The recent passage of the Inflation Reduction Act was a historic moment for the future of American clean energy. Long-term tax policy certainty for the wind, solar and battery storage industries will drive further cost declines and accelerate the transition to clean power. However, delivering the lowest-cost power to businesses and homeowners will still require a massive expansion of the nation’s electricity transmission capacity.
This fact was recently reinforced by a new study from the National Renewable Energy Laboratory, ‘Examining Supply-Side Options to Achieve 100% Clean Electricity by 2035.’ Although the study did not model the implications of the IRA or the bipartisan infrastructure legislation passed last year, each of its four main scenarios required adding significant transmission in many locations to reach the 100% clean energy goal. Given that the best remaining low-cost wind and solar resource areas still need transmission capacity to connect to the grid no matter how the IRA impacts future pricing, it’s fair to assume that expanded transmission remains essential. It will also pay for itself.
The “Infrastructure Renaissance scenario” in the NREL modeling saved more than $300 billion in power system costs compared to the transmission-constrained scenario. But to realize those savings, the modeling shows we will need to double, if not triple, the level of transmission capacity currently available in America by 2035. This will require thousands of miles of new high-capacity lines being built per year, with a total projected increase of 91,000 miles of new transmission lines in the U.S. within the next 13 years.
Transmission, as the report notes, is the key enabling technology for a clean electricity system because it allows higher-quality energy resources and better utilization of those resources, including reduced curtailment of wind and solar power. It helps smooth the variability of both electricity supply and demand across large regions and various timescales. In particular, large-scale regional and interregional transmission can increase reliability by expanding electricity imports and exports and enhancing coordination across wider geographies.
The findings from this study are consistent with previous studies from Princeton, MIT and NREL’s own ‘Seam’ study, which also found a need for significant interregional transmission capacity to deliver the lowest-cost clean power. The Princeton study explored several scenarios, two of which outlined aggressive end-use electrification paths. In both instances, transmission capacity increased. Under the supply side-constrained model, the transmission increase was two times higher than in 2020; under the unconstrained model, three times more transmission was needed to deliver the electricity generated. The NREL ‘Seam’ study, which quantified the costs and benefits of strengthening the connection between the Western and Eastern Interconnections to encourage efficient resource utilization, also validated the value of interregional transmission connection.
While the benefits of large-scale transmission are becoming increasingly well-known, there are several challenges to achieving a nationally connected grid, or “Macro Grid.” These include: 1) transmission planning is too often focused on local reliability, not holistic system performance; 2) generator queue processes favor short-term upgrades rather than maximizing efficiencies with system-wide and forward-looking planning; 3) there is minimal interregional transmission planning between ISOs/RTOs and utilities; and 4) allocating costs for new transmission is often contentious, particularly for interregional lines.
Of these challenges, solving cost allocation for interregional lines is perhaps the most pressing, as merchant transmission developers currently do not have a way to recover expenses on lines that would provide significant cost savings. One way to solve that challenge is to revive an investment tax credit for sufficiently large transmission lines, a policy that was not included in the final language of the IRA. A transmission ITC would create upwards of 650,000 good-paying jobs, enable an additional 30,000 megawatts of renewable energy capacity, spur more than $15 billion in private capital investment, and provide $2.3 billion in energy cost savings for the lower 80% of income brackets, according to a recent American Council on Renewable Energy report.
Similarly, the cost allocation mechanism in Senator Manchin’s permitting reform bill would have enabled the Federal Energy Regulatory Commission to allocate project costs to ratepayers who benefit from them, offering another potential path forward. Reviving one of these options is critical for encouraging the interregional lines that are necessary to ensure a low-cost and reliable power grid.
While there’s significant complexity to some of the potential planning reforms, one technology stands out as a straightforward way to make better use of existing transmission corridors — using advanced conductors. Reconductoring and rebuilding existing transmission pathways using advanced composite conductors can help create a significant amount of new transmission capacity more quickly and more cost-effectively than trying to build new, large-scale transmission. Deploying advanced conductors to address just 25% of aging infrastructure needs in NERC regions could facilitate the interconnection of at least 27 gigawatts of zero-carbon generating capacity annually over the next 10 years, according to a recent report.
The U.S. Department of Energy is seeking to encourage the use of this, and other transmission technologies, through implementing various provisions of the Infrastructure Investment and Jobs Act. Yet the current funding available to states, utilities and other entities is likely insufficient to generate the massive amount of new capacity needed to deliver the low-cost energy already waiting in interconnection queues, let alone the projects that will seek to take advantage of the IRA incentives.
The advantages of new energy infrastructure are apparent in NREL’s most recent study — not only for optimizing our current resources but for tapping future sources of energy. That’s why a coalition of over 30 diverse signatories, including utilities, consumer groups, clean energy buyers and environmental groups, among others, have twice filed comments with FERC encouraging transmission planning reform and commending them for their leadership in establishing the FERC-NARUC Joint Task Force on Transmission to develop consensus solutions.
The benefits of abundant domestic energy supplies have never been more pronounced than in today’s international geopolitical landscape. The upgrading and interregional connection of our national transmission system is a timely and worthy investment in national security and a clean energy future.