With transmission costs expected to continue increasing, state utility regulators, energy consumers and transmission operators are eyeing options to ensure the grid is expanded in the most cost-effective way possible, according to a Nov. 13 panel at the National Association of Regulatory Utility Commissioners’ annual meeting in Anaheim, California.
“We're not opposed to transmission investment,” said Pat Scully, a commissioner at the Maine Public Utilities Commission. “We know it's necessary, but it needs to be subject to appropriate, high quality planning — planning that focuses on what the needs are, what the most effective solutions for those needs are and with some mechanisms to control costs.”
In New England, annual transmission charges have grown to $3.3 billion, from $869 million in 2008, with transmission investments almost entirely focused on reliability needs, according to Scully.
Looking ahead, ISO New England estimates the region will need about 57 GW to meet state energy goals by 2050, up from 28 GW today, Scully said during a panel on ensuring cost-effective transmission. That could require up to $26 billion in new transmission, he said.
New England states have asked ISO-NE to issue a solicitation for transmission that could deliver roughly 3 GW of potential wind generation in Northern Maine to the rest of New England, Scully noted. The grid operator is expected to issue a request for proposals early next year and a project to be selected in 2026, according to Scully.
Options for cost-effective transmission
Transmission is getting expensive, but the spending is needed to keep overall power costs low, according to Johannes Pfeifenberger, a principal at the Brattle Group. “Transmission is one of the things [where] we have to spend money to save money,” he said. “The kind of multi-value planning that [the Midcontinent Independent System Operator] is doing, with benefit-cost ratios saving $2 for every dollar you spend on transmission, is exactly the kind of planning we need.”
There are a range of options to help ensure new transmission is cost effective, according to Pfeifenberger.
Options include more holistic and proactive transmission planning, which is occurring in some regions and may increase under the Federal Energy Regulatory Commission’s Order 1920, Pfeifenberger said.
Transmission planners can also use a “loading order” that begins with optimizing the existing system and upgrading existing lines before building new ones, according to Pfeifenberger’s presentation. Cost control incentives, such as performance-based rates, and competitive solicitations can also help tame costs, he said.
In addition, state regulators can help reduce transmission needs — and its related costs — through energy efficiency and demand response programs that reduce peak load, according to Scully. ISO-NE estimated in its 2050 transmission study that if New England could reduce its mid-century peak load to 51 GW from 57 GW, it could reduce its expected transmission costs by up to $9 billion, or roughly 35%, he said.
Transmission for economic growth
Transmission additions are needed to meet growing electricity loads that are driven by onshoring of manufacturing, computer chip manufacturing and other industries, according to Karen Onaran, president and CEO of Electricity Consumers Resource Council, which represents large industrial companies.
“Let's make sure we're doing the most efficient transmission plan,” Onaran said. “We know it's going to cost a lot of money, but the alternative is going to cost even more.”
Grid-enhancing technologies can help limit transmission costs, according to Onaran. “We need to be using our existing infrastructure to its fullest potential before we start putting new steel in the ground,” she said.
Onaran said she is working to change the “narrative” in some states that transmission expansion is driven solely by the energy transition. More transmission capacity is needed for economic growth and is not just a “boondoggle” to bring wind from a distant state to a major load center, she said.
Meanwhile, the California Independent System Operator sees “tremendous opportunities” for interregional transmission, according to Neil Millar, CAISO vice president of infrastructure and operations planning.
“There's tremendous opportunity for the diversity advantages of the resources and the loads,” Millar said. “We're much more effective to the extent we're coordinating and collaborating and working across a much broader footprint.”
However, most regions have minimal excess power they can share, according to MISO’s Aubrey Johnson, vice president of system planning and competitive transmission. “When we talk about transfer capability, we actually have to have something to transfer,” he said.
