Dive Brief:
- A set of 13 “high value” inter- and intraregional transmission projects in the Eastern Interconnection could produce up to $15.3 billion in net system value through 2050, according to a study released Tuesday.
- Also, the transmission projects would lower retail electricity rates, enhance system reliability and improve resilience to extreme weather events, according to Powering Growth and Affordability: The Role of Transmission in Economic and National Security, which was prepared by S&P Global’s CERA Consulting for the Electricity Customer Alliance, National Grid and Converge Strategies.
- Compared with other analysis, the study offers a customer-centric look at transmission expansion, according to Jeff Dennis, ECA executive director. “Customers need more transmission capacity,” Dennis said in an interview. “But they're in this conundrum because they see transmission costs going up. A lot of that is things like supplemental projects in [the PJM Interconnection] and local builds in other regions, and so this study really does show how we can start to address that by refocusing our attention on the [transmission] that provides the most net benefits.”
Dive Insight:
The study’s findings complement analysis from the U.S. Department of Energy and other researchers showing how targeted transmission projects between and inside regions can lower costs by creating pathways for lower cost electricity to flow to higher-cost areas.
The transmission links can also obviate the need to build power plants and local transmission to serve constrained areas, according to the report.
In the study, CERA Consulting evaluated potential transmission lines in the Northeast, the PJM Interconnection, the Southeast, the Midcontinent Independent System Operator’s southern region and the Southwest Power Pool.
It modeled base demand and high demand cases combined with constrained and unconstrained transmission scenarios. The constrained case lacks new interregional transmission projects.
The study identified 12 potential high-value transmission projects under the base demand case and 13 projects under the high-demand case.
Across the Eastern Interconnection footprint, the unconstrained base demand case produces about $12.4 billion of net present value at a 1.77 benefit to cost ratio, according to the study. Not including interregional transmission significantly reduces the benefits, according to the results of the constrained case.
“The biggest contributor to NPV is [a change in generation capital expenditures], followed by production cost savings and avoided transmission costs, as transmission expansion enables access to lower-cost remote resources, reducing the need for more expensive local generation builds,” the study’s authors said.
In the base demand, unconstrained case, PJM receives $6.7 billion in benefits over 40 years, followed by SPP and MISO South at $1.9 billion, the Southeast at $851 million and the Northeast at $393 million, according to the study. The benefits are escalated in the high demand scenario, especially for the Northeast and Southeast.
Using advanced transmission technologies, such as dynamic line ratings, could produce significant benefits that would likely offset higher initial costs, according to the study.
Power supply construction in the United States is at its highest level in recent history, the study noted. Currently, 67 GW is being built in the U.S., including 27 GW of solar, 17 GW of battery storage, 15 GW of wind and 9 GW of gas-fired generation, according to the study.
Some solutions for spurring interregional transmission development include allowing large customers to invest directly in transmission, opening opportunities for merchant transmission and permitting, according to Dennis, who was deputy director of transmission in DOE’s Grid Deployment Office during the Biden administration.
“We need those permitting reforms that Congress is talking about,” Dennis said. “And we need some transition policy reforms too to really open up opportunities to invest in the system and ensure that our planning processes are aligned around projects that deliver the most future value to customers and encouraging those projects — not encouraging smaller projects that may be adding cost, but not adding a lot of capacity.”
