A plan to build a multi-billion dollar transmission line from the Dallas-Fort Worth area to Mississippi, dubbed Southern Spirit by its developer Pattern Energy, has made waves on social media this past week after the Dallas Morning News wrote about the project, followed by other Texas media outlets. The project, which has been in the works for over a decade and received approval from federal regulators back in 2014, is still years away from completion but is close to receiving its final regulatory approvals in Texas, Louisiana, and Mississippi.
Wind and solar advocates have been aflutter since Winter Storm Uri in February 2021 with calls for the Electric Reliability Council of Texas (ERCOT) grid, which covers 90% of Texas’s population, to establish more connections with other states. The Dallas Morning News followed the report on Southern Spirit with an editorial, which reads more like an advertisement, lavishing on the resiliency benefits of the project, and even Pattern has said the project will serve as “ice storm insurance” for Texas.
To be fair, the project’s backers are not advertising it as a reliability cure-all. At most, the line will be able to transfer about 3 GW, or about 4% of peak demand in ERCOT. However, this project is part of a consistent drumbeat from advocates for more transmission, who argue that it is more efficient to connect to other regions with excess capacity than to build more dispatchable power plants locally. They say that Texas should give up its status as an isolated electric network so that it can export excess wind and solar to other states when demand in Texas is low and import power when demand is high.
But as always, reality is more challenging than these unreliable advocates suggest, and the Southern Spirit project is a case study in hard realities.
First, while the project is notable for its size, it is not unique. ERCOT already has four similar ties to other grids: two to Mexico, one in North Texas and one in East Texas close to where the Southern Spirit line will run. The operation of these lines during Winter Storm Uri is an empirical example of the challenge of importing power during extreme weather events. The two markets to the east of Texas that the Southern Spirit line will run through, the Southwest Power Pool (SPP) and the Midcontinent ISO, required massive imports of power during the storm to stay afloat, and SPP still had a brief period of rolling outages. We’ll see again during the storm next week that those regions will be net importers of power. They have very little to give to Texas in the form of “ice storm insurance.”
Second, multi-state transmission projects like this require layers of federal, state, and local approvals that take years or sometimes decades to obtain. When the Federal Energy Regulatory Commission approved the project in 2014, reports indicated the planned completion date was 2019. Long state regulatory processes and lack of demand for the project put it on ice for a while. Now the start date is 2026, and completion date has stretched to 2029. Federal environmental approvals and additional local permitting battles could stretch that date back even further.
The extensive approvals and permits required for this project are an indictment of how much the U.S. overregulates large industrial projects and why they have become harder and harder to complete. But it also attests to how much land is required for transmission lines and their extensive environmental and property impacts. The 320-mile Southern Spirit line will likely require over 11,000 acres of right of way across hundreds of properties. While the project is being privately funded, it will require the use of eminent domain to seize land, which will likely spawn additional legal battles.
Imagine the time it would take to duplicate this project five times over, maybe requiring a decade or more to get 15 GW of interstate transmission capacity. That’s not enough to meet peak demand growth in ERCOT over the next decade, much less compensate for fluctuations in wind and solar output and the other problems that caused the disaster in 2021. Transmission helps balance the system, but if one wants to call these connections an “insurance policy,” they are quite a meager one. Even if this buildout were to happen, Texas would still need to build more dispatchable generation locally.
Finally, there is the issue of cost. The project is privately funded, and its backers expect to receive a return on their investment by having electricity generators and consumers pay for the use of the line. In that sense, market forces will to some degree determine the value of the project. But from the perspective of the system planners at ERCOT and the Public Utility Commission of Texas, is it more efficient to solve ERCOT’s reliability problems by building more interstate transmission, as the wind and solar lobby often suggests, or by building more power plants locally?
The answer is clearly the latter. Based on the most recent capital cost data from the Energy Information Administration, $2.6 billion could purchase about 2.5 GW of natural gas capacity, roughly equal to what the Southern Spirit line could theoretically import in an emergency. That could happen if ERCOT’s eastern neighbors had a true excess of reserve capacity, but as noted above, expecting this line to make 2.5 GW of imports available in an emergency is foolish. Reliability for Texas consumers would be far greater improved if this money was invested in new dispatchable capacity in ERCOT.
The reason the Southern Spirit line makes sense for its investors is not for the relatively few hours every year when ERCOT is short of capacity and its neighbors are not, but for the many hours when ERCOT has too much wind and solar generation. The line provides more buyers for that excess generation, some of which is owned by Pattern itself, and increases the price for that electricity.
The bottom line is that this project will not meaningfully improve reliability in Texas as long as the ERCOT market remains broken. Texas needs to focus on fixing the market—primarily the federal subsidy-driven overbuilding of wind and solar that is causing the existing reliability deficit—and not place its hopes on its neighbors to bail it out.