Utilising the Power Infrastructure to Fuel a Transition to Sustainable Energy and the Impact of Energy Policies in North Dakota

Introduction

North Dakota, well known as the USA’s third-largest crude oil producer and home to the world’s second-largest deposit of lignite coal, stands to maintain its position as an important player in power generation and transmission even as the United States transitions to renewable energy. Unbeknown to many, over 40% of the electricity generated in North Dakota comes from renewable resources and over 50% of the electricity generated in North Dakota, including two thirds of its wind energy, is exported to surrounding states and Canada by way of extensive transmission lines. Leaders in North Dakota have identified the value of its established energy infrastructure and want to prioritise utilisation of the state’s diversified energy portfolio by implementing policies that promote energy development, generation and transmission. 

Status quo of energy generation in North Dakota

North Dakota, like most of the United States, is experiencing an energy transition. Rich in natural resources, it has historically relied upon mineral resources (coal, oil and natural gas) to satisfy energy demand. Over the last two decades, however, North Dakota has taken a more diversified approach by investing more in renewable energy sources (wind, in particular). Today, North Dakota ranks among the top ten states in the nation for installed wind capacity. 

North Dakota relies on a variety of sources to feed its energy needs. Chief among these is coal, which accounts for 55% of the power generated in the state. Its coal reserves are extensive – estimated to exceed 25 billion tons, enough to last 800 years at current rates of consumption. In addition to coal power plants, the Garrison Dam, North Dakota’s sole hydroelectric power plant, adds an additional baseload source of energy and accounts for 5% of the power generated in the state. 

Intermittent renewable energy resources supplement the baseload generation provided by coal and hydroelectricity. These resources are becoming increasingly prevalent throughout the northern plains state, particularly with the development of large wind energy projects in the last 20 years. In fact, North Dakota’s wind energy sources are among the most abundant in the nation. Wind energy currently accounts for roughly 37% of the power generated in North Dakota. There are over 2,000 operating wind turbines located throughout the state – with plans to substantially increase wind energy capacity in the near term. Additionally, although presently far less prevalent and virtually non-existent at the utility level, solar energy capacity is expected to marginally increase in the near future. Although North Dakota maintains a robust baseload, the increase of intermittent energy resources like wind and solar energy has necessitated the need for and development of natural gas and oil-fired “peaking stations”, which are used during periods of low wind and solar output. Connecting these energy sources is a transmission system comprised of over 65,000 miles of transmission and distribution lines that continues to grow year on year. 

Looking forward, North Dakota hopes to further diversify its energy resources and expand energy exports. Created in 2007 by the North Dakota legislature, the EmPower Commission is tasked with developing a comprehensive energy policy. By legislative mandate, the EmPower Commission’s policy should stimulate the development of renewable and traditional fossil-based energy generation and promote the development of new technologies to help North Dakota maintain its status as a leader in power generation and transmission. The 16-member Commission published a “Comprehensive Energy Policy Report for 2010–2025”, which includes 20 goals, 51 policy statements and 98 action items tailored to spur growth in all energy sectors throughout North Dakota. Key goals include: 

• doubling North Dakota’s energy production (from all sources) by 2025; 
• ensuring 25% of energy production can be attributed to renewable sources; 
• increasing wind generation capacity;
• investing in clean coal electricity generation plans; and 
• increasing North Dakota’s export capacity to facilitate permitting, construction and upgrading of transmission systems. 

Clearly, North Dakota seeks not only to advance its own energy sufficiency but also to position itself as a key energy supplier at the national level. 

Achieving North Dakota’s energy goals through policy

North Dakota’s legislature continues to prioritise the promotion of energy generation, transmission and distribution. Through its Energy Development and Transmission Committee, the legislature continues to study and form policy proposals supporting the development, use and exportation of energy resources. Several statutory changes enacted during the last legislative session will continue support to established advisory boards, councils and programmes relating to North Dakota’s energy sector.

Two important statutory changes will affect the North Dakota Public Service Commission (PSC), which has authority over energy transmission facilities, energy conversion facility siting, and electric utilities. First, transmission facility developers are now required to inform the PSC that they have executed or filed a generation interconnection agreement or comparable transmission services agreement before it can begin operating a proposed facility. Second, project developers are now allowed to adjust a previously approved transmission line route without the PSC’s prior approval, as long as the adjusted transmission line still falls within the designated corridor.  Together, these changes will increase predictability and efficiency for the PSC and those who invest in the development of transmission facilities across the state. 

The legislature also passed additional legislation supporting energy development. For example, it renewed funding for the Energy & Environmental Research Center – reaffirming the legislature’s commitment to innovative research concerning energy generation and transmission.  Additionally, the legislature passed S.B. 2261, which clarifies that construction liens arising from the construction of a wind turbine project only apply and attach to the wind turbine and leasehold, not the underlying freehold estate. This change offers a fair amount of protection to wind project lessors. Further, the North Dakota legislature continues to support the large array of established energy programmes and advisory boards. The following agencies, programmes and initiatives may be of particular interest to those wishing to invest in North Dakota’s energy sector. 

The Renewable Energy Council

Formed in 2007, the Renewable Energy Council provides financial assistance by guiding the disbursement of funds appropriated under the Renewable Energy Program to promote development of renewable energies and related industrial use technologies. While the Council is known for the advancement of biofuels, biomass and biomaterials, it also supports renewable energy resources such as wind, solar, hydroelectric, geothermal, and renewable hydrogen via research, development and commercialisation. Grants have been awarded for a variety of projects. One such project included the creation of a drone-based system that utilises artificial intelligence to inspect wind energy farms. Another project involved the development of a residential community plan, complete with a renewable energy strategy inclusive of energy efficient homes, geothermal heat sources and an energy corridor engineered for future wind or solar development. 

The Clean Sustainable Energy Authority

Recently, the North Dakota legislature expanded the membership of the Clean Sustainable Energy Authority. The Authority is now comprised of 17 members, nine of which have voting rights, and each of which is intended to represent a different portion of the energy sector and bring their technical expertise to bear. The Authority was created to “support research, development, and technological advancements through partnerships and financial support” and to enhance the production of clean, sustainable energy and the diversification of North Dakota’s energy economy. Specifically, the Authority focuses on large-scale development through the commercialisation of projects, processes, activities and technologies, which simultaneously reduce environmental impacts and increase the sustainability of energy production and delivery. Financial assistance is provided by mean of loans and grants and must satisfy the review of the Authority, which includes showing feasibility and the promotion of the Authority’s goals. 

The Lignite Research Council

Formed in 1991, the Lignite Research Council promotes the economic, efficient and clean use of North Dakota’s coal resources through its support of research, development, educational and marketing programmes related to the lignite industry. The Council is also tasked with preserving and creating jobs involved in the production and utilisation of North Dakota coal and ensuring economic stability, growth and opportunity in the industry. To achieve its goals, the Council manages the Lignite Research Program which provides grants, loans and other economic aid. To be eligible for economic assistance, projects must advance the Council’s goals, have undergone technical review to determine technical merit, generated matching private industry investment, and received a favourable Council recommendation.

The North Dakota Transmission Authority

In 2005, the legislature recognised there was a need to promote the development of energy transmission projects to distribute the abundant coal and wind energy generated throughout the state. This resulted in the creation of the North Dakota Transmission Authority (NDTA) to “diversify and expand the North Dakota economy by facilitating development of transmission facilities to support the production, transportation, and utilization of North Dakota electric energy”. Among other duties, the NDTA provides grants and loans to strengthen transmission infrastructure; contracts for, receives and disburses aid; leases transmission facilities; and investigates, plans and prioritises the development of transmission corridors throughout the state. Importantly, the NDTA is tasked with utilising and distributing funds received from the United States federal government pursuant to the Bipartisan Infrastructure Law. In so doing, the NDTA is to prioritise the modernisation of energy transmission, resulting in a more resilient electrical grid while promoting a clean and equitable energy sector throughout the state. 

Hurdles impairing development of energy projects in North Dakota

Although North Dakota is making great strides to advance its energy objectives, key hurdles and other obstacles remain. These include local, regional and federal challenges to energy development. Collectively, these hurdles may significantly impair, or outright prevent, existing and new energy projects. 

Local challenges 

As those in the industry are aware, energy development rarely comes without local resistance. North Dakota is no different. At the local level, several counties in the heart of coal country have attempted to implement policies designed to target and restrict the development of new wind farms. In addition, attempts to permit new wind farms have met stiff resistance from local landowners concerned with their downstream effects (eg, aesthetics, “shadow flicker” caused by spinning blades, road maintenance, etc). A recurrent theme in discussions concerning new wind development is that it will jeopardise existing coal-fired power plants, and, by extension, those employed by them. Finally, during the last legislative session in 2023, several bills were introduced and signed into law that specifically targeted wind energy development. It is fair to assume that similar bills will be introduced during North Dakota’s next legislative session in 2025. Together, these local concerns and policy choices serve as significant barriers to wind project developers and may undermine North Dakota’s goal of increasing wind capacity and doubling its energy output by 2025. 

Regional challenges

Regional policy changes may also pose significant barriers to future energy production. In 2023, Minnesota passed a law requiring that power utilities supply customers with 100% clean electricity by 2040. Much of the power exported by North Dakota goes to Minnesota. Because the majority of North Dakota’s energy is generated by coal, Minnesota’s 100% clean energy standard could significantly hinder North Dakota’s access to Minnesota’s energy market and hamper its efforts to become a leading energy exporter in the Midwest. Shortly after the law was passed, there were indications that North Dakota may sue Minnesota over the new standard. However, a lawsuit has not been filed as yet. 

Federal challenges

Perhaps the most critical challenge to energy development in North Dakota originates in the Biden administration’s continued aversion to fossil fuels. In this respect, the Biden administration continues to advance and implement policies which may imperil coal and natural gas production and restrict the operation of power plants in North Dakota. Although the federal government’s moratorium on new coal leasing was recently struck down by the 9th Circuit, that same court acknowledged that a “de facto moratorium” appears to be in place, nonetheless. Over the past decade, federal coal lease sales have dropped precipitously. In addition, coal mine operators have met severe delays when attempting to obtain new leases in aid of their existing operations. Unsurprisingly, this has spawned litigation concerning the federal government’s “unjustifiable delays and continuing failure to timely act upon” coal lease applications. See, for example, The Falkirk Mining Company v US Department of Interior, No 1:24-cv-00040 (D. N.D. filed 29 February 2024). Such delays threaten to restrict the supply of coal needed to operate coal-fired power plants in North Dakota. 

The Biden administration has also taken significant steps to regulate emissions generated through the consumption of fossil fuels. The Environmental Protection Agency (EPA) recently announced a new suite of standards specifically designed to target emissions from coal and natural gas-fired power plants. One such standard requires existing coal-fired power plants and new natural gas-fired plants to control 90% of their carbon emissions. The new standards also impose new emission limits for toxic metals and mercury (MATS); efforts to reduce pollutants discharged through wastewater; and rules requiring the safe management of coal ash. Critics claimed these new standards (particularly the new MATS standards) would impose significant implementation costs with little to no benefit to the public, as well as jeopardising the plants’ long-term operational potential. Of course, these new standards are also being litigated. See, for example, North Dakota et al v US Env’t Prot. Agency, No 24-1119 (DC Circuit, filed 8 May 2024). 

The above examples are not exclusive. The Biden administration continues to implement policies through a variety of administrative agencies which could detrimentally impact North Dakota’s energy goals. Depending on November’s election it is entirely possible that these policies could be reversed or revised by a future Trump administration. Regardless, North Dakota’s susceptibility to federal elections and policy swings marks a significant roadblock in the state’s development goals.

Conclusion

North Dakota’s energy future is a bright one. Rich in natural resources, the state is uniquely positioned to become one of the Midwest’s leading energy exporters. North Dakota policy makers are well aware of the state’s energy potential and are making great strides to capitalise on the opportunity. Nonetheless, there are significant barriers and challenges that may hinder or prevent ongoing development. This presents an exciting opportunity for active participation in continuing to push North Dakota’s energy industry into a leading national position.