Todd Alexander Welcome to Currents and Norton Rose Fulbright podcast. I’m Todd Alexander, host, and a partner in Norton Rose Fulbright Projects Group. Today, we welcome back to the podcast Kimberlee Centera, CEO of TerraPro Solutions, which is a consulting firm for renewable energy projects. She’s here to discuss transmission project development. Kimberlee, welcome back to the podcast.

Kimberlee Centera Thank you, Todd. I’m happy to be here.

Todd Alexander So transmission’s been a big issue for the renewable sector for a long time, given that the wind may not blow exactly where people live or the sun may not shine exactly where people live, or for that matter, it’s hard to cite things in areas that are densely populated where there’s a lot of road. Can you share with us some of your experiences about transmission projects and those that you’ve worked on over the years and give people an idea of what has been done over the last few years to try to make the transmission sector a better host for renewable projects?

Kimberlee Centera Right. Well, thank you for that question, Todd, because I think it’s always the top of the mind when we’re developing projects. Right. You can have a great project, the wind blowing or the sun’s shining. But if you can’t get the power to where you need to, then it really all becomes moot. And my earliest experiences with transmission actually go back to the days of the sagebrush transmission line in the late 80s, early 90s, which was at the time, forty-six mile privately held transmission line, one of the longest, I think, privately held lines that had been built. Back in those days it cost twenty-eight million dollars, which translated into today’s dollars is about seventy-six million dollars. So, the acquisition costs were quite substantial. And my job was to work on all the curative work, which was to do all the title review, get the title policies issued so, you know, back in the early days that that was, I think, the one of the earliest days of transmission. Moving forward, as I say, it’s one of the pieces, you know, when we’re looking at projects, we’re looking at site location, we’re looking at interconnection, we’re looking at transmission, and we’re, you know, looking at access. And it’s interesting because, you know, from a lot of standpoints, the idea is transmission can be, you know, easier. Maybe it’s not as controversial as to say is the project, but it has its own set of challenges. And we worked on a project recently where they’ve done all the siting, pursuing their permitting, and then they discovered along their twenty-five-mile transmission line that they had a restriction on title that affected a lot of the private land parcels where it prohibited development of any kind except pasture and grazing and farming. So, it can be quite a challenge to get your transmission in, but it’s so integral to the success of the projects.

Todd Alexander So when you’re trying to put together all the land rights for a transmission project, what are some of the biggest challenges? I know from working on gas pipelines, for example, there theoretically at least, you have FERC to help you. Is there a similar type of assistance that can be called upon on the federal level to help you obtain the rights of way that you need? Or do you have to go out there and try to piece it together yourself? And for that matter, what other big challenges do you see?

Kimberlee Centera Right. So traditionally, exactly. You know, in our sector and the private sector working on these projects, we had to piece together all the property ourselves. So, we were going to have to look at what is the makeup, what is the ownership. And we want to make sure that we have you know you know, if you’re looking at it, is it all private you know? Do you have some federal lands? Do you have state lands? Do you have you know, who else can be the holders of the property? I think understanding the ownership is really crucial because that’s going to play into the permitting. And a lot of times if we’re looking at feasibility, you know, a client will say what we want to stay off federal lands or we want to say off state lands because they don’t want to trigger some of the permitting. Traditionally, we did not have, you know, the benefit of FERC and some of these other, you know, regulations to be able to step in. You know, a lot of the utilities, they have condemnation, rights. So, they have the ability if they’re not able to reach some kind of reasonable agreement, then they have some kind of mechanism to try to use to acquire that right. But in the private sector in which we work, those rights don’t exist. Now, it’s going to be interesting. There’s a lot of conversation around transmission now especially. And I think we see that because of what happened in Texas in February. And we’re seeing a lot of mandates and legislation and a lot of other interesting pieces that are moving brought forward by our current administration and other groups. And so, I think there’s definitely an interest and people are looking at this and there’s, you know, a lot of other incentives and ways that they’re trying to be creative, to provide some mechanisms to move forward transmission. So, it’ll be interesting to see how those develop and what they are.

Todd Alexander So you mentioned the federal government. I know the DOE has a plan in place to provide billions of dollars for transmission build out. Maybe you can talk a little bit about that program.

Kimberlee Centera Right. And there’s a lot of different elements to it. I think it’s interesting that there’s also an element to it that wants to try to provide some incentive on tribal lands, which we know traditionally has been maybe difficult to negotiate. So, I think it’s definitely interesting. You know, it’s going to require a lot of further review and due diligence to understand exactly how that’s going to benefit these projects and how we’re going to be able to access those funds. But I think certainly it illustrates now something that I think the renewable business itself and the industry and the developers and sponsors have certainly been talking about for a long time, you know. We need to give this attention to transmission, so it’s great to see now that a lot of these programs are being put into effect. I’m sure as a developer, if I put on my developer hat, there’s going to be a lot of questions because there’s quite a bit of space that we have to cover between knowing that there is a program out there and then being able to actually access those funds and then put them to work in terms of the project. So, I think that part of it is still under review and being determined. But certainly, it’s very interesting that this has been put forward and that there’s an interest in seeing this to incentivize the transmission rights and acquisition.

Todd Alexander What about the program the Department of Transportation has to try to get transmission lines built along public highways or other transportation Rights of Way.

Kimberlee Centera Right. So certainly, another really interesting piece, this idea of can we utilize Rights of Way. I think also something saw something along railroads and that type of thing. So, but I think some of the challenges that we may encounter is, again, the makeup of ownership. You have distinctions between federal rights and state rights. So, along the lines of the analogy of if you have a transmission line and most of it is private, but then you have a piece in the middle that can be public, then what are the implications going to be? So, I think the other piece of this is going to be the permitting. You know, we really can’t just isolate the monetary piece of this. We need to look at how that’s going to play into the permitting and a lot of the different requirements that are now in play, because traditionally we would try to avoid some of the right of ways or look at those really carefully. I think the other thing that we encounter is we’re always looking at this from the standpoint of financing and whatever we’re going to get is going to ultimately have to pass that, you know, lender scrutiny, tax equity scrutiny. So, what is the view going to be on those rights and how are we going to be able to ensure those for purposes of the project? So, I think it’s interesting. I think there’s a lot of programs that are being advanced, but I still see a lot of work to be done between, you know, the fact that we have these programs there and how they actually will be implemented to be able to help and support our projects.

Todd Alexander What you’ve mentioned a couple of times now, the idea of maybe favoring private landowners over government landowners, what are some of the challenges of working with private landowners or the benefits versus working with a government landowner?

Kimberlee Centera Well, we talked about financing, right? And typically, when you think about these projects, you’re working with private landowners, you know, you’re presenting, let’s just say, your form of agreement that, you know, is going to be financeable, let’s call it. You know, typically that’s the starting point in these negotiations. And so, there is a discussion that happens with the private landowners around those terms and conditions and what’s going to work. A lot of times when you’re working with governmental agencies or other types of agencies, you know, they present the document to you. And in some cases, it’s kind of like, well, it’s you know, it’s our way or the highway, right. Highway, take it or leave it. And there’s not always a lot of negotiation that happens. So, it can be a challenge. You know, you can certainly get those agreements financed. And I think as we’re looking at all these mandates and all this support, I think it provides the foundation to be able to assert to our lender parties and tax equity parties or there will be a methodology for making that happen. But it is it’s a challenge when you’re looking at the agencies, the types of things that they require. And I think also the timing, you know, working with private landowners, in a lot of cases, you have maybe a little bit more control, not always, but a little more control over the timing and the speed at which things move. But, you know, a lot of times in the government sector and I think certainly coming out of last year, you’re going to see a lot of challenges with just moving things forward. I mean, I think we’re seeing that in so many cases on our projects where, you know, things are held up either from a permitting standpoint or, you know, we do a lot of negotiations around federal loans that might affect properties. And those timeframes now are upwards of 12 months to be able to negotiate that documentation. So that will be another challenge as well. Just timing.

Todd Alexander So beyond looking at whether it’s privately held or publicly held property, what are some of the other factors that you look at when you’re doing a feasibility analysis of a proposed transmission project?

Kimberlee Centera I think we’re going to look at the land use. You know, it’s a factor in terms of our of our projects. And I think you mentioned at the beginning of this, a lot of our projects are located away from the road. A lot of it is going to involve the land use. What is the current land use? And there can be some interesting aspects of that when we’re doing feasibility. And I looked at a project recently where, you know, they engineered around entire sections that were controlled by an oil major oil and gas company. So, we’ll look at things like, is there a severance? We will look at other land uses. We will also look at the community. And what are some of the concerns about the around the community, you know, stakeholders, transmission lines. Traditionally, they have to be above ground, especially servicing our projects. If you’re talking about, you know, the smaller lower voltage or medium voltage, you know, that can pretty easily be buried underground. But most of the transmission projects that we’re going to be looking at are going to be large scale above ground, I’m sure, in the excess of seventy-five feet wide. So, you’re talking about a pretty significant overhead, you know, improvement that’s going to have to be installed, getting people comfortable with that. So, there’s you know, we look at those kinds of pieces, I think when you’re talking about with within Right of Ways and that kind of thing, which we’re also looking at, you know, a lot of it is just the practicality. Is there enough space? You know, because frequently in these public Right of Ways that we’re talking about, there’s federal rights of way, let’s just say along a highway, you’ve already got a lot of other transmission or other uses going on. So, we have to be able to make sure that our use is going to fit and be compatible within whatever space is remaining that might be available. So, a lot of those different pieces will we’ll try to understand even the what the overall engineering, you know, what are the structures going to look like? Because frequently our stakeholders are going to care about the structures. You know, what are they going to be wood? Are they going to be steel? How tall? So, all those things need to be understood in terms of feasibility.

Todd Alexander You mentioned whether the transmission should be sited above ground or below ground, I live it up there in the Northeast when it’s wintertime, the people who have the aboveground wires, it seems like their power goes out. And I had always thought that it was really just a question of cost. If it was just expensive to put the wire underground, but if the population was dense enough, you kind of had to do that because it’s the only way to get through heavily densely populated areas. But you’re making it sound like that’s not the cases that are there. Restrictions also in terms of voltage that you can’t really put high voltage wires below ground either.

Kimberlee Centera Absolutely. There are cases where if you’re talking about a five-hundred-megawatt line, you know, that’s not something that you can easily underground and, you know, because you’re going to have issues around, you know, heat and that sort of thing. And so, it’s definitely a matter of cost. That’s a factor. It can be a million dollars a mile or more to underground. So that’s not something that we’re going to take lightly. But I think from an engineering standpoint, you know, sometimes it’s just not feasible to be able to locate high voltage lines underground.

Todd Alexander How about building along the railway corridors? I know from working again on gas pipelines and also some of the transmission lines that we’ve worked on at Norton Rose, those people often talk about trying to site along existing rights away for the exact reasons that you’re mentioning there. It’s very tough to get land rights. And you also, even if you can get the land rights, you don’t want to have public opposition. So, you try to go where there’s already something there. Is that kind of a preferred approach for a lot of people? What challenges does that present trying to go along the railway railroad route?

Kimberlee Centera Yeah, it’s a great it’s a great question. I think some of the challenge that we’ve encountered specifically with railroad Right of Ways is, first of all, which railroad is it that’s in control. So, believe it or not, ownership, it can be a question. We worked on one project here in California where the railroads have an agreement, where it changes every 10 years, the ownership of the railroad line flip flops to another agency. So first of all, you’ve got to try to figure out which agency are you even going to be talking to. And then I think, again, when we look at, you know, specific requirements, the railways are just inherently because they have a certain liability that they have to make sure and protect. They’re very cautious as far as any kind of improvements that are going to be within that Right of Way. So, there’s going to be a very strict adherence to whatever their requirements are whether you go over the railroad, whether you have to dig a culvert, go under the railroad. So, I think that’s what we’ve seen. But the biggest challenge for us is timing. We have a project right now that we are now over two years in the process of trying to get the right of way crossing finalized. And it’s just it’s taken that long for them, you know, to be able to look at all the engineering, do all the review, and it’s still not done. So, I think, you know, that’s kind of the other challenge that will face a project is just the timing, you know. So, if you know, you’re going to a project in 2023 and you’re going to be crossing a railroad and you haven’t already started that, you might you can almost say, well, you’re already behind. So, I think that’s the other challenge, because a lot of times these projects, they’re going along your engineering. Let’s go. Right. And maybe your construction start is six months or nine months out, but certainly you’re not necessarily planning for a couple of years, which can be the challenge with the railroad.

Todd Alexander Let some things up here. What do you think the next couple of years looks like for transmission development? What are your thoughts on the industry and where do you think the most opportunity lies?

Kimberlee Centera I’m actually really encouraged because there’s a more intelligent conversation happening around transmission with more solutions being put forward than I’ve ever seen. You know, we’re looking at Right of Ways we’re looking at railroad Right of Way, state, federal. There’s I saw even an article around some kind of a tax credit for transmission. So, I think we’re finally really having the conversation that we needed to have. And I think the parties are starting to come to the table and agreeing that this is a really important part of the development of renewables and our ability to be able to meet our sustainability goals. So, it’s something it’s kind of been, you know, the red herring in the room, so to speak. So, it’s now moving forward. So, I think that’s very important. And I’m really happy to see that that conversation is taking place. And I think it also helps us to be able to help our clients really look at this. The fact that there’s going to be this support is going to make those conversations easier, even if you’re having those conversations now at the project level, the fact that there’s so much emphasis being put on it as from kind of the political piece gives a great segue way for us to be able to have those conversations and say, look, this is difficult. What can we do to move this forward? So, I think I see it as really being a huge benefit for the projects and especially certain projects that maybe this has been one of the primary challenges, which we have a lot of these.

Todd Alexander Good. Sounds optimistic, which is which is always good to hear. And I think there are if the clients coming to Norton Rose are any indication, it does seem to be a lot of focus put on this area and a lot of opportunity. So hopefully there’s some good work out there for both of us.

Kimberlee Centera Yes, yes, exactly.

Todd Alexander All right, well, thanks for being with us again, Kimberlee.

Kimberlee Centera Thank you.

Todd Alexander  You can find us online at www.ProjectFinance.Law, or send us an email at Currents@NortonRoseFulbright.com, please rate review and subscribe on Apple podcast Spotify or your preferred podcast app. Our show today was produced by Emily Rogers. Stay ahead of the cuts.