................... 42

e. Involvement in Development of Generation ............................................................... 43

f. Purchase Commitments .................................................................................................... 43

3. Interconnection .................................................................................................................................. 44

4. Transmission Rights .......................................................................................................................... 46

5. Participant Roles ................................................................................................................................ 47

6. Prior Experience ................................................................................................................................ 49

7. Participation of Other Entities ........................................................................................................ 49

8. Financial Viability ................................................................................................................................ 50

9. Additional Information ..................................................................................................................... 52

a. Project Schedule ................................................................................................................. 52

10. Conclusion ........................................................................................................................................... 53

APPENDICES

1. Benefits of High Voltage Direct Current Technology

2. An Economic Impact Study of the Proposed Grain Belt Express Clean Line – Development

Strategies, Inc.

3. Analysis of the Benefits of the Proposed Grain Belt Express Clean Line – ICF International

4. The Grain Belt Express Clean Line: A Growth Opportunity for Missouri Manufacturers

5. Levelized Cost Model for a Kansas Wind Farm

6. SPP Criteria 3.5 and Appendix 11

7. Clean Line Energy Partners Biographies

8. Phase 1Corridor Identification and Analysis Report for the Grain Belt Express Clean Line

Project – Ecology and Environment, Inc.

Notice

The development of a major infrastructure project like the Grain Belt Express

Clean Line is a long-term undertaking. During the development process, the

Project will be modified and refined to reflect input from stakeholders and

progress in the areas of permitting, public outreach, engineering, commercial

relationships and others.

(The remainder of this page is intentionally left blank.)

KEY ABBREVIATIONS AND ACRONYMS

AC Alternating Current AWEA American Wind Energy Association AWS AWS Truepower CCA Conditional Constraint Area CCC Capacitive Commutated Converter CSCC Controlled Series Capacitor Converter CREZ Competitive Renewable Energy Zones DOE Department of Energy E&E Ecology and Environment, Inc. EHV Extra High Voltage ERCOT Electric Reliability Council of Texas EWITS Eastern Wind Integration and Transmission Study FERC Federal Energy Regulatory Commission HVDC High Voltage Direct Current ICF ICF International ISO Independent System Operator JCSP Joint Coordinated System Plan kW Kilowatt (one thousand or 103 watts) LMP Locational Marginal Price MAPP Mid-continent Area Power Pool MISO Midwest Independent Transmission System Operator, Inc. MW Megawatt (one million or 106 watts) MWh Megawatt-hours (one million or 106 watt-hours) NASPI North American SynchroPhasor Initiative NEPA National Environmental Policy Act NERC North American Electric Reliability Corporation NOPR Notice of Proposed Rulemaking NREL National Renewable Energy Laboratory PJM PJM Interconnection, LLC RES Renewable Electricity Standard RFP Request for Proposal RGOS Regional Generation Outlet Study RPS Renewable Portfolio Standard RTO Regional Transmission Organization SERC Southeast Reliability Corporation Siemens PTI Siemens Energy Inc., Power Technologies International SPP Southwest Power Pool, Inc. Southwestern Southwestern Power Administration Sunflower Sunflower Electric Power Corporation TO Transmission Owner TOP Transmission Operator TOV Temporary Over-Voltage TrAIL Trans-Allegheny Interstate Line Company TVA Tennessee Valley Authority Universal Universal Field Services Western Western Area Power Administration WECC Western Electricity Coordinating Council

SEPTEMBER 2010 GRAIN BELT EXPRESS CLEAN LINE PROPOSAL Page 2 of 53


INTRODUCTION

Clean Line Energy Partners LLC (“Clean Line”), on behalf of itself and the Grain Belt Express Clean Line LLC, respectfully submits this proposal to the US Department of Energy (“DOE”) and the Southwestern Power Administration (“Southwestern”) in response to the Request for Proposals for New or Upgraded Transmission Line Projects Under Section 1222 of the Energy Policy Act of 2005, 75 Fed. Reg. 32940 (June 10, 2010) (“RFP”). Clean Line wishes to work with DOE and Southwestern and provide them “contributed funds” for the purposes of developing, constructing, and operating a new, overhead, High Voltage Direct Current (“HVDC”) transmission line that will be capable of moving up to 3,500 megawatts (“MW”) of renewable energy from new generation projects in western Kansas to the service area of the Midwest Independent Transmission System Operator and to the eastern United States.

The Grain Belt Express Clean Line (“Grain Belt Express” or “the Project”) will facilitate the reliable delivery of power generated by renewable resources, and the development of this project will support national efforts to significantly increase renewable electric generation capacity. This project will meet the needs of generators and utilities for new transmission capacity and enable the construction of thousands of megawatts of new, cost-effective renewable electric generation capacity. The addition of this generation capacity will create new jobs, stimulate domestic manufacturing, and reduce pollution and water consumption.

Clean Line respectfully requests that during or after their review of this application, DOE and Southwestern initiate negotiations with Clean Line to enter into a development partnership for the Grain Belt Express Clean Line. Clean Line stands ready to enter into those negotiations and to make available the necessary contributed funds to DOE and Southwestern.

1. The Challenge

The most vexing challenge blocking continued growth in the renewable energy industry is the expansion of the US electric transmission grid. The existing transmission system was built primarily as a result of local utility planning—connecting population centers with nearby fossil fuel power plants. In the last decade, the nation has begun to move away from fossil fuels and toward a clean energy economy.

While the United States has the best renewable resources in the industrialized world, the transmission infrastructure does not exist to connect the bulk of these resources, predominantly located in remote areas, to distant load centers. DOE noted in its 2009 Congestion Study that “Renewable projects in particular have been subject to the ‘chicken and egg’ timing problem—new transmission will not be built unless there is specific generation to deliver from and specific customers to deliver to, but remote renewables cannot be developed unless the transmission is there to serve them.”1

The shortage of transmission has begun to limit renewable energy growth. Wind installations in the first half of 2010 totaled 1,239 MW, down 71% from the first half of 2009 and 57% from the first half of 2008.2

1 US Department of Energy, National Electric Transmission Congestion Study, December 2009, 25.

The dramatic drop is due in part to the economic downturn and unclear federal policy, but the lack of new transmission infrastructure is also a major cause. New high voltage, long-haul transmission

2 American Wind Energy Association, AWEA Mid-Year 2010 Market Report, July 2010, 2. http://www.awea.org/publications/reports/2Q10.pdf.


lines must be built to capture the full potential of America’s vast renewable resources, improve reliability, connect our energy markets more efficiently, and advance the development of a clean energy economy.

2. The Solution

An effective transmission solution requires the appropriate technology, a flexible business model, a methodical approach to development, and most importantly, the right project. The best wind resources in the United States are found in the central Plains region, and Kansas lies at the heart of that region. The Grain Belt Express Clean Line will connect the wind resources of western Kansas (“Resource Area”) to southeastern Missouri and deliver up to 3,500 MW of low-cost renewable power to new markets in the Eastern Interconnection. Fewer power losses and more efficient use of rights of way make HVDC the most economical and environmentally friendly technology to move large amounts of power over long distances. HVDC lines can transmit several thousand MW of power using a 150- to 200-foot right of way, while traditional alternating current (“AC”) lines require a 600-foot right of way to transmit the same amount of power.3

By utilizing HVDC technology, Clean Line will minimize the impact to environmentally sensitive areas in Kansas and Missouri, such as the Flint Hills and the Ozarks, respectively.

By selling transmission capacity to renewable generators or the buyers of their power, the Project can avoid difficult cost-allocation proceedings. Clean Line’s independence from existing or planned generation and from load-serving utilities permits a single-minded focus on meeting the needs of the Project’s many stakeholders through a transparent development effort. Clean Line has made substantial progress in the development of the Grain Belt Express Clean Line. The Project will involve two Regional Transmission Organizations (“RTO”), and Clean Line has begun working with each. The Project’s Resource Area lies within the RTO footprint of the Southwest Power Pool (“SPP”). Clean Line has presented the Project to the SPP Transmission Working Group for planning purposes and to determine its reliability impacts. Clean Line has engaged Sargent & Lundy to conduct a feasibility analysis on the eastern end of the Project. The results indicate that with some local upgrades, the St. Francois substation in St. Francois County, Missouri, will be a viable delivery point for 3,500 MW of wind power. The St. Francois substation is within the Midwest Independent Transmission System Operator, Inc. (“MISO”) footprint. Clean Line has filed an interconnection request with MISO and has received the results of the feasibility study. The System Planning and Analysis Study, the next step in the interconnection process, is pending.

As part of its efforts to employ best practices in siting the Project, Clean Line has engaged in dialogue with and has solicited input from relevant state government officials and agencies, as well as organizations and individuals concerned about how new infrastructure may affect land use. Clean Line has hired Ecology and Environment, Inc. to conduct a corridor study to identify constraints and opportunities for route planning. In order to address proactively concerns related to environmentally sensitive areas, Clean Line has reached out to the Kansas Field Office of The Nature Conservancy, the Missouri Department of Conservation, and the Sierra Club and will continue in these efforts with other environmental and natural resource groups.

3 See Appendix 1: “Benefits of High Voltage Direct Current Technology.”


Clean Line estimates that the Project will make possible over 4,000 MW of new wind development, resulting in approximately $6-8 billion of energy projects that otherwise cannot be built due to the limitations of the existing grid.4 An independent consulting firm, Development Strategies, Inc., estimated that the transmission line and wind energy projects will provide over 93,000 temporary jobs and 1,100 permanent jobs.5

According to a study conducted by ICF International (“ICF”), the Project will reduce carbon emissions by more than 12.6 million tons annually,

To ensure that qualified local suppliers and contractors can participate in the construction and operation of the Project, Clean Line intends to work closely with the economic development offices and state Chambers of Commerce in both Kansas and Missouri. With the help of these offices, Clean Line will maximize the involvement of local businesses in the Project area.

6

equivalent to removing 1.7 million cars from the road each year. The Project will increase competition in wholesale power markets and improve the diversity and security of America’s energy supply.

Figure 1 Grain Belt Express Clean Line Project Area Map

Source: Clean Line Energy

4 Because wind farms typically do not generate 100% of their nameplate capacity, the Project will likely connect wind farms that collectively have a combined generating capacity greater than the Project’s transmission capacity. While the Project is capable of transmitting 3,500 MW, Clean Line estimates that, depending on advances in technology, the Project may draw on 4,000 MW or more of new renewable power projects. 5 Jobs include direct and indirect employment effects. See Appendix 2: Development Strategies, Inc., “An Economic Impact Study of the Proposed Grain Belt Express Clean Line,” September, 2010. 6 See Appendix 3: ICF International “Analysis of the Benefits of the Proposed Grain Belt Express Clean Line,” September 2010.


Clean Line proposes that DOE and Southwestern use their authority under Section 1222 of the Energy Policy Act of 2005 to participate in the development, construction, and operation of the Grain Belt Express Clean Line. By doing so, DOE and Southwestern will help meet future electric transmission needs, will enable the development of new renewable generation capacity, and will provide customers greater access to low-cost renewable energy. Clean Line recently submitted a similar project proposal to DOE under Section 1222 for another HVDC transmission line, the Plains & Eastern Clean Line, which will be capable of transmitting up to 7,000 MW of renewable energy from Texas, Oklahoma and Kansas to the service area of the Tennessee Valley Authority (“TVA”) and to the southeastern United States.

Both the Grain Belt Express Clean Line and the Plains & Eastern Clean Line will facilitate the reliable delivery of renewable energy, thereby supporting national efforts to increase renewable electric generation capacity. Both of these projects will meet the need for new transmission capacity and enable the construction of thousands of megawatts of new, cost-effective renewable energy projects. The addition of this generation capacity will create new jobs, stimulate domestic manufacturing, and reduce pollution and water consumption. In these and other respects, the Grain Belt Express Clean Line and the Plains & Eastern Clean Line are similar; however, the two projects will have different resource areas, will serve different markets, and will create benefits in different regions, as explained in greater detail in this application.


SECTION I: STATUTORY CRITERIA

The RFP states that, in order for the Secretary to exercise his authority under Section 1222, a proposed project must meet certain statutory restrictions, as well as criteria outlined by DOE. Section I of this proposal addresses the statutory restrictions, and Section II addresses the additional project criteria.

1. General Description of the Entity

The name and a general description of the entity submitting the Project Proposal;

This proposal is submitted on behalf of Clean Line Energy Partners LLC, a Delaware limited liability company, and its subsidiary Grain Belt Express Clean Line LLC, a Delaware limited liability company. Clean Line Energy Partners LLC is the sole member and 100% owner of Grain Belt Express Holding LLC, which in turn is the sole member and 100% owner of Grain Belt Express Clean Line LLC, which is developing and owns all of the assets comprising the Grain Belt Express Clean Line.

Figure 2 Clean Line Organizational Structure


Clean Line is an independent developer of high voltage, long-haul transmission lines. The company focuses exclusively on connecting the best renewable resources in North America with large load centers. In addition to the Grain Belt Express, Clean Line is developing three other projects in the United States that will facilitate the movement of thousands of megawatts of renewable power from resource-rich areas to major load centers via HVDC transmission lines. In July of 2010, Clean Line submitted a similar project proposal in response to the RFP for the Plains & Eastern Clean Line.

ZAM Ventures, LP Management

Clean Line Energy Partners LLCA Delaware LLC

Grain Belt Express Holding LLCA Delaware LLC

Grain Belt Express Clean Line LLCA Delaware LLC

Michael Zilkha


Figure 3 Clean Line Energy Partners: Projects Map


2. Project Description

a. Overview

An overview of the proposed Project, including the Project location, proposed routing, and minimum transfer capability;

Clean Line is developing and is planning to build and operate the Grain Belt Express Clean Line transmission project. The Project will consist of one ±500 or ±600 kV HVDC transmission line capable of transmitting up to 3,500 MW of power from renewable projects in western Kansas to load centers in the Eastern Interconnection. The Project will have two DC converters, one near Spearville, Kansas and the other in St. Francois County, Missouri.7

7 Clean Line will continue to study alternate locations for the eastern converter in order to optimize the delivery of energy from the Project.

A more exact route will be determined in the National Environmental Policy Act (“NEPA”) process if a partnership with DOE is established under Section 1222.


b. Eligibility Criteria

(For Proposals for Projects for non-DOE entities to participate with Southwestern or Western in designing, developing, constructing, operating, maintaining, or owning a new electric power transmission facility and related facilities located within any State in which Southwestern or Western operates): A statement, supported by the best available data, demonstrating how the proposed Project meets all of the following five eligibility criteria: The Grain Belt Express Clean Line meets the five criteria set by DOE in order to partner with Southwestern pursuant to Section 1222 of the Energy Policy Act of 2005. Each of these criteria is addressed below. I. The proposed Project must be either: (A) Located in an area designated under section 216(a) of the Federal

Power Act (16 U.S.C. 824p(a)) and will reduce congestion of electric transmission interstate commerce; or (B) Necessary to accommodate an actual or projected increase in demand for electric transmission capacity.

Grain Belt Express is necessary to accommodate the actual and projected increase in demand for electric transmission capacity While the Grain Belt Express Clean Line is not located in a designated National Interest Electric Transmission Corridor, the Project is necessary to accommodate actual and projected increases in demand for electric transmission capacity. DOE has identified the Project’s Resource Area as a Conditional Constraint Area (“CCA”) in its National Electric Transmission Congestion Study (both 2006 and 2009). As indicated in Figure 4, the resource area is a Type I CCA: a region where the development of additional wind generation—using existing technology with known cost and performance characteristics—is limited primarily by the availability of transmission capacity.

Figure 4 Type I and Type II Conditional Constraint Areas

Sources: US Department of Energy, National Electric Transmission Congestion Study, December 2009, 23, Clean Line Energy


According to DOE, “[p]arts of this [conditional constraint] area have large numbers of generation proposals sitting in transmission access queues, where they have been delayed for years because the existing transmission network is not sufficient to deliver additional electricity from these points to load centers.”8

The Department of Energy has recognized the need for additional transmission capacity in the following reports:

• 2002 National Transmission Grid Study9

• 2003 Power System Outage Final Report 10

• 2006 National Electric Transmission Congestion Study

11

• 2008 20% Wind by 2030

12

• 2009 Electricity Advisory Committee report “Keeping the Lights on in a New World”

13

• 2009 National Electric Transmission Congestion Study

14

The DOE Electricity Advisory Board concluded that increasing transmission capability will help ensure a reliable electric supply and provide greater access to economically-priced power. It stated, “The possibility of a national renewable portfolio standard will require significant new transmission to bring these resources, which are often remotely located, to consumer load centers.”15

The North American Electric Reliability Corporation (“NERC”) concluded, “Significant transmission expansion will be needed to comply with renewable mandates, even in the absence of a national renewable portfolio standard.”16 NERC found that if a national renewable portfolio standard (“RPS”) of 15% were adopted, an additional 40,000 miles of transmission lines would be needed and “[t]ransmission would be a key component to accommodating new resources, linking geographically remote generation to demand centers.”17

According to a joint white paper by the Solar Energy Industries Association and the American Wind Energy Association (“AWEA”), “The massive deployment of renewable generation envisioned by President Obama cannot occur without a renewed investment in our country’s transmission infrastructure.”18

In addition to satisfying the demand for more renewable-focused transmission, the Grain Belt Express will address the expected increase in transmission capacity needed to develop wind resources in SPP, will relieve transmission congestion in western SPP, will export additional wind capacity from SPP, and will help meet demand for renewables in the Eastern Interconnection, as discussed in greater detail below.

8 US Department of Energy, National Electric Transmission Congestion Study, December 2009, 22-23. 9 U.S. Department of Energy, National Transmission Grid Study, May 2002. 10 U.S. - Canada Power System Outage Task Force, Final Report on the August 14th Blackout in the United States and Canada: Causes and Recommendations, April 2004. 11 U.S. Department of Energy, National Electric Transmission Congestion Study, August 2006. 12 U.S Department of Energy for Renewable Energy and Energy Efficiency, 20% Wind by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity Supply, July 2008. 13 Electricity Advisory Committee, Keeping the Lights On in a New World, January 2009. 14 U.S. Department of Energy, National Electric Transmission Congestion Study, December 2009. 15 Electricity Advisory Committee, Keeping the Lights On in a New World, January 2009, 45. 16 North American Electric Reliability Corporation, Long-Term Reliability Assessment: 2009-2018, October 2009, 29. 17 North American Electric Reliability Corporation, Scenario Reliability Assessment: 2009-2018, October 2009, 9. 18 American Wind Energy Association and the Solar Energy Industries Association, Green Power Superhighways, February 2009, 3.


Additional Transmission is Needed to Develop Wind Resources in SPP

The Southwest Power Pool has some of the best wind resources in the country. With average wind speeds of 8.5-9.0 m/s in much of the region,19 wind projects in the area have very high capacity factors.20 The National Renewable Energy Laboratory (“NREL”) estimated that Kansas has the potential to produce in excess of 700,000 MW of high capacity factor wind energy.21 The potential wind energy generation in Kansas alone far exceeds SPP’s average load of 26,000 MW.22 As shown in Table 1 and Figure 5, the SPP Generation Interconnection Queue has over 25,000 MW of wind projects currently under study, of which 9,208 MW are located in Kansas.23

Table 1 SPP Interconnection Queue as of 8/27/2010

Source: SPP

19 US Department of Energy, National Renewable Energy Laboratory. 20 The National Renewable Energy Laboratory defines capacity factor as the amount of power produced per year divided by the amount of power that would be produced if the wind turbines operated at full capacity throughout the year. 21 US Department of Energy, National Renewable Energy Laboratory and AWS Truepower, Estimates of Windy Land Area and Wind, February 2010. 22 Southwest Power Pool, Introduction to SPP, May 13, 2010. http://www.spp.org/publications/Intro_to_SPP_Presentation.pdf. 23 Southwest Power Pool. Generation Interconnection. August 12, 2010. The Kansas wind projects in the queue only represent a portion of the potential for wind energy in the state.

Type MWWind 25,755

Coal 2,885

Gas 1,197

Nuclear 109

Solar 60

Hydro 20


Figure 5 Wind Generation Interconnection Requests in SPP, as of 4/27/2010

Source: SPP, Intro to SPP Presentation, 59

Without additional transmission capacity, only a small fraction of these queued projects will be constructed. Recognizing this, SPP has embarked on an ambitious transmission expansion plan, which includes two groups of approved projects with different rationales. The Balanced Portfolio is a set of SPP-approved projects that will increase reliability, reduce congestion, and lower end-use consumer costs. This portfolio includes five new 345 kV transmission lines, a 345 kV transformer, and a new connection between two existing 345 kV lines. The Priority Projects are a set of upgrades that will help relieve grid congestion, improve SPP members’ ability to deliver power to customers, improve transfers between SPP’s east and west regions, and facilitate the addition of new wind generation to the grid. The Priority Projects include three double-circuit 345 kV lines, two single-circuit 345 kV lines, and new equipment in Tulsa County, Oklahoma. The Balanced Portfolio and Priority Projects are illustrated in Figure 6.


Figure 6 SPP Projects with Notification to Construct in SPP, July 2010

Source: SPP, Intro to SPP Presentation, 45

As shown above, all of the approved projects are located within the SPP footprint and are focused on serving SPP customers and not on exporting energy to neighboring regions. These projects will enable some of the queued generation to be developed; however, recognizing the export limitations of their current transmission network, SPP stated, “There is huge wind potential in the SPP footprint; significantly more than SPP can absorb.”24

Additional export capability will allow the efficient development of the region’s wind generation potential. While the Priority Projects help strengthen the SPP grid, facilitating greater wind penetration within the region, the Grain Belt Express helps strengthen the national grid, facilitating the development of a clean energy economy. By providing access to MISO and the broader Eastern Interconnection, the Grain Belt Express will enable the development of over 4,000 MW of additional wind generation.

24 Southwest Power Pool, Introduction to SPP Presentation, 55. http://www.spp.org/publications/Intro_to_SPP_Presentation.pdf.


Additional Transmission is Needed to Relieve Congestion in Western SPP

As noted in the SPP Transmission Expansion Plan, congestion in western SPP is mounting: “Wind represents about 5% of generation in the SPP region, and wind generation is continually developing. As wind farms in the panhandle of Texas, Oklahoma, and Western Kansas continue to develop, the congestion in that region should increase.”25 To relieve this congestion and accommodate power flows from west to east within SPP, new transmission development is required. In the recent wind integration study commissioned by SPP, Charles River Associates found that as more wind is installed, “Power flows from western SPP to eastern SPP increase significantly…To accommodate the increased west-to-east flows while meeting the reliability standards of the SPP Criteria, a number of transmission expansions were required.”26

The Grain Belt Express will collect wind resources largely from a region served by Sunflower Electric Power Corporation (“Sunflower”) in southwestern Kansas. At the end of 2009, the amount of generation requesting to connect to Sunflower’s system was nearly 8,000 MW, while Sunflower’s peak load was only 982 MW.

27

Due to its high level of wind penetration and limited transfer capability, when wind production is high, the constrained links between Sunflower and the broader grid are likely to become congested. As a result, zero marginal cost wind power may not be able to reach load or displace the most expensive fossil fuel generation. Existing congestion due to a lack of transmission is evidenced by low or negative locational marginal prices (“LMP”) in some hours. Low prices are an indication that there is not enough transmission capacity to link Sunflower’s system with the broader grid, where power demand and prices are higher. Sunflower power prices were lower than $20/MWh over 39% of 2009.

Transmission is needed to give queued generation projects access to markets outside of Sunflower’s service territory.

Table 2

SECI-LA Average Hourly Price

Source: SPP

Without new transmission, as more wind power is added, congestion in Sunflower is likely to increase. The desire to relieve potentially costly congestion and to allow wind power to achieve the maximum cost savings for consumers will create a demand for capacity on the Grain Belt Express.

25 Southwest Power Pool, 2009 SPP Transmission Expansion Plan, 2009, 58. 26 Charles River Associates, SPP WITF Wind Integration Study, January 2010, 1-2. 27 Southwest Power Pool, Inc., 2009 State of the Market Report, May 2010, 20, 26.

Price Range

($/MWh) Hours % of Time

<0 199 2.3%

0 to 10 271 3.1%

10 to 20 2971 33.9%

20 to 30 2960 33.8%

Above 30 2355 26.9%

2009 Hourly Locational Imbalance Price


Additional Export Capability is Needed from SPP

Since SPP can use only a fraction of the renewable energy potential in its region, the increasing demand for renewable energy will create a need for additional export capability. As part of the Eastern Interconnect, SPP is asynchronous from Western Electricity Coordinating Council (“WECC”) and the Electric Reliability Council of Texas (“ERCOT”), and the ability to export to these neighboring regions is constrained by limited DC ties. ERCOT already has more wind generation than can be delivered to its load centers. Export capability into WECC is restricted by the low electricity demand in eastern New Mexico and Colorado and by limited transfer capabilities to locations farther west in the WECC footprint. Furthermore, New Mexico and Colorado have excellent wind resources within their borders and thus are not likely to be importers of wind energy from Kansas. Consequently, exports to the East are the most promising route to realizing SPP’s wind potential. In its EHV Overlay Study,28 SPP specifically identified a future demand for additional export capacity to the broader Eastern Interconnection as increases in renewable energy penetration occur.29 In an April 2009 white paper, SPP stated, “We believe that SPP could absorb only 20%-30% of the wind potential in our region.”30

Additional Transmission is Needed to Meet Demand for Renewables in the Eastern Interconnection

As a result, a tremendous natural resource will remain under-utilized without delivery to areas outside the SPP footprint. The Grain Belt Express is ideally positioned to export wind energy from SPP to the East.

Even in the absence of a federal Renewable Electricity Standard or carbon legislation, state Renewable Portfolio Standards (“RPS”) create a demand for renewable energy that cannot be met without extensive transmission improvements. The Grain Belt Express can provide renewable energy to meet RPS goals and mandates in MISO, where the St. Francois substation is located, and also in neighboring RTOs. Of the RTOs neighboring MISO, PJM is most likely to import a large amount of renewable energy because of its many RPS and strong electrical ties to MISO. Eleven of the thirteen states in MISO have an RPS goal or mandate. In PJM, ten of the thirteen states and Washington, DC have RPS requirements as well. Many of the state RPS goals and mandates call for utilities to procure 15% to 20% of their energy from renewable resources. In the present environment, wind is the least cost option to meet these goals. Reaching these levels of wind penetration is not possible without a broad transmission buildout to connect the best resources to load centers. As shown in Figure 7, the best wind resources in the country are found in the central Plains region of the United States, far from many of the states in the MISO and PJM regions with RPS requirements.

28 EHV is an acronym for extra high voltage. 29 Southwest Power Pool, Final Report on the SPP EHV Overlay Project, June 27, 2007, 7. http://www.spp.org/publications/spp_ehv_study_final_report.pdf. 30 Southwest Power Pool, An SPP Perspective, Renewable Energy Conference White Paper, April 14, 2009, 4. http://www.spp.org/publications/Renewable_Energy_Conference_white_paper%20_04%2014%2009.pdf.


Figure 7 USA Wind Speeds at 80 M Hub Height

Sources: US Department of Energy, National Renewable Energy Laboratory Today, the transmission infrastructure between the best wind resources in the country and regions with the highest population densities and electricity demand is quite weak. As shown in Figure 8, high voltage transmission in the central Plains region is limited to a relatively sparse network of 345 kV lines, whereas the density of extra high voltage lines (345 kV or above) is much greater east of the Mississippi River.

Figure 8 US Transmission Grid

Source: National Public Radio, “Generating Changes in the Electrical Power Grid,” July 8, 2010


New transmission links between the central Plains region and the broader Eastern Interconnection have a critical role to play in reaching higher levels of wind penetration. Two recent transmission studies, the Joint Coordinated System Plan 2008 (“JCSP”) and the Eastern Wind Integration and Transmission Study (“EWITS”), point out the necessity of new, major links from the best wind resources to locations farther east with higher electricity demand. These studies and their findings are discussed in greater detail below.

II. The proposed Project must be consistent with both (i) Transmission needs identified, in a transmission

expansion plan or otherwise, by the appropriate Transmission Organization (as defined in the Federal Power Act, 16 U.S.C. 791a et seq.) if any, or approved regional reliability organization; and (ii) Efficient and reliable operation of the transmission grid.

Grain Belt Express is Consistent with Transmission Needs Identified in Collaborative Studies by Multiple Transmission Organizations In its recent Notice of Proposed Rulemaking (“NOPR”), the Federal Energy Regulatory Commission (“FERC”) called attention to the lack of national and interregional transmission planning. Historically, Transmission Organizations have focused on regional upgrades to address regional issues; accordingly, MISO and SPP have not included new interregional lines, such as the Grain Belt Express, in their transmission expansion plans. FERC’s NOPR would require RTOs to create a process for transmission planning with neighboring systems.31

In advance of a more formal joint transmission plan, SPP and MISO have collaborated on two studies that define transmission needs to increase the penetration of wind energy: the JCSP and the EWITS.

JCSP, the first collaborative interregional transmission planning effort in the Eastern Interconnection, involved several RTOs and Independent System Operators (“ISO”), including: MISO, SPP, PJM, TVA, Mid-Continent Area Power Pool (“MAPP”) and several key members of the Southeast Reliability Corporation (“SERC”). Looking to enable further renewable penetration and to address future congestion across the Eastern Interconnection, JCSP examined two potential 2024 scenarios: (1) the Reference Scenario—the Eastern Interconnection meets 5% of its energy needs from wind generation and (2) the 20% Wind Scenario—the Eastern Interconnection meets 20% of its energy needs from wind generation. The report assumed that the vast majority of the wind generation would be sited in areas with the best resources, located in the western part of the Eastern Interconnection.

In both scenarios, JCSP identifies HVDC as an appropriate technology to bridge the seam between the rich wind resources in the central Plains and more densely populated areas in the Eastern Interconnection. HVDC can link distant parts of the electric grid more reliably and more efficiently than comparable AC systems. HVDC transmission reduces line losses, requires narrower rights of way, and is more cost effective per mile than AC transmission. For these and other reasons, the Grain Belt Express will employ HVDC technology.

As shown in Table 3, the JCSP conceptual transmission overlay includes almost 3,000 miles of HVDC transmission lines in the Reference Scenario and over 7,000 miles in the 20% Wind Energy Scenario.

31 Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities; Proposed Rule, 75 Fed. Reg. 37884 (2010).


The lines originate in the Plains or midwestern states with strong renewable resources and terminate in eastern states with higher demand but more limited renewable resources (as shown in Figure 9).

Table 3 Comparison of Reference and 20% Wind Energy Scenarios

Source: Joint Coordinated System Plan 2008

Figure 9 JCSP Conceptual Transmission Overlay - 20% Wind Energy Scenario

Source: Joint Coordinated System Plan 2008 By connecting rich renewable resources to areas of higher population density (as shown in Figure 10) and greater load, the Grain Belt Express is consistent with transmission needs identified by multiple regional transmission organizations in the JCSP.

Miles Percentage Miles PercentageEHV AC (>=345kV) 7,109 71% 6,998 48%

HV AC (<345kV) - - - -

HVDC 2,870 29% 7,582 52%

Total 9,979 100% 14,580 100%

Reference Scenario Wind Scenario

Transmission Overlay (Miles)


Figure 10 Increasing Population Density from West to East in Project Area

Source: US. Census of Population and Housing, 2000, Northern Illinois University Compared to the HVDC transmission lines in the JSCP study, both endpoints of the Grain Belt Express are located farther west. The JCSP HVDC lines rely on the construction of a new 765 kV AC network in SPP to collect the wind power at the origination point of the HVDC line. Because there are no approved plans for such a network in SPP, the Grain Belt Express has its western end point directly in the best Kansas wind resources. Some of the HVDC lines in the JCSP extend farther east than does the Grain Belt Express; by only crossing two states, the Grain Belt Express will be easier to permit and have a greater chance of success. Once the power reaches the St. Louis area, it can be delivered farther east through the existing high voltage AC network. As shown in Figure 11, the transmission infrastructure between the Resource Area and the St. Francois substation on the existing AC system is weak—with only two 345 kV lines connecting eastern Missouri with western Missouri. The St. Francois substation is in a region with relatively well-connected high voltage AC lines; three 345 kV lines extend eastward from the substation, and several 500 kV lines are in close proximity. Furthermore, major upgrades to the AC system in the delivery area have been approved by MISO,32

enabling the low-cost renewable energy delivered by the Grain Belt Express to reach a larger body of customers in the MISO and PJM regions. Locating the eastern converter station in Missouri will limit the Project Area to only two states and will result in fewer regulatory hurdles and a more practical, achievable project.

32 Projects in Appendix A of the MTEP process have been approved by MISO see, Midwest ISO Expansion Plan. http://www.midwestiso.org/publish/Folder/193f68_1118e81057f_-7f8f0a48324a?rev=1.

Spearville St. Francois

http://www.midwestiso.org/publish/Folder/193f68_1118e81057f_-7f8f0a48324a?rev=1�


Figure 11

Existing Transmission Lines in Project Area

Source: Platts

In EWITS, subsequent to the JCSP report, NREL performed additional work to identify the specific operational requirements and transmission upgrades needed to meet 20% of the Eastern Interconnection’s electricity demand with wind energy. Along with the consulting firms EnerNex and Ventyx, MISO was a principal investigator in EWITS. SPP was one of several RTOs and ISOs that participated in EWITS and provided data and comments. The study confirms that HVDC transmission lines are needed to deliver energy from wind-rich states to load centers in the East. Without large transmission upgrades, curtailment will increase to uneconomic levels, and wind development may not grow to the desired level.33

EWITS highlights the necessity of new transmission to enable greater renewable energy penetration:

33 US Department of Energy, National Renewable Energy Laboratory, Eastern Wind Integration and Transmission Study, January 2010, 27. http://www.nrel.gov/wind/systemsintegration/pdfs/2010/ewits_final_report.pdf.


• New transmission will be required for all future wind scenarios in the Eastern Interconnection, including the Reference Scenario. Planning for this transmission, then, is imperative because it takes longer to build new transmission capacity than it does to build new wind plants.

• Without transmission enhancements, substantial curtailment of wind generation would be required for all of the 20% scenarios.

• Transmission helps reduce the impacts of the variability of the wind, which reduces wind integration costs, increases reliability of the electrical grid, and helps make more efficient use of the available generation resources.34

In the absence of sufficient transmission capacity to export additional energy, the development of large amounts of wind generation will result in congestion and substantial LMP differentials. Figure 12 shows the comparison of annual generation-weighted LMPs for Scenario 1 of EWITS, in which the majority of the 20% wind energy is generated by wind farms in the Great Plains. Blue colors represent low or negative prices, while red represents the highest price.

Figure 12

20% Wind Scenario 1 Annual Generation-Weighted LMP Comparison

Source: Eastern Wind Integration and Transmission Study The map on the left represents the hub LMPs for the transmission constrained base case, and the one on the right represents the hub LMPs for the transmission overlay case. According to EWITS:

The LMP change demonstrates the ability of the conceptual transmission overlay to create a more competitive market in the Midwest ISO, thereby reducing costs to the East Coast. With the conceptual transmission overlay, more low-cost energy in the western regions is available to energy markets and is economically transferred to the high-priced East Coast regions. As the result of the economic energy transfer, LMPs increase in the western regions with the increased base-load generation output, but

34 US Department of Energy, National Renewable Energy Laboratory, Eastern Wind Integration and Transmission Study: Executive Summary and Project Overview, January 2010, 13.


decrease in the eastern regions because the output of the high-priced generation is displaced by the imported low-cost energy.35

The maps in Figure 12 demonstrate the need for the Grain Belt Express. Low LMP areas (in blue) represent areas with too much wind generation and too little load. Higher LMP areas, in contrast, tend to have fewer wind resources and higher load. Transmission lines are needed to connect the low LMP areas to areas with higher LMP, relieving curtailment and congestion, allowing prices to equalize across the Eastern Interconnection. Grain Belt Express is Consistent with Transmission Needs Identified by SPP and MISO As discussed above, the Grain Belt Express Clean Line is not yet specifically identified in Transmission Expansion Plans published individually by SPP or MISO; however, it is consistent with transmission needs identified in the transmission expansion plans and otherwise. SPP has identified repeatedly the need to build additional transmission to fully develop the region’s wind energy potential, to export it to neighboring regions, and to relieve congestion in SPP. In its 2008 Strategic Plan, SPP declared that “New high voltage transmission expansion will be needed to bring wind energy to consumers.”36 The SPP Wind Integration Study concluded, “Major transmission reinforcements are needed to accommodate increased wind penetration levels.”37 SPP’s EHV Overlay Study projected that SPP’s transmission system will have to be expanded to accommodate the “extensive demand for renewable energy in the US electric system.”38 The study found a need for additional export capabilities from SPP to its neighboring RTOs and made export capabilities one of the primary metrics by which transmission expansion scenarios were scored. SPP also stated, in its 2009 Transmission Expansion Plan, that congestion was likely to increase in western SPP with new wind capacity installations.39

The Grain Belt Express will improve the ability to build new wind projects in SPP and improve its export capabilities. It will also relieve congestion in western SPP resulting from the installation of new wind projects.

The integration of renewable resources is one of MISO’s key objectives. According to DOE, “the Midwest ISO is working with the other eastern system planning organizations to study alternative renewable energy development scenarios and associated transmission plans.”40 Recognizing that climate change and national security issues have been gaining momentum on both state and federal levels, MISO has initiated the Regional Generation Outlet Study (“RGOS”) focused on developing the necessary transmission portfolios to implement RPS mandates or goals at the least cost for consumers while continuing to reliably serve load. The RGOS seeks to connect renewable resource areas, which are far from areas of large energy use, to load centers in order to meet state energy policies.41

The Grain Belt Express meets MISO’s identified need of accessing the best renewable resources to increase renewable penetration at the lowest possible cost.

35 US Department of Energy, National Renewable Energy Laboratory, Eastern Wind Integration and Transmission Study, January 2010, 27. http://www.nrel.gov/wind/systemsintegration/pdfs/2010/ewits_final_report.pdf. 36 Southwest Power Pool, 2008 SPP Strategic Plan, December 12, 2008, 5. http://www.spp.org/publications/2008_SPP_Strategic_Plan.pdf. 37 Charles River Associates, SPP WITF Wind Integration Study, January 2010, 1-3. 38 Southwest Power Pool, Final Report on the SPP EHV Overlay Project, June 27, 2007, 7. 39 Southwest Power Pool, 2009 SPP Transmission Expansion Plan, 58. 40 US Department of Energy, National Renewable Energy Laboratory, National Electric Transmission Congestion Study, January 2010, 59. 41 Midwest ISO, Regional Generation Outlet Study: Phase 1 Executive Summary Report, December 2009, 5.

http://www.nrel.gov/wind/systemsintegration/pdfs/2010/ewits_final_report.pdf�


Grain Belt Express is Consistent with Reliable and Efficient Operation of the Grid HVDC provides a number of reliability benefits, including the ability to control the flow of power. HVDC can link distant parts of the electric grid more reliably than an equivalent AC solution. Unlike AC lines, HVDC lines will not become overloaded by unrelated outages because the amount of power delivered is strictly limited by the DC converter. This reduces the likelihood that line outages will propagate from one region to another. Benefits of HVDC technology are described in greater detail in Appendix 1. Clean Line will coordinate the control of its HVDC lines with transmission system operators, SPP and MISO, to ensure that reliability is maintained at both the western and eastern terminals of the Project. Clean Line’s commitment to reliability is further discussed in items III and IV below. Clean Line has engaged Siemens Energy Inc., Power Technologies International (“Siemens PTI”) to perform a suite of studies for the Plains & Eastern Clean Line. Siemens PTI is performing load flow (steady state) analysis, short circuit analysis, and dynamic stability analysis to ensure that the design of the Plains & Eastern Clean Line maintains system reliability. These studies will encompass both terminals of the HVDC transmission line and will give detailed insight into possible system concerns, and, if needed, appropriate mitigation measures. Clean Line plans to engage a firm to perform a similar suite of studies to ensure that the design of the Grain Belt Express maintains system reliability in SPP and MISO. Siemens PTI, or another firm that Clean Line engages to conduct these studies, will consider the system impacts of the Plains & Eastern Clean Line and the Grain Belt Express Clean Line both individually and together. III. The proposed Project will be operated in conformance with prudent utility practice; The Project will conform to mandatory reliability standards and prudent utility practices, which emphasize ongoing safety and maintenance requirements concerned with the operation of transmission lines. Clean Line engages only experienced engineering, operations and construction firms to design, construct and maintain the Project. Clean Line will develop and implement policies in accordance with national, regional and local standards in such a way as to integrate the Project seamlessly with interconnected utilities.

Clean Line will work closely with the interconnected utilities and regional entities to develop appropriate operational and seams agreements based upon the following FERC-approved NERC standards: Transmission Owner (“TO”); Transmission Operator (“TOP”); Communications; Critical Infrastructure Protection; Emergency Preparedness and Operations; Facilities Design, Connections, and Maintenance; Interconnection Reliability Operations and Coordination; Modeling, Data and Analysis; Personnel Performance, Training and Qualifications; Protection and Control; Transmission Planning; and Voltage and Reactive.

IV. The proposed Project will be operated by, or in conformance with the rules of, the appropriate Transmission Organization, if any; or if such an organization does not exist, regional reliability organization;

At the appropriate time, Clean Line will register as a TO and TOP in accordance with mandatory reliability rules approved by FERC. As a TO/TOP, Clean Line intends to meet all applicable NERC, MISO and SPP reliability standards. Clean Line is actively participating in several SPP working groups to collaborate with SPP members on the Project’s interconnection and on broad transmission issues. Clean Line will collaborate with MISO in a similar manner.


Clean Line is presently working with a third party supplier of control and dispatch services to identify and design implementation processes for all applicable rules, standards and criteria. Clean Line anticipates achieving operational readiness approximately six months prior to energizing the transmission line.

Clean Line will install synchrophasors at the AC substations at each end of the transmission line to provide real-time data for system operators at locations necessary to promote increased reliability and situational awareness. The inclusion of synchrophasors will ensure that Clean Line participates in the North American SynchroPhasor Initiative (“NASPI”) and will support efforts to understand the impact of integrating large amounts of wind into the electric system. NASPI grew out of a DOE-funded effort to improve reliability of the bulk electric system after the 2003 Blackout. Clean Line will work with NERC, FERC and other authorities to ensure that existing and future physical and cybersecurity standards are implemented in a manner that improves the reliability of the Project and the larger electric grid.

V. The proposed Project will not duplicate the functions of existing transmission facilities or proposed facilities which are the subject of ongoing or approved siting and related permitting proceedings;

SPP is in the process of implementing considerable upgrades to its AC transmission system, but these projects have different objectives than the Grain Belt Express Clean Line. On April 27, 2010, SPP’s Board of Directors approved “Priority Projects” totaling $1.14 billion of investment. As discussed above and illustrated in Figure 6, the stated purpose of these projects is to relieve congestion, improve SPP’s generation interconnection queue, and enhance transfer capability from SPP West to SPP East. These projects do not increase SPP’s export capabilities to other regions. The Grain Belt Express Clean Line and Priority Projects are designed to serve very different needs; the Priority Projects will enhance the ability of wind farms to transmit power within SPP, while the Grain Belt Express Clean Line will increase the ability to export wind power out of SPP.

Transmission expansion projects have recently been announced on the eastern end of the Project. In August 2010, Ameren Services Company created Ameren Transmission Company to develop and construct a number of transmission projects in Illinois and Missouri over the next 10 to 15 years. There are four initial projects in the $1.3 billion portfolio, collectively called the Grand Rivers Projects, illustrated below in Figure 13. These projects are designed to allow for the integration of renewables (including over 5,000 MW of wind seeking to connect to Ameren’s system), improve reliability, and relieve congestion. In addition, the upgrades proposed by Ameren’s Grand Rivers Projects provide:

• Improved North-South transfer capability in southeast Missouri and southwest Illinois areas by over 6,700 MW;

• An additional 3,400 MW transfer capability between Missouri and Illinois; • Reduced congestion within and between MISO and PJM; • Increased transfer capability between Illinois and Indiana by 5,900 MW; and • Increased transfer capability between Missouri and Indiana by over 2,600 MW.42

42 Ameren Services Co., Docket No. EL10-80, Petition for Declaratory Order for Incentive Rates, dated Aug. 2, 2010.


Figure 13 Proposed 345kV Upgrades by Ameren Transmission Company

Source: Ameren Transmission Company Several other AC upgrades near the eastern end of the Project have already been approved by MISO.43

These upgrades and the proposed Ameren upgrades will enable low-cost renewable energy delivered by the Grain Belt Express to reach a larger body of customers in the MISO and PJM regions.

Both the Priority Projects and Ameren/MISO’s planned upgrades are complementary to the Grain Belt Express Clean Line. AC is the best technology for gathering and distributing wind power over relatively short distances. HVDC is a better, more economical choice for the long-distance delivery of renewable power—a need that neither the Priority Projects nor the Ameren/MISO projects satisfy. Clean Line recently submitted a project proposal to DOE under Section 1222 of the Energy Policy Act of 2005 for its Plains & Eastern Clean Line. The Plains & Eastern Clean Line’s western converter station will be located in the Oklahoma panhandle, and the Project’s radial collector system will draw renewable energy from projects in Texas, Oklahoma and southern Kansas. The collector system for the Grain Belt Express will extend from the Spearville converter station in all directions, connecting generators in western Kansas that may be too distant from the Plains & Eastern converter station to utilize that line.

43 Projects in Appendix A of the MTEP process have been approved by MISO see, Midwest ISO Expansion Plan. http://www.midwestiso.org/publish/Folder/193f68_1118e81057f_-7f8f0a48324a?rev=1.

http://www.midwestiso.org/publish/Folder/193f68_1118e81057f_-7f8f0a48324a?rev=1�


The proximity of the two projects’ Resource Areas will not limit the amount of generation that can be sold to customers on the eastern end of the lines. There is more than enough wind resource potential to fill the capacity of both of these lines. The SPP Generation Interconnection Queue has over 25,000 MW of wind energy projects, of which 9,208 MW are located in Kansas. The wind resource in Kansas is abundant enough to provide generation capacity many times that of the Grain Belt Express. NREL estimates that Kansas is home to over 760,000 MW of high capacity factor wind potential.44

Although the Plains & Eastern Clean Line and the Grain Belt Express Clean Line will export wind power from SPP, the two projects will serve different markets. The Grain Belt Express will transmit power to eastern MISO, allowing wind generators in Kansas to access the MISO and PJM markets; the Plains & Eastern Clean Line will transmit power to the southeastern United States, serving TVA and other utilities in the Southeast.

The combined capacity of the Plains & Eastern Clean Line and the Grain Belt Express Clean Line, totaling 10,500 MW, is merely a fraction of the state’s wind energy potential.

In order to enable the continued expansion of the wind industry, the Grain Belt Express will provide developers with interconnection queue and land positions in regions with the richest wind resources access to vast, new markets. In the past ten years, the number of installed MW in the United States has increased from 2,500 to over 35,000 MW;45 but recent growth has been stunted by transmission congestion, among other factors. Wind turbine installations in the first half of 2010 were down 71% compared to the first half of 2009.46

3. Financing Statement

Together, the Plains & Eastern Clean Line and the Grain Belt Express Clean Line will help the United States to capitalize on its tremendous wind resources and spur the economic development the country needs.

A financing statement, detailing the amount of funds the submitting entity would contribute to DOE for purposes of carrying out the Project, including the expected Project costs for which those contributed funds would be used, and the fiscal year(s) in which any contributed funds would be provided to DOE. In response to the request for a financing statement, Clean Line has set forth below a brief summary of expected project costs, the plans for funding, and an estimate of the amount and schedule of contributed funds that Clean Line will provide to Southwestern for the Project. Upon request, Clean Line will provide to DOE any additional financial information that DOE may require, including information that would be submitted on a confidential basis. Based on internal estimates and third-party consultations, Clean Line anticipates that the total cost of developing and constructing the Project will be approximately $1.7 billion. Total development cost is estimated at $60 million, including land acquisition; total cost of DC converters is estimated at $500 million; and total cost of the line (including towers and cable) is estimated at about $1.14 billion (or $2 million per mile).47

An approximate schedule of costs is shown in Table 4. This schedule is predicated on a late 2016 in-service date; however, the total budget and schedule remain fluid at this juncture.

44 US Department of Energy, National Renewable Energy Laboratory and AWS Truewind, Estimates of Windy Land Area and Wind Energy Potential by State, Feb. 4, 2010. 45 American Wind Energy Association, First Quarter 2010 Market Report, April 2010. 46 American Wind Energy Association, AWEA Mid-Year 2010 Market Report, July 2010, 2. http://www.awea.org/publications/reports/2Q10.pdf. 47 This is consistent with public cost estimates of HVDC lines, for example in SPP’s EHV Overlay Study, which estimates $1.7 million per mile for 500 kV HVDC lines, 40.


Table 4 Clean Line Preliminary Cost Schedule

Source: Clean Line Energy Clean Line anticipates that it will fund the vast majority of Project related costs directly, including costs incurred for engineering and construction services performed by non-governmental personnel, the procurement of materials, and the acquisition of property rights acquired through negotiated purchase. Therefore, the funds used to pay these costs will not flow through Southwestern and will not count toward the $100 million statutory limitation on contributed funds in Section 1222 of the Energy Policy Act of 2005. Clean Line proposes to supply contributed funds to Southwestern for costs that must be incurred by Southwestern and otherwise cannot be paid for directly by Clean Line–approximately $13 million to Southwestern for purposes of advancing the Project. These contributed funds will cover two categories of costs: (1) those necessary for Southwestern to acquire any necessary property rights that cannot be acquired except through the use of federal eminent domain authority, and (2) Southwestern’s administrative and other costs related to its participation in the Project that Clean Line cannot pay for directly. In respect to the first category, Clean Line expects to acquire at least 90% of the right of way required for the Project through privately negotiated transactions and will aim for much higher percentages. Consistent with the experience of Clean Line’s management on other large transmission projects, Clean Line expects the remaining portion of the right of way will be acquired through condemnation proceedings. Table 5 shows an estimate of the timing of contributed funds and their purpose.

Year Development Converters Line Total

2010 1,500,000$ -$ -$ 1,500,000$

2011 2,500,000$ -$ -$ 2,500,000$

2012 3,000,000$ -$ -$ 3,000,000$

2013 10,000,000$ -$ -$ 10,000,000$

2014 28,000,000$ 50,000,000$ -$ 78,000,000$

2015 15,000,000$ 250,000,000$ 570,000,000$ 835,000,000$

2016 -$ 200,000,000$ 570,000,000$ 770,000,000$

Total 60,000,000$ 500,000,000$ 1,140,000,000$ 1,700,000,000$


Table 5 Contributed Funds Estimate


Clean Line’s estimate of land acquisition costs is based on work with Universal Field Services, Inc. (“Universal”). Based on payments at fair market value, Universal estimated that acquiring a 150-foot right of way along a possible route for the project would cost $28.5 million. Clean Line assumes that land values will appreciate 10% by 2013. Applying a 10% condemnation rate, the cost for acquiring land through the use of eminent domain will be $3.2 million. As to the second category of costs noted above, Clean Line recognizes that Southwestern’s participation in the development of the Project likely will require internal and external resources to assist with the preparation of necessary NEPA analysis, provide legal advice, perform engineering services for Southwestern, and other activities. More detailed discussions between Clean Line and Southwestern will be required to determine the scope of services for which contributed funds will need to be provided. The above estimate assumes that Clean Line will enter into an agreement with Southwestern’s lead environmental contractor and will fund these services directly (as Clean Line understands DOE has done in other contexts). Thus, these costs will not count against the $100 million limitation mandated in Section 1222. While Clean Line prefers this solution, it would be willing to discuss an alternative. Clean Line will cooperate with DOE and Southwestern to ensure that the Project will not adversely affect Southwestern’s customers from a cost or reliability perspective. Clean Line has the financial capability to contribute funds to Southwestern for both the Grain Belt Express Clean Line and the Plains & Eastern Clean Line. Each project has its own approved development budget, and Clean Line has raised the necessary capital to pursue both projects simultaneously.

Year Land Acquisition Other Total

2010 -$ 300,000$ 300,000$

2011 -$ 400,000$ 400,000$

2012 -$ 700,000$ 700,000$

2013 -$ 1,300,000$ 1,300,000$

2014 800,000$ 2,300,000$ 3,100,000$

2015 1,600,000$ 2,400,000$ 4,000,000$

2016 800,000$ 2,400,000$ 3,200,000$

Total 3,200,000$ 9,800,000$ 13,000,000$


SECTION II: PROJECT CRITERIA

The RFP states that if a proposed project meets the eligibility criteria discussed above, DOE and the relevant power marketing administration will conduct an initial evaluation of the eligible project, including criteria such as whether the project is in the public interest and whether it will facilitate the reliable delivery of power generated by renewable resources (75 Fed. Reg. at 32941). The RFP then sets forth the data and information that project proposals should contain so that DOE and the relevant Power Marketing Association (“PMA”) can conduct this evaluation (75 Fed. Reg. at 32941-32942). Clean Line has provided this information below, in the order set forth in the RFP.

1. Public Interest

A brief description of how the Project is in the public interest, including, but not limited to, advancing the purposes of EPAct. President George W. Bush noted that, among other things, the EPAct 2005 will “...promote alternative and renewable energy sources, reduce our dependence on foreign sources of energy, increase domestic production, modernize the electricity grid...” When President Barack Obama addressed the nation from the Oval Office on June 16, 2010, he said, “The transition to clean energy has the potential to grow our economy and create millions of jobs – but only if we accelerate that transition. Only if we seize the moment.”48

Grain Belt Express is in the public interest and advances the purposes of EPAct 2005; it will promote energy security, will improve the environment, will enable development of new clean energy facilities, and will help reduce the cost of renewable electricity in markets far from the best renewable resources. America is well positioned to leverage its strong wind and solar resources and capability for business innovation to move away from its dependence on foreign energy and create a sustainable clean energy economy.

The general public favors improving America’s energy infrastructure. Support is strong in states like Kansas, Missouri and Illinois that stand to realize economic gain from the burgeoning renewable energy industry. A poll in 2008 found “an overwhelming majority of Kansans – fully 75% – favor a more aggressive pursuit of wind energy.”49 In 2008, 66% of Missourians voted in favor of the Clean Energy Initiative that requires utilities to generate or purchase at least 15% of their electricity from renewable sources by 2021.50

The MISO footprint has a combined RPS mandate to integrate roughly 25,000 MW of renewable energy within the next 10-15 years.

Illinois has required that 25% of its energy consumption be sourced from renewable energy in 2025, 75% of which must come from wind.

51 Today, only 8,200 MW of wind capacity have been installed in MISO.52

48 Remarks by President Barack Obama, June 16, 2010. http://www.whitehouse.gov/blog/2010/06/16/president-obamas-oval-office-address-bp-oil-spill-a-faith-future-sustains-us-a-peopl.

Transmission availability is limiting the location and pace of wind farm construction and the utilization of operating wind farms. Consequently, new construction has shifted from the windiest sites to less windy

49 Land Institute, Climate and Energy Project, By 2-to1 Margin, Kansans Support Denial of Coal Plants, Want Wind Power for New Electricity, January 2007. http://www.climateandenergy.org/LearnMore/InTheNews/CEPpollKDHEwind.htm. 50 Pew Center on Global Climate Change, Missouri RPS. http://www.pewclimate.org/node/4671. 51 Renewable Energy in the Midwest. http://www.midwestmarket.org/page/Renewable+Energy_inMidwest. 52 Integration of Renewables at the Midwest ISO. http://www.narucmeetings.org/Presentations/midwestisonarucfebruary142010.pdf.

http://www.pewclimate.org/node/4671�


areas closer to load farther east (see Figure 14). Using data from AWEA, Clean Line calculated the geographical center of wind installations in the Eastern Interconnection. From 2005 to 2009, the epicenter for new construction moved about 220 miles east—from near Kirksville, Iowa to near Ottawa, Illinois. The Grain Belt Express will enable construction of wind projects in the windiest sites, thus reducing the cost of delivered energy for consumers.

Figure 14 Shift in Wind Construction

Source: American Wind Energy Association

Note: Higher NCF: North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Minnesota, Iowa Lower NCF: Illinois, Indiana, Ohio, Pennsylvania, New York, Wisconsin, Tennessee, West Virginia, New Jersey, Maine, Massachusetts, and Missouri During the first quarter of 2010, new wind installations declined 50% compared to the first quarter of 2009. Wind projects under development vastly outstrip available transmission. Of over 25,000 MW of wind projects in the SPP Generation Interconnection Queue, only a small fraction will reach customers through the existing transmission system. Recognizing that a lack of transmission will prevent the full development of wind resources and the accompanying economic benefits, RTOs such as SPP, through its Priority Projects, and ERCOT, through its Competitive Renewable Energy Zones (“CREZ”), are in the process of upgrading their transmission systems to accommodate the interconnection of new wind power projects. But regional efforts will not be enough to satiate the national appetite for renewable energy; equally important is finding ways to export rich renewable resources to regions without access to low-cost clean energy. Interregional projects like the Grain Belt Express Clean Line help meet this need while complementing regional efforts already underway.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009

Per

cent

of N

ew In

stal

led

Win

d C

apac

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Year

Annual Percent Wind Generation in Each Group

Higher NCF

Lower NCF


a. Economic Benefits

The successful development of the Grain Belt Express Clean Line will provide an important stimulus to the US economy through the construction of new transmission and about 4,000 MW of renewable energy projects that would otherwise not be built due to a lack of transmission infrastructure. Clean Line has engaged the St. Louis consulting firm Development Strategies, Inc. to estimate the potential economic impacts of the Grain Belt Express Clean Line and the associated renewable energy projects. All estimates in this section come from their report, An Economic Impact Study of the Proposed Grain Belt Express Clean Line, Appendix 2. In addition to the direct expenditures and employment from the Project and associated wind farms, the Development Strategies estimates the indirect and induced economic benefits. To estimate how the Project will affect production, wages, jobs and total output in all sectors of the economy, the study employs industry-accepted modeling tools, extensive survey data, industry information, and a variety of corroborative source materials, including multipliers and consumption patterns in each region. Total estimated economic benefits, including multiplier effects, from building the transmission line are shown below in Table 6.

Table 6 Economic Benefits of Development and Construction of the Grain Belt Express Clean Line

Source: Development Strategies In addition to the economic impacts of the transmission line, Development Strategies estimated the impacts of 4,000 MW of wind power projects that could not otherwise be built. A key variable in the results is the percentage of wind turbine components manufactured in Kansas. As shown in Table 7, the report examined three levels of instate manufacturing: 0%, 12%, and 30%. In 2009, Siemens announced a new nacelle manufacturing facility would be located in Hutchinson, Kansas. Siemens had a 12% share of the US wind turbine market, and this was used as a reasonable estimate of turbine content manufactured in Kansas. New transmission will make Kansas and Missouri a more attractive location to site new manufacturing facilities. An additional 30% scenario was run to illustrate the possible benefits of increased in-state wind turbine manufacturing.

Kansas Missouri US

Direct Spending 734$ 641$ 1,375$

Economic Output 903$ 1,013$ 3,992$

Earnings 227$ 252$ 1,018$

Retail Sales 86$ 98$ 387$

FTE Jobs 4,763 4,900 17,103

(Monetary Values in Millions)


Table 7 Economic Benefits of Development and Construction of Associated Wind Farms53

Source: Development Strategies Total US employment effects from development and construction of the Project and enabled power plants equate to over 93,000 full-time-equivalent jobs. Wages paid during construction of the transmission line alone will result in $31million of state and local taxes collected in Kansas and Missouri.54

Economic benefits will continue long after construction; the Project and associated wind farms are estimated to create over 1,100 permanent jobs.

According to AWEA, “With supportive policies in place since 2004 and a rapidly growing market, US domestic manufacturing of wind turbines and their components has increased 12-fold with domestic content increasing from less than 25% to 50% even with a much larger market.”55

Figure 15 shows wind turbine and component manufacturing facilities, including 2009 expansions, such as the Siemens facility mentioned above.

53 Local share refers to turbine components sourced in Kansas. Siemens had 12% of domestic wind turbine market share in 2009 and is opening a facility in Kansas. 54 Additional sales, property and income taxes will likely be generated from the Project and associated wind farms; however, because various exemptions may apply, these tax revenues have not been quantified at this time. 55 American Wind Energy Association, Windpower Outlook 2010. http://www.awea.org/pubs/documents/Outlook_2010.pdf.

US

0% 12% 30%

Direct Spending 8,000$ 8,000$ 8,000$ 8,000$

Economic Output 2,090$ 3,157$ 4,758$ 14,892$

Earnings 755$ 1,006$ 1,383$ 4,398$

Retail Sales 287$ 382$ 526$ 1,671$

FTE Jobs 16,504 21,060 27,890 76,041

(Monetary Values in Millions)

Kansas - Local Share Scenarios*


Figure 15 US Wind Turbine Manufacturing Facilities with 2009 Expansions

Source: National Renewable Energy Laboratory Missouri is located between some of the windiest states in the country and large electric loads. The state, with its rivers, highways and rail infrastructure, is in an ideal position to become a manufacturing hub for the wind industry. Missouri also has an established wind energy manufacturing base; ABB, a wind turbine component manufacturer, already has a facility in St. Louis. Two other Missouri companies, Continental Disc Corporation and FAG Bearings announced in 2009 that they will expand their facilities and capabilities to manufacture brakes and bearings, respectively, for wind turbine generators. As discussed in greater detail in Appendix 4, The Grain Belt Express Clean Line: A Growth Opportunity for Missouri Manufacturers, the state of Missouri has an extensive manufacturing base and hundreds of additional companies with the technical potential to enter the wind turbine supply chain. The expansion of the local market for wind turbines, created by the Grain Belt Express, could stimulate growth in the manufacturing sector of Missouri and neighboring states. To ensure that the economic benefits predicted by Development Strategies are realized by Kansas and Missouri, Clean Line will take an active role in bringing business opportunities to local vendors. The


construction of the Grain Belt Express Clean Line will take approximately three years and will require large capital expenditures for conductors, steel, towers, cement, power electronics and construction and transportation services. Long before construction begins, Clean Line will select an engineering, procurement and construction (“EPC”) firm to serve as the general contractor for the Project. Selection will be based in part on the firm’s commitment to implement a local procurement program. Clean Line plans to initiate the vendor selection process by hosting open houses for local concrete vendors, electrical subcontractors, and transportation service providers, among others. Thereafter, Clean Line intends to hold the EPC firm accountable for procuring a sizable percentage of materials and labor from local vendors.

b. Environmental Benefits

Renewable energy creates environmental benefits by decreasing dependence on thermal plants powered by fossil fuels like coal, oil and natural gas. Energy delivered by the Grain Belt Express Clean Line will allow utilities in the Midwest and East to achieve substantial reductions in pollution. Reduced emissions include greenhouse gases (principally carbon dioxide), particulates (such as SOX and NOX) and heavy metals (including mercury). Displacing thermal generation also saves the large amounts of water needed to cool power plants. According to the Institute of Electrical and Electronics Engineers Spectrum, approximately 39% of freshwater withdrawn from rivers, lakes and aquifers in the United States is used to cool thermoelectric power plants.56

Renewable generation decreases emissions because polluting plants can be run less often and at lower output levels. Estimating the reduction in pollution as a result of the Grain Belt Express Clean Line requires an assessment of how operators would reduce thermal power production and replace it with the renewable power injected via the Project. Clean Line engaged ICF International (“ICF”) to create such an estimate using a transmission-constrained model of the entire Eastern Interconnection that incorporated the Grain Belt Express Clean Line. ICF’s report is attached as Appendix 3. The model assumes that 4,000 MW of incremental wind generation is built in Kansas due to the Project. The additional wind power is then delivered to the MISO grid via the AmerenUE transmission system. ICF estimated environmental benefits by comparing two cases. Each case was simulated with a year-long, hourly, economic, security-constrained dispatch of the Eastern Interconnection using General Electric’s MAPS57

software. MAPS is a leading software product for simulating hourly power production in a transmission system and is used by utilities around the United States. The Reference Case did not include the Grain Belt Express. The Change Case included the Project in the electric transmission system as well as an incremental 4,000 MW of wind generation made possible by the Project. This incremental renewable power is delivered to AmerenUE and the broader Eastern Interconnection. The benefits of the Project are represented by the difference in emissions between the two cases. Table 8 summarizes the pollution avoided by the Project.

56 IEEE Spectrum Staff, IEEE Spectrum, The Coming Clash Between Water and Energy, June 2010, 26-27. 57 Multi-Area Production Simulation software (“MAPS”) is a registered trademark of General Electric.


Table 8 Annual Emissions Reductions in Eastern Interconnection

Source: Analysis of the Benefits of the Proposed Grain Belt Express Clean Line, ICF International The Project will significantly reduce NOx, SO2 and mercury emissions. By abating over 12.6 million tons of carbon dioxide emissions annually, the Project will achieve the equivalent savings of removing 1.7 million cars from the road each year.58

The estimate of carbon dioxide emissions reductions may be conservative because ICF’s model includes a price of carbon dioxide of $24 per ton. A price on carbon would reduce carbon emissions from today’s levels. Without a cost to emissions, baseline carbon dioxide levels would be higher, and reductions from the Project therefore could be greater.

Lastly, ICF estimated that the Grain Belt Express would reduce fresh water consumption by over 11,000 gallons per second or over 1.1 million acre-feet per year by reducing coal plant dispatches and the associated cooling requirements in MISO.

c. Need for Affordable Energy

The prosperity of the United States depends to a large degree on an abundant supply of affordable energy. While the country has historically relied on fossil fuels to meet its energy needs, the twin challenges of reliance on volatile regimes and environmental degradation have led to an increasing role for alternative energy in the country’s portfolio. Energy security and environmental protection must be balanced against increasing costs. Projects like the Grain Belt Express can play a vital role in addressing these challenges. Wind energy built in the best resource areas, even with the added cost of long-haul transmission, is the ideal low-cost option to add new, clean generation capacity to the national grid. Wind turbine prices have begun to fall dramatically. Projects constructed on flat terrains like Kansas can now achieve installed costs under $2,000/kW. At the same time, wind turbine technology is improving due to larger rotor diameters and improved control technologies. After accounting for the Section 45 Production Tax Credit, wind farms in western Kansas and neighboring regions can provide power for a nominal levelized cost over 20 years of approximately $40/MWh59 or less. Oklahoma Gas & Electric reported a levelized cost of $37.57/MWh in a June 2010 filing to the Oklahoma Corporation Commission.60

A simple financial model supporting a $40/MWh nominal levelized cost is also attached as Appendix 5.

58 Based on Department of Transportation fuel economy numbers of 5.2 metric tons of CO2 emitted for all passenger vehicles as cited in U.S. EPA, Emissions Facts: Greenhouse Gas Emissions from a Typical Passenger Vehicle, February 2005. 59 One megawatt-hour (“MWh”) equals one million or 106 watt-hours. 60 http://imaging.occeweb.com/AP/CaseFiles/02FC906F.pdf.

Pollutant Reference Case (A)

Change Case Including Grain Belt

Express Clean Line and 4,000 MW

Wind Injection in SPP (B)

Net Decrease in Emission

(C) = (B) - (A)

Nitrogen Oxides (NOx) (Tons) 1,635,132 1,627,643 -7,490

Sulfur Dioxide (SO2) (Tons) 4,218,378 4,188,771 -29,607

Carbon Dioxide (CO2) (Tons) 2,054,221,541 2,041,627,172 -12,594,369

Mercury (Hg) (Pounds) 24,603 24,443 -160

http://imaging.occeweb.com/AP/CaseFiles/02FC906F.pdf�


Assuming 2% long-term inflation, the 20-year nominal levelized cost of $40/MWh is equal to $33/MWh in real terms. The added transmission costs of the Grain Belt Express are estimated to be roughly $20/MWh in real terms, making the total cost of energy delivered by the Project equal to $53/MWh in 2008 dollars. This cost is after a federal production tax credit (worth about $21/MWh in 2008 dollars). Even without the tax credit, the total cost of wind energy delivered by the Grain Belt Express will be competitive with thermal generation. As seen in Table 9, at $53/MWh, the energy delivered by the Grain Belt Express offers a lower total system levelized cost than any other option for new generation, even with the added cost of long-haul transmission. In addition to comparing the total system levelized cost to other sources of new generation, it is important to compare the levelized cost of wind to the variable operation and maintenance (“O&M”) cost of other sources of generation. Because wind is not dispatchable, it may not eliminate the need to build other power plants to provide electricity when the wind is not blowing. Wind generation does allow utilities to run fossil fuel generation less often, reducing variable O&M including fuel expenditures. Wind power delivered by the Grain Belt Express is economic even when compared to the cost of running a combined cycle gas unit more often, as shown in the Variable O&M column in Table 9.

Table 9 Levelized Cost Comparison61

Source: Energy Information Administration, 2010 EIA Energy Outlook

Despite the variability of wind energy, certain ISOs such as PJM and NYISO assign a capacity credit to wind generation based on average energy production during peak hours. Even if MISO does not take this approach, the Grain Belt Express transmission line may provide a capacity resource by creating the opportunity to share reserve capacity across SPP and MISO. This could allow the construction of fewer fossil fire power plants or the retirement of uneconomic existing units.

61 EIA estimated the average levelized cost of US wind farms using a capacity factor of 35%, and excluding the production tax credit. This led to a much higher cost than Clean Line’s estimate of the levelized cost of wind in western Kansas. Including the PTC and reflecting the 40%+ capacity factor in Kansas, however, yields a more accurate view of the cost competitiveness of energy delivered by the Grain Belt Express.

Levelized Capital Cost

(including transmission)

Variable O&M

(including fuel)Fixed O&M

Total System

Levelized Cost

Conventional Coal 72.7 23.9 3.8 100.4

Advanced Coal 84.8 20.4 5.3 110.5

Coal with CCS 96.6 26.4 6.3 129.3

Combined Cycle Gas 26.5 54.9 1.7 83.1

Advanced Combined 26.0 51.7 1.6 79.3

Advanced CC with 47.6 63.0 2.7 113.3

Advanced Nuclear 97.9 9.4 11.7 119.0

US Average Levelized Cost (2008 $/MWh) for Plants Entering Service in 2016

Plant Type


Because wind generation capacity operates at zero marginal cost, it displaces generation from less efficient plants with higher marginal costs and reduces wholesale electricity prices. To estimate the wholesale electricity pricing impact of the injection of additional wind energy delivered by the Project, ICF ran an economic dispatch model using GE’s MAPS and Positive Sequence Load Flow (“PSLF”) software, more fully described in Appendix 3. Together, MAPS and PSLF simulated the entire Eastern Interconnection on an hourly basis for one year. The model took account of the hourly profile of wind generation using simulated production data from NREL’s EWITS. It simulated the hourly marginal cost of each generator using an estimated unit heat rate and a set of assumptions about fuel prices and environmental allowances, which are set forth on page 28 of Appendix 3. Notable assumptions include a $7.15/mmBtu Henry Hub natural gas price and carbon dioxide price of $24/ton.62

While the magnitude of price decreases may change with assumptions about fuel and emissions prices, the basic conclusion that wind reduces prices remains true over a wide variety of assumptions.

By delivering energy at a lower marginal cost than existing generation sources (more precisely, at zero marginal cost), the Project will decrease clearing wholesale prices in the area surrounding the eastern converter location, as shown in Table 10. ICF estimated that peak prices in the AmerenUE service territory will decline by $1/MWh due to the substantial injection of zero variable cost power. Even though ICF’s model assumes delivery is in southeastern Missouri, wholesale power prices in neighboring areas decline as well.

Table 10 Wholesale Power Prices – 2016 ($/MWh)

Source: Analysis of the Benefits of the Proposed Grain Belt Express Clean Line, ICF International

ICF’s estimate of the value of the delivered energy is well above the levelized cost of energy delivered by the Grain Belt Express. This is further evidence of the cost competitiveness of the Project.

d. Clean Energy Leadership

US Secretary of Energy Stephen Chu recently stated, “rather than sending billions overseas to pay for clean technologies, we must start investing these dollars in America's workers, industries, and innovations.”63

62 Clean Line acknowledges that a $7.15/mmBTU natural gas price is high relative to 2009 and 2010 prices but still believes it is a reasonable assumption for 2016 given rising trends since 2000.

Secretary Chu and several other US leaders have identified the need to develop cleaner and safer alternative sources of energy to reduce the country’s dependence on foreign sources of energy.

63 Remarks by Secretary Stephen Chu, Anniversary of the Recovery Act, Windsor, Colorado, February 19, 2010

Scenario Period* AmerenUEIllinois Power

CompanyCentral Illinois

LightSouthern

Illinois Power

Off-P ea k 64.3 64.6 64.6 63.8

P ea k 95.1 96.2 96.2 94.0

All Hours 84.8 85.6 85.6 83.9

Off-P ea k 63.4 64.0 64.0 63.4

P ea k 94.1 95.8 95.8 93.6

All Hours 83.9 85.2 85.2 83.6

*On-pea k is defined a s 7 x 16

Cha ng e Ca s e - Includes Clea n Line P roject a nd 3,500 MW Wind Injection

R eference Ca s e

Wholes ale Power Prices - 2016 ($/MWh)


The Project will spur the development of domestically produced clean energy to be transmitted and sold within the United States . The revenue generated and jobs created from the Project will bolster our nation’s international competitiveness by providing domestic manufacturing jobs in the renewable energy sector. Nations such as China and India are actively pursuing similar projects and developing new technologies. Despite recent growth, in 2009 wind made up less than 2% of total electric power generation in the United States.64 Other industrialized nations, such as Denmark (20%), Spain (15%), and Germany (7%), obtain more of their power from wind.65

2. Resource Description

The Project provides an opportunity for the US to take an important step towards becoming a leader in clean energy development.

A description of the energy resources (wind, solar, hydro, coal, natural gas, nuclear, etc.) for which the proposed Project would facilitate delivery; the size and location of the resources; schedule for resource development; specific location of load or markets; availability of generation-related ancillary services, including regulation and frequency response and operating reserves; a description of the entity’s involvement in the development of the energy resources to be delivered; and/or any commitments to purchase the resulting energy and capacity from the proposed resource.

a. Size and Location of Resource

The Grain Belt Express Clean Line will draw from the best wind resources in the country. Working with the meteorology firm AWS Truepower (“AWS”), NREL published the map in Figure 16 of average wind speeds at 80 meters, the hub height of a modern wind turbine.

Figure 16 Wind Speeds at 80 M Hub Height in the Project Area

Source: US Department of Energy, National Renewable Energy Laboratory

64 American Wind Energy Association, AWEA Releases U.S. Wind Industry Annual Market Report, April 2010. http://www.awea.org/newsroom/releases/04-08-10-U.S._Wind_Industry_Annual_Market_Report.html. 65 Global Wind Energy Council, Global Wind 2009 Report. http://www.gwec.net/fileadmin/documents/Publications/Global_Wind_2007_report/GWEC_Global_Wind_2009_Report_LOWRES_15th.%20Apr..pdf.


The Resource Area for the Grain Belt Express, encircled in the map above has average wind speeds of 8.5-9.0 meters per second (about 20 miles per hour) or greater at 80 meter hub heights. NREL and AWS also published a state-by-state ranking of wind capacity potential at a 40% gross capacity factor, shown in Table 11. Kansas ranks fourth in the US for wind energy potential with approximately 760,300 MW of potential installed capacity.

Table 11 Wind Capacity Potential by State

Sources: US Department of Energy, National Renewable Energy Laboratory and AWS Truepower

Developers are advancing projects totaling tens of thousands of MW in the Resource Area. The SPP Generation Interconnection Queue contains 9,208 MW of wind projects located in Kansas. Table 12 shows projects in the SPP Interconnection Queue within 50 miles of the Grain Belt Express converter station. The total capacity of the wind projects below, more than 3,500 MW, have scheduled commercial online dates on or before 2016.

Total Excluded Available Available Installed Capacity Annual Generation

(km2) (km2) (km2) % of State (MW) (GWh)

1 Texas 180,822 15,426 165,397 24% 826,983 3,240,930

2 Nebraska 165,445 10,012 155,433 78% 777,165 3,084,090

3 South Dakota 163,281 10,004 153,277 77% 766,383 3,039,460

4 Kansas 163,170 11,105 152,065 71% 760,324 3,024,2805 North Dakota 160,497 21,932 138,564 76% 692,821 2,728,620

6 Montana 98,309 18,737 79,571 21% 397,857 1,529,560

7 Iowa 72,119 8,400 63,719 44% 318,595 1,232,860

8 Wyoming 70,268 17,787 52,482 21% 262,410 1,043,890

9 Oklahoma 55,593 6,038 49,555 27% 247,773 952,678

10 New Mexico 39,573.80 2,424.70 37,149.10 11.80% 185,745.30 712,877

Ranking (by Capacity

Potential) State

Windy Land Area >= 40% Gross Capacity Factor at 80m Wind Energy Potential


Table 12 SPP Interconnections Queue as of 8/27/2010

(Wind Projects within 50 miles of Proposed Converter Station)

Source: Southwest Power Pool

There are many additional wind projects with meteorological data and land options that have not yet submitted a queue request due to a backlog of similar requests and inadequate transmission infrastructure. Clean Line is collaborating with many of the developers in the Resource Area and has confirmed that there are many more projects than are currently in the SPP Queue.

Land use patterns in the Resource Area are very compatible with wind farm development. Much of western Kansas contains highly fragmented agricultural geography, which provides less natural habitat for wildlife. As a result, few environmental- or land-use concerns exist with large-scale wind development. This sparsely-populated area has very little topographical relief and few trees which allow for even more intense winds.

Clean Line will avoid sensitive environmental areas when possible and will minimize impacts when avoiding these areas is not possible. Preliminary corridor analysis includes input from state agencies and the environmental community (see Figure 17 below).

The Flint Hills are a region of particular environmental importance for the Project. The Flint Hills represent the last expanse of tallgrass prairie, an ecosystem that once stretched from Canada to Texas.66

66 Knopf, F and Samson, F. “Biological Diversity-Science and Action.”

The Grain Belt Express will help direct wind farm development away from the Flint Hills. The region around Spearville, where the Grain Belt Express originates, is already being used for agricultural purposes and is therefore less environmentally sensitive than the Flint Hills. The Grain Belt Express will

Conservation Biology. Vol. 8:3, September 1994, 909-910.

Generation Interconnection

Number

Nearest Town or County

State CA In-Service Date Capacity Type Status

GEN-2007-025 Barber County KS WERE 12/31/2009 300 Wind FACILITY STUDY STAGE

GEN-2009-059 Clark County KS SUNC 12/31/2011 100.5 Wind DISIS STAGE

GEN-2008-018 Finney County KS SWPS 12/31/2012 405 Wind FACILITY STUDY STAGE

GEN-2004-014 Ford County KS MIDW 11/15/2005 154.5 Wind IA FULLY EXECUTED/ON SCHEDULE

GEN-2006-006 Ford County KS MKEC 12/1/2008 205.5 Wind FACILITY STUDY STAGE

GEN-2005-012 Ford County KS WPEK 12/1/2008 250 Wind IA FULLY EXECUTED/ON SUSPENSION

GEN-2007-038 Ford County KS SUNC 10/1/2012 200 Wind FACILITY STUDY STAGE

GEN-2008-124 Ford County KS MKEC 11/30/2011 200.1 Wind FACILITY STUDY STAGE

GEN-2010-029 Ford County KS SUNC 12/31/2013 450 Wind FEASIBILITY STUDY STAGE

GEN-2007-040 Gray County KS SUNC 12/15/2010 200.1 Wind FACILITY STUDY STAGE

GEN-2008-079 Gray County KS MKEC 12/1/2010 100.5 Wind FACILITY STUDY STAGE

GEN-2010-009 Gray County KS SUNC 12/1/2011 165.6 Wind DISIS STAGE

GEN-2010-015 Hodgeman County KS SUNC 1/1/2013 200.1 Wind DISIS STAGE

GEN-2001-039A Kiowa County KS WPEK 12/31/2009 105 Wind IA FULLY EXECUTED/ON SUSPENSION

GEN-2009-008 Ness County KS SUNC 9/1/2011 199.5 Wind DISIS STAGE

GEN-2006-022 Pratt County KS WPEK 5/31/2008 150 Wind IA FULLY EXECUTED/ON SUSPENSION

GEN-2009-020 Rush County KS MIDW 12/31/2011 49.5 Wind DISIS STAGE

GEN-2010-016 Rush County KS MIDW 12/31/2015 199.8 Wind DISIS STAGE

TOTAL 3,535.2

http://www.jstor.org/action/showPublication?journalCode=consbiol�


have to cross the Flint Hills, but can minimize its impact by following existing infrastructure wherever possible.

Figure 17

Environmentally Sensitive Areas

Source: Ecology and Environment

b. Schedule of Resource Development

Wind development projects sufficient to fill the capacity of the Grain Belt Express Clean Line can be completed on a schedule consistent with a transmission line online date of 2016. In general, the development and construction timeframe for wind farms in the Resource Area is approximately three to five years—shorter than the timeframe for a transmission line. The wind industry has already demonstrated that it can install thousands of MW of new projects in a short timeframe. From 2008 to 2009, over 6,000 MW of new wind projects were installed in Texas, Kansas and Oklahoma.67

Clean Line is working with wind developers who are advancing projects located in the Resource Area. These developers include large, multinational, multi-billion dollar companies and more local development firms. On September 9, 2010, Clean Line hosted a forum to present its projects to 20

67 American Wind Energy Association, AWEA Year End 2009 Market Report, January 2010. http://www.awea.org/publications/reports/4Q09.pdf; American Wind Energy Association, American Wind Energy Association Annual Wind Industry Report, 2008. http://www.awea.org/publications/reports/AWEA-Annual-Wind-Report-2009.pdf; US Department of Energy, Wind Powering America, U.S. Installed Wind Capacity and Wind Project Locations, March 2010. http://www.windpoweringamerica.gov/wind_installed_capacity.asp.

http://www.awea.org/publications/reports/4Q09.pdf�

http://www.awea.org/publications/reports/AWEA-Annual-Wind-Report-2009.pdf�

http://www.windpoweringamerica.gov/wind_installed_capacity.asp�


wind developers who have prospective projects in SPP. Many of these developers already have agreed to share wind data with Clean Line to take advantage of the best wind resources and most efficiently use the line capacity on the Grain Belt Express Clean Line.

c. Location of Load and Market

The Grain Belt Express Clean Line will deliver energy to the MISO grid at AmerenUE’s St. Francois substation in St. Francois County, Missouri. The St. Francois substation is currently connected to two AC lines rated at 138-161 kV and two AC lines rated at 345 kV. With the existing lines and local upgrades recommended by Sargent & Lundy, the St. Francois substation will provide access to attractive markets for renewable energy to generators on the western end of the Project.

The Grain Belt Express will deliver energy to MISO via the AmerenUE transmission system; however, the delivery of energy will not be limited to Ameren or MISO. MISO’s liquid market will allow this energy to be purchased by a variety of load serving entities within MISO and PJM. The MISO and PJM transmission grids are reasonably well connected, and electricity is readily wheeled between utilities in both regions. Thus, the Grain Belt Express would allow both the MISO and PJM markets to access the best wind resources in the country, providing them with abundant, low-cost power to meet their demands for clean energy. There is great demand for renewable energy in MISO and PJM. The Missouri Clean Energy Initiative requires utilities to generate or purchase at least 15% of their electricity from renewable sources by 2021. Today, only 3% of Missouri’s energy consumption comes from renewable sources,68 and fossil fuels continue to be Missouri’s main source of electricity.69

The Grain Belt Express Clean Line will help Missouri work towards meeting its requirement by delivering up to 3,500 MW of renewable power to the region beginning in late 2016. In addition to Missouri, ten other states in MISO have an RPS goal or mandate. In PJM, ten of the thirteen states and Washington, DC have RPS requirements as well.

68 Missouri Department of Natural Resources. http://www.dnr.mo.gov/energy/renewables/index.html. 69 Missouri consumed approximately 84 million MWh of electricity in 2008, of which more than 90% came from fossil fuels. Coal is the dominant fuel for electricity production in Missouri and in 2008 it supplied 84% of the state’s electricity. The Missouri Department of Natural Resources said that fossil fuel expenditures increased between 1990 and 2007 at a compound annual growth rate of 6.4%, “compared to a compound annual growth rate of 5.4 percent for all energy expenditures.” This rate is estimated to increase by 1% annually, leading to higher electricity prices for consumers.


Table 13 Renewable Portfolio Standards in MISO and PJM

Sources: Database of State Incentives for Renewable Energy and Energy Information Administration

Both MISO and PJM have wind resources within their footprints. The best resources in MISO are located in western MISO: the Dakotas, Iowa, and Minnesota. These areas suffer from the same challenges as western Kansas. They have outstanding wind resources but relatively low levels of transmission and load; therefore, long-haul transmission projects like the Grain Belt Express are needed for MISO to reach its renewable goals. In PJM, a limited number of areas in Illinois, Indiana, and Pennsylvania have moderate wind resources. These wind resources typically yield 40-50% less energy per turbine than the turbines in western Kansas. Moreover, wind projects in PJM face transmission challenges of their own, and they can meet only a portion of the renewable energy demand in PJM states. Enabling the development of wind resources with capacity factors among the highest in the nation, the Grain Belt Express will lower renewable energy costs for consumers in these states. Wind resources in western Kansas are not only more cost-effective but also meteorologically distinct from wind resources in the states that the Grain Belt Express will serve; the winds in Kansas blow at different times than the winds in Illinois, Indiana and Missouri, and have little correlation in respect to wind speed. To measure the independence of western Kansas’s wind regime from those farther east, Clean Line measured correlations using simulated power production data from NREL (see Table 14). The analysis

State RegionRPS Mandate

or GoalTarget Year

Total 2008 Load (MWh)

Required Annual Renewable MWh

(assuming 0% load growth)

Equivalent MW of Wind

(at 35% NCF)

Iowa MISO 105 MW 45,480,789 105

Minnesota MISO 25% 2025 68,765,607 17,191,402 5,607

Missouri MISO 15% 2021 84,366,393 12,654,959 4,128

Montana MISO 15% 2015 15,326,020 2,298,903 750

North Dakota* MISO 10% 2015 12,414,260 1,241,426 405

South Dakota* MISO 10% 2015 10,974,456 1,097,446 358

Wisconsin MISO 10% 2015 70,126,474 7,012,647 2,287

Illinois MISO and PJM 25% 2025 144,075,398 36,018,849 11,748

Michigan MISO and PJM 10% 2015 105,769,304 10,576,930 3,450

Ohio** MISO and PJM 25% 2025 159,351,377 39,837,844 12,993

Pennsylvania** MISO and PJM 18% 2021 149,533,660 26,916,059 8,779

Delaware PJM 25% 2026 11,749,518 2,937,379 958

Maryland PJM 20% 2022 62,789,033 12,557,807 4,096

New Jersey PJM 22.5% 2021 80,197,641 18,044,469 5,885

North Carolina PJM 12.5% 2021 130,039,268 16,254,909 5,302

Virginia PJM 15% 2025 109,926,543 16,488,981 5,378

Washington DC PJM 20% 2020 11,492,496 2,298,499 750

West Virginia PJM 25% 2025 34,216,422 8,554,105 2,790* Renewable Energy Goal Total 1,306,594,656 231,982,615 75,768** Includes non-renewable alternative resources


shows that western Kansas has a high degree of independence from locations farther east; i.e., the wind blows at different times and at different speeds.

Table 14 Correlation of Wind Power Production in Western Kansas and Project Delivery Area

Source: NREL, 10 minute simulated production from 2004-2006 Diverse wind resources dampen the overall intermittency of wind generation and facilitate the integration of more wind capacity. If a balancing authority receives all of its wind generation from a narrow geographic area where wind speeds are highly correlated, wind turbines will be more likely to ramp up at the same time and ramp down at the same time, causing large ramp events that exacerbate the intermittency of wind resources. On the other hand, a more diverse mix of wind resources will lead to smaller ramp events, dampening intermittency and providing a more stable supply of power. In this manner, by adding the western Kansas wind resource to the wind profile in Illinois, Indiana and Missouri, the Grain Belt Express will help stabilize the aggregate supply of wind generation to the region. Coupled with a diverse generation portfolio, a robust transmission network, allows for an even greater renewable penetration of the national grid. The Department of Energy has stated: “One of the major benefits of a robust transmission network is that it enables grid operators to adjust the generation mix they are using in response to the intermittent nature of renewable electricity generation, as well as to other unanticipated events or conditions.”70

d. Generation Reliability and Related Ancillary Services

As discussed above in Eligibility Criteria II(ii), HVDC provides a number of reliability benefits, including controllable power flows. By incorporating diverse wind resources through a controllable transmission line, the Grain Belt Express will play a vital role in the continued integration of wind into the grid and into the markets which the Project will serve.

Because wind is a variable resource, it must work in tandem with dispatchable generation that can accommodate changes in wind power output and load variability. In certain circumstances, wind can create the need for additional regulation and frequency response ancillary services and spinning reserves. Regulation and frequency response resources typically balance supply and demand over very short time frames, such as seconds. Procedurally spinning reserves must be available in a ten-minute period.

70 US Department of Energy, National Electric Transmission Congestion Study, December 2009, 24.

Site EWITS ID Latitude (deg) Longitude (deg)

R^2 relative to Spearville Site

Western Kansas

(near Spearville)

62 -100.27 37.67 1

Illinois 1 4242 -89.70 42.14 0.08

Illinois 2 4022 -89.67 41.11 0.32

Illinois 3 5779 -89.33 39.33 0.08

Indiana 1 5862 -86.15 41.49 0.08

Indiana 2 4913 -86.48 40.09 0.30

Indiana 3 6915 -87.30 38.89 0.24

Missouri 1 3904 -93.47 40.44 0.31

Missouri 2 4806 -94.32 37.04 0.09


Every electrical system has baseline variability caused by continuously changing load, which must be managed through ancillary services. Wind integration only adds variability insofar as it increases already existing load variability. It is now industry standard for wind integration studies to consider net load variability, where wind power is treated as a negative load. The wind delivered by the Grain Belt Express may create some additional load variability and an associated demand for ancillary services. The variability of wind resources local to the delivery zone, however, is not correlated to that of the wind resources of the Resource Area, reducing the need for ancillary services due to the additional wind generation. The transmission line will create opportunities to share reserves across the ISO that will diminish the need for additional reserves, and may eliminate it if proper coordination between SPP and MISO can be implemented. HVDC technology can provide a number of services to the grid such as frequency and reactive power control. Because it is controllable, HVDC technology can connect distant parts of the grid without increasing the risk that frequency disturbances originating on one end of the line will propagate to the other end.

e. Involvement in Development of Generation

Clean Line has no competitive interest in existing generation or retail operations and therefore is well-suited to facilitate transmission solutions that provide wholesale customers with affordable access to clean energy. Maintaining exclusive focus on the development and operation of transmission lines enhances Clean Line’s ability to execute projects that best serve the need for increased access to renewable energy. Clean Line does not and will not own any of the generation that will deliver power via the Grain Belt Express. If utilities in the delivery area issue an RFP for renewable resources, Clean Line’s independence will allow competition among renewable generators.

f. Purchase Commitments

Clean Line believes that the appropriate time to enter into transmission service agreements is upon the completion of the initial development of the Project—when permits have been obtained, an interconnection agreement has been signed, and a clear path to right of way acquisition has been established. At that point in time, transmission customers will be able to make long-term commitments to buy capacity on the Grain Belt Express Clean Line with the confidence that the Project will proceed.

Wind developers with projects in Kansas lacking the transmission capacity for their power to reach a viable market are potential customers for the Grain Belt Express; over 9,208 MW of wind projects in Kansas have filed for interconnection services with SPP. Load serving entities on the eastern end of the line may purchase transmission capacity as well.

As Figure 20 shows, the Project will collect the wind power from the Resource Area in one of two ways: (i) generators will build AC lines to the Project substation; or (ii) depending on the level of transmission upgrades completed by SPP, they will buy point to point transmission on the SPP system (Leg 1). Through long-term capacity contracts awarded from an open-season or anchor-tenant process (described further in section 4. Transmission Rights), the Grain Belt Express Clean Line will then deliver the energy to the St. Francois substation (Leg 2). The utility that owns the substation can use the delivered energy either to meet internal needs or it can charge transmission fees and wheel the energy to other end users (Leg 3).


Figure 18 Grain Belt Express Clean Line: Moving Power East


3. Interconnection

If the proposed Project involves an interconnection request, a description of the interconnection request, including, but not limited to, the names of the entities involved in the request, such as transmission facility owners, Regional Transmission Organizations, Independent System Operators, or any other relevant entities, and the status of that request, including queue position and estimated date the transmission facility owner(s) expect to be ready to provide transmission service. Clean Line is working with the interconnecting utilities and RTOs at each end of the Project to perform the necessary studies to guarantee system reliability, to ensure that relevant system interconnection protocols are met, and to determine any necessary system upgrades. To identify an ideal delivery point on the eastern end of the Project, Clean Line engaged Sargent & Lundy to determine the feasibility and reliability impacts of injecting 3,000 to 6,000 MW of wind energy into the southeastern Missouri area. The results indicate that with some local upgrades, the St. Francois substation in St. Francois County, Missouri, will be a viable delivery point for 3,500 MW of wind energy.


An interconnection request was submitted to MISO with an estimated on-line date of 2016 for the Grain Belt Express. MISO has completed its feasibility study, and the interconnection request will soon enter the System Planning and Analysis Study process. With respect to the western end of the Project, Clean Line is working in accordance with SPP Criteria 3.5 and Appendix 11 to the SPP Criteria. For a description of these protocols, please see Appendix 6. Clean Line has presented the project and proposed study scope to SPP stakeholders at a SPP Transmission Working Group meeting. To perform the required interconnection studies for the Grain Belt Express, Clean Line plans to hire a consultant with extensive knowledge and expertise in all areas of power system planning, analysis and modeling and simulation of HVDC integration. Clean Line has previously engaged Siemens PTI to perform a suite of studies for the Plains & Eastern Clean Line to ensure that the project will be implemented in a manner that will not adversely impact the reliability of the bulk electric grid. Using model inputs from SPP and TVA, Siemens PTI is performing load flow (steady state) analysis, short circuit analysis and dynamic stability analysis, giving detailed insight into possible system concerns and, if needed, appropriate mitigation measures to ensure the best possible design of the Plains & Eastern Clean Line. Clean Line plans to take the same approach for the Grain Belt Express. When detailed design on the converter stations begins, further studies may also be required. These studies include, but are not limited to, the following: • Determination of AC temporary over voltages (“TOVs”) and whether the applied compensation

methods and short circuit capacity are adequate. A temporary or permanent bipolar failure is usually the cause of the most severe TOVs. Another potential cause is frequent switching of too large a shunt capacitor bank. However, studies can determine the maximum appropriate size of the shunt capacitor bank. There are grid requirements to ensure AC transient voltage deviations do not adversely impact nearby communities connected to the AC system and that AC substation equipment remains safe. If additional facilities are needed to restrain AC TOVs, these will be investigated and a solution determined. This work can be addressed with Transient Stability and Electromagnetic Transient Studies.

• Improvement of AC system performance. The fast power response of HVDC transmission

allows it to provide support to the interconnected AC system as needed. For example, there is a 500 kV AC transmission line between Winnipeg (in Manitoba) and Minneapolis / St. Paul, Minnesota. If one of the AC line sections trips out, the signal to the circuit breakers that clear the AC line section is also sent to the Nelson River HVDC transmission line, which quickly adjusts its power schedule to keep the AC system functioning. In addition, there is the possibility of adding damping controls on the HVDC transmission line that respond to measured AC frequency at each end and modulate DC power to dampen system oscillations should they occur. This is done on the Square Butte and CU DC projects from North Dakota into Minnesota and also on the Nelson River DC transmission. As a result, the power transfer capability on the underlying and parallel AC system is increased. This work can be addressed with Transient Stability Studies.

• Impact of 60 Hz coupling onto the HVDC line. If the HVDC transmission line is to share

right-of-way with AC circuits, there will be 60 Hz coupling onto the DC line. If this coupling is severe enough, it can lead to saturation in the converter transformers. The solution applied to the Hydro Quebec to New England (Sandy Pond) DC line is to use 60 Hz blocking filters in each pole in series with the valve groups. A control solution is


possible but, to Clean Line’s knowledge, has not been applied. This work can be addressed with Electromagnetic Transient Studies.

• Harmonic studies. It is useful to obtain measured power quality data at the terminating AC

busbars (or as close as possible to them) that include, over a given time period, the voltage Total Harmonic Distortion, voltage harmonics of individual harmonics at least up to the 40th harmonic, and negative sequence unbalance levels. This is necessary information for a technical specification to help with AC filter design. In addition, the AC system harmonic impedance over the same range as the measurements will need to be determined for the technical specification. This work can be addressed with several different software packages including Electromagnetic Transient Studies.

• Switching surge studies. These studies are needed to determine how converter

transformers, filter banks, shunt capacitors and reactors can be energized. The DC controls may respond to the switching action and subsequently worsen the response. This work can be addressed with Electromagnetic Transient Studies.

• Commutation Failures. A commutation failure screening study can be undertaken. If the AC

system fault instigates a commutation failure in too large an area, the Owner may request additional facilities in the converter technical specification to reduce the effect. For example, voltage sourced converters are not prone to fail commutation. Other equipment such as controlled series capacitor converter (“CSCC”) or capacitive commutated converter (“CCC”) may be applied to line commutated converters to reduce sensitivity to AC system faults and commutation failures. The initial screening study can be addressed with Electromagnetic Transient Studies.

4. Transmission Rights

Description of transmission rights or long-term service the entity may desire when the Project is completed. Clean Line anticipates that it will sell most or all of the transmission rights on the Grain Belt Express Clean Line through long-term agreements with either load serving entities or renewable energy developers. Clean Line also anticipates that a secondary market for transmission rights will be created to allow other entities access to the line and to optimize the use of transmission capacity.

FERC has signaled its openness to innovative capacity ownership models for transmission projects. In particular, FERC has demonstrated its understanding that the traditional rate-based transmission model for incumbent utilities is not sufficient to bring about the interstate and interregional projects needed to integrate more renewable energy into the nation’s generation mix.

In February 2009, FERC authorized a negotiated rate proposal for the Zephyr Power Transmission, LLC and Chinook Power Transmission, LLC projects under development by TransCanada.71

71 Chinook Power Transmission, LLC & Zephyr Power Transmission, LLC, 126 FERC ¶ 61,134 (2009).

In lieu of the conventional open season process, FERC authorized Zephyr and Chinook to pre-subscribe transmission capacity to customers willing to make an early commitment (“anchors”). This “anchor-tenant” model helps solve the “chicken and egg” problem that troubles many transmission projects; transmission customers do not want to commit to transmission capacity before they know a project will be built, but


transmission developers do not want to commit to building a project before they know customers will purchase the capacity.

Clean Line anticipates that the Project will include a mix of anchor-tenant and open-season transmission customers. It is likely that both generators and power purchasers will own capacity on the Grain Belt Express Clean Line. The creditworthiness of capacity customers is a key consideration and is essential to successful financing of the Project. Clean Line expects to sign capacity contracts leading up to the completion of the development phase of the project. Because the Grain Belt Express is an interstate line, the process and terms under which capacity is sold will be subject to regulation by FERC. In the Zephyr and Chinook ruling, FERC set forth four criteria for evaluating requests for negotiated rate authority. One of those criteria is avoiding “the potential for undue preference, including affiliate preference.”72

5. Participant Roles

In light of this statement and subsequent FERC decisions, Clean Line believes it is more likely to reach a rate structure that is acceptable to FERC because of its independence from wind developers.

Description of the proposed role that the submitting entity, the relevant PMA, the Secretary, and any other Project participants might play in the development, ownership, operation, and maintenance of the Project. Section 1222 authorizes DOE to “participate with other entities in designing, developing, constructing, operating, maintaining or owning, a new electric power transmission facility and related facilities”73

DOE and Southwestern are authorized to “accept and use funds contributed by another entity for the purpose of carrying out”

that are located in states in which Southwestern operates. Congress gave DOE, Southwestern and the Western Area Power Administration ("Western") this authority after the successful efforts by DOE, Western and private parties to provide much-needed transmission capacity through the development of the Path 15 transmission facilities in California. Western participated in the planning and development of those facilities and, in certain limited cases, exercised its condemnation authority under federal law to acquire needed property rights. Western’s use of eminent domain authority to enable development of the Path 15 facilities was upheld by the U.S. Court of Appeals for the Ninth Circuit. United States v. 14.02 Acres of Land More or Less in Fresno County, 547 F.3d 943 (9th Cir. 2008). DOE, Southwestern and Western will have the same authority in carrying out Section 1222 projects.

74

Clean Line has done a substantial amount of work to advance the development of the Grain Belt Express Clean Line. The use of Section 1222 is both desirable and necessary because the Project crosses multiple states, involves areas served by more than one Transmission Organization, and has national significance and impact. For these reasons, the Project requires Federal participation for the development and permitting process.

a Section 1222 project and do not need any further Congressional authority or appropriation. There is no requirement, however, that a private party contribute funds or that DOE accept such funds in carrying out a Section 1222 project.

72 Federal Energy Regulatory Commission, February 19, 2009, 12. http://www.ferc.gov/whats-new/comm-meet/2009/021909/E-15.pdf. 73 US Department of Energy, Request for Proposals for New or Upgraded Transmission Line Projects under Section 1222 of the Energy Policy Act of 2005, Southwestern Power Administration and Western Area Power Administration, June 10, 2010. 74 US Department of Energy, Request for Proposals for New or Upgraded Transmission Line Projects under Section 1222 of the Energy Policy Act of 2005, Southwestern Power Administration and Western Area Power Administration, June 10, 2010.


Clean Line does not currently foresee the need for a sizable financial investment by DOE or Southwestern in the Grain Belt Express Clean Line. Rather, Clean Line will pay for all or nearly all of the costs of developing these facilities, including (through the use of the Section 1222 contributed funds authority) DOE’s and Southwestern’s costs of participating in the Project. Therefore, Clean Line is not seeking Federal financial support under this proposal.

Clean Line anticipates the involvement of DOE and Southwestern in the development of the Grain Belt Express in three critically important areas: public outreach, siting and permitting. The precise roles and responsibilities of DOE, Southwestern and Clean Line will be specified in development agreements and other arrangements to be negotiated among the parties.

First, the participation of DOE and Southwestern in the Project will be critically important in defining the exact parameters of the route and gaining public acceptance and support. Southwestern has a long history of working cooperatively with utilities, communities, landowners, state officials and others in helping meet their needs while simultaneously serving national interests. By working together, Clean Line and Southwestern can help ensure that the Project is developed in such a way that stakeholder interests are preserved and that its national significance and importance are understood by all interested parties.

Second, because Southwestern can acquire property through the use of eminent domain, all Project participants can be assured that if necessary state and federal permits are obtained and there is customer demand for the transmission capacity, then the Project will be built. The regulatory and legal certainty allows developers of renewable projects, buyers of renewable energy, and the investment community to commit billions of dollars to fund the construction of both the Project and the accompanying renewable generation facilities. Without the certainty provided by Section 1222 or a similar statute with respect to right of way acquisition, there is real doubt that the cost-effective renewable energy from the Resource Area can be made available to MISO and PJM.

States often have laws allowing utilities to use eminent domain for siting transmission lines because the development of lines that serve the overall public interest cannot rely on 100% of private landowners voluntarily selling needed property rights. Clean Line will seek authority from the states of Kansas and Missouri to use eminent domain to acquire right of way for the Project if certain private negotiations prove unsuccessful. If it obtains this authority from the states, Clean Line anticipates that it will use state law and processes to exercise eminent domain authority when necessary to acquire property rights, rather than call upon Southwestern to exercise its federal right of eminent domain.

Clean Line believes that eminent domain will be used very rarely in connection with the Project’s development. The Company is committed to treating all landowners with respect and expects to acquire at least 90% of the necessary rights of way through private transactions. To achieve these goals Clean Line will pay fair market value for all necessary property rights and will obligate its representatives and land agents to abide by a code of conduct. Landowners will be contacted as early as possible, and sufficient time will be allocated for negotiations. The legal and administrative expenses of condemning land will be avoided if reasonably possible.

Through the Section 1222 process, the Project will benefit from DOE and Southwestern taking a leading role in coordinating federal permitting actions and overseeing necessary NEPA analyses. Coordinating federal authorizations for transmission facilities is consistent with DOE’s authority under Federal Power Act section 216(h). Such action will ensure that the energy security policies and interests of the Administration and DOE, as set forth in Section 1222 itself, are taken into account in the Project’s planning, development and construction.


Clean Line believes that the best way for DOE to carry out these functions will be to delegate authority to FERC to act as lead agency in preparing the Environmental Impact Statement. DOE will continue to have final decision-making authority over its participation in the Project and its development. Delegating to FERC will take advantage of FERC’s considerable experience in performing NEPA analyses for long-distance linear infrastructure projects that it has developed through its work on siting natural gas pipelines. Many of the issues in siting pipelines – for example, wildlife, plant and archaeological issues – are relevant to siting long-distance transmission lines. Through the contributed funds authority of Section 1222, Clean Line is prepared to pay the NEPA-related expenses of DOE, Southwestern and FERC in carrying out appropriate NEPA analysis for the Project.

Clean Line will continue to be the entity with primary responsibility for the Project’s permitting, land acquisition, interconnection studies and construction.

6. Prior Experience

A brief description of the submitting entity’s prior experience related to constructing, financing, facilitating, or studying construction of upgraded and/or new electric power transmission lines and related facilities for the primary purpose of delivering or facilitating the delivery of power generated by resources constructed or reasonably expected to be constructed. In addition to the Grain Belt Express, Clean Line is developing three other projects that will facilitate the movement of thousands of megawatts of renewable energy from resource-rich areas to major load centers via HVDC transmission lines. Clean Line has the management capability and the team to pursue all of these projects. The Company has dedicated project teams working full time on each project and is partnering with leading firms highly experienced in building linear, multi-state infrastructure projects. Clean Line was founded by Michael Skelly, who led the development efforts at Horizon Wind Energy. The rest of the management team is comprised of highly regarded professionals in the electric energy industry, including individuals who have designed, studied, developed and secured the financing for multiple transmission lines. The team also includes executives who have managed, built and financed projects in the renewable and traditional energy sectors around the world, as well as senior policy professionals who have shaped energy policy and advanced the renewable energy agenda at the local, state and national levels. In aggregate, the Clean Line team has financed billions of dollars of projects and managed the development and construction of thousands of megawatts of power plants and transmission lines. Biographies of key Clean Line employees are in Appendix 7.

7. Participation of Other Entities

A brief description of any steps the entity has taken to seek interest from other entities in participating in developing the proposed Project or in seeking interest in subscribers for the additional transmission capacity resulting from the proposed Project. The successful development of the Grain Belt Express requires substantial and widespread participation from a diverse group of other entities and stakeholders. Clean Line is responsible for working collaboratively with the landowners, towns, counties, factories and businesses most affected by the Grain Belt Express Clean Line. To garner support for the Project, Clean Line has launched an extensive outreach campaign to ensure that the states of Kansas and Missouri view the Project as a source of jobs, security and opportunity.


Clean Line has engaged in dialogue with and solicited input from organizations and individuals concerned about how new infrastructure may affect land use. In order to proactively address concerns related to environmentally sensitive areas, Clean Line has reached out to the Kansas Field Office of The Nature Conservancy, the Missouri Department of Conservation and the Sierra Club and will continue in these efforts with other environmental and natural resource groups.

To ensure that qualified local suppliers and contractors can participate in the construction and operation of the Project, Clean Line intends to work closely with the economic development offices and state Chambers of Commerce in both Kansas and Missouri. With the help of these offices, Clean Line is working to maximize the involvement of local businesses in the Project area.

Clean Line launched its siting efforts for the Grain Belt Express Clean Line by engaging Ecology and Environment, Inc. (“E&E”) to perform a Phase I Corridor Identification Study. E&E is identifying potential corridors within which one or more possible transmission routes could be located. Preliminary findings are included in Appendix 8, but maps have been excluded due to the early stage of this analysis.

Clean Line will continue to employ an experienced environmental consultant for the Project’s state permitting and NEPA permitting processes. The firm will assist Clean Line in routing the Project so as to minimize land use and environmental impacts.

Though Clean Line will not enter into transmission service agreements until the Project reaches a more advanced stage of development, many parties have demonstrated their interest in the Project. Clean Line is working with several key wind developers in the US that have wind farms under development in western Kansas. These developers are potential capacity customers on the line. Alternatively, the same developers can sell renewable energy to load serving entities that purchase transmission capacity on the Grain Belt Express.

Clean Line is working with leading HVDC equipment manufacturers to present the benefits of the technology to planning engineers and operators. In June 2010, Clean Line hosted personnel from SPP, TVA and other utilities at a seminar where Siemens engineers explained the technical, planning and operational aspects of HVDC.

Clean Line has made progress on the interconnection process for the terminals at both ends of the transmission line. As previously described, Clean Line has submitted an interconnection request to MISO. Clean Line executed an Interconnection Study Agreement with MISO on February 12, 2010, and received the results of the Interconnection Feasibility Study for the Project on March 12, 2010. The Project will soon begin work on the System Planning & Analysis Study. Clean Line has held extensive discussions with staff and members of SPP and officially introduced the Project to the Transmission Working Group for future planning. Clean Line will continue to work with SPP to conduct further studies on how to integrate the Project with the SPP system.

8. Financial Viability

Verifiable information demonstrating that the entity is in sound financial condition and has the ability to secure the necessary financing to meet the Project’s requirements at all relevant phases of the Project. Clean Line has secured the ideal investor group for the development of interstate transmission projects – investors focused on long-term results with a shared vision of the need for dramatic investments to integrate renewable energy across the US electric transmission system. Clean Line has enough


development capital to fund all four of its projects currently underway. Each project has its own budget and its own allocation of funding. As the Project progresses, Clean Line and its investors, independently, or along with other financial sponsors, will raise the additional capital needed to construct and operate the Project. The majority owner of Clean Line Energy Partners LLC is ZAM Ventures, L.P. (“ZAM Ventures”), the principal investment vehicle for ZBI Ventures, L.L.C. ZBI Ventures, L.L.C., which focuses on long-term investments in the energy sector, is a subsidiary of Ziff Brothers Investments, L.L.C. ZAM Ventures’ investments include several clean energy companies, such as biotechnology companies in the United States and a sugar-based ethanol business in Brazil. Additional owners of Clean Line Energy Partners include the Houston-based Zilkha family. The Zilkha family has a proven track record of making successful investments in the energy industry, including investing 100% of the equity in Horizon Wind Energy during its initial growth stage. Upon request from DOE, Clean Line can provide additional information about its equity backing on a confidential basis. One of the keys to a project’s success is to have the proper financial backing for the applicable phase of the project’s development. In considering its financing needs, Clean Line views the Grain Belt Express Clean Line as consisting of three phases.

Table 15 Finance Plan

Source: Clean Line Energy Though there is substantial interest in transmission, most investors want to fund projects that are construction-ready. Consequently, it is much harder to locate capital with the patience and risk appetite to fund early development. Clean Line has secured the funding it needs to advance the development of the Grain Belt Express to a stage where transmission service agreements can be signed and more traditional sources of financing can be secured.

Clean Line’s management team has the requisite experience in raising capital for large-scale energy projects. Executive Vice President Jayshree Desai was formerly Chief Financial Officer of Horizon Wind Energy, where she led the company through several billion dollars of financings and acquisitions including

Phase Key MilestonesApproximate Percentage

of Project CostSiting authority

Interconnection studies

Routing

Permitting

Public outreach

Order DC converters

Acquire right of way

Install and commission converters

Procure and install towers, cable

Development

Pre-construction

Construction

10%

1-2%

88-89%


the 2005 company sale to Goldman Sachs and the 2007 sale to Energias de Portugal (“EDP”). She was a key part of the management team responsible for raising over $2.4 billion in the initial public offering of EDP’s renewable energy subsidiary. Vice President of Finance and Strategy, David Berry, has led over $2 billion of project finance transactions, including non-recourse debt deals and structured equity transactions.

Large amounts of liquidity exist in the capital markets for transmission projects that have reached an advanced stage of development. The debt markets have a history of supporting transmission, including merchant and HVDC lines. In 2003, the Path 15 project, an 83 mile stretch of 500 kV lines in Southern California, closed $209 million in debt financing spread across the bank and bond markets. In 2005, the Neptune Project, a 500 kV HVDC submarine line connecting New Jersey to Long Island, raised $600 million in a private placement at a competitive spread of 125 basis points over LIBOR. In early 2008, Trans Bay Cable LLC successfully closed an approximately $500 million transaction in the project finance market to fund a 53-mile underwater HVDC project across the San Francisco Bay. In September 2008, the Trans-Allegheny Interstate Line Company (“TrAIL”) project closed a $550 million senior secured loan. In January 2010, TrAIL closed an $800 million financing, consisting of $350 million in floating bank debt and $450 million in fixed coupon bonds.

ZAM Ventures is committed to funding the development of the Grain Belt Express Clean Line and expects to have a continued interest in the project. Other equity investors will be brought in to raise the funds necessary to construct a project of this size.

9. Additional Information

a. Project Schedule

Figure 19 Grain Belt Express Project Schedule



10. Conclusion

The Grain Belt Express Clean Line meets the demand for new electric transmission infrastructure to connect the best renewable energy resources to load centers. The Project and the renewable energy generation it will stimulate will create jobs, reduce pollution and improve the country’s energy security. By supporting the Project’s public outreach, permitting and siting efforts, DOE and Southwestern can play a critical role in the Project’s success – a partnership between Clean Line and Southwestern could make these benefits a reality. For further information about Clean Line Energy Partners and the Grain Belt Express Clean Line, please contact: Michael Skelly President Clean Line Energy Partners LLC 1001 McKinney, Suite 700 Houston, Texas, 77002 (o) 832.319.6333 [email protected]


APPENDICES

1. Benefits of High Voltage Direct Current Technology

2. An Economic Impact Study of the Proposed Grain Belt Express Clean Line – Development

Strategies, Inc.

3. Analysis of the Benefits of the Proposed Grain Belt Express Clean Line – ICF International

4. The Grain Belt Express Clean Line: A Growth Opportunity for Missouri Manufacturers

5. Levelized Cost Model for a Kansas Wind Farm

6. SPP Criteria 3.5 and Appendix 11

7. Clean Line Energy Partners Biographies

8. Phase 1 Corridor Identification and Analysis Report for the Grain Belt Express Clean Line

Project – Ecology and Environment, Inc.

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