Dive Brief:

• A new report titled "The Value of Transmission" has been published by the Southwest Power Pool, highlighting the fuel savings customers are now seeing as a result of $3.4 billion in transmission investments undertaken between 2012 and 2014.
• The study looked at the value provided by 348 transmission upgrades and found $240 million in annual benefits in their first year if operation. It predicts $16.6 billion in benefits over the 40-year life of the investments.
• The study looks at the first year of historical data from the investments and attempts to place a dollar value on transmission upgrades. Ultimately, SPP found the investments are expected to produce more than $3.50 in overall benefits for every $1 in transmission-related costs.

Dive Insight:

Southwest Power Pool's report identified $240 million in fuel savings in one year, thanks to transmission upgrades, but the operator stressed that there are additional benefits. In addition to fuel cost savings, the study looked at benefits accruing from upgrades, including reliability and resource adequacy benefits.

SPP found the net present value of all quantified benefits is expected to exceed $16.6 billion over a 40-year period, resulting in a benefit-cost ratio of at least 3.5. Other benefits considered included: generation capacity cost savings, reduced transmission losses, increased wheeling revenues and public policy benefits associated with more optimal wind development facilitated by the transmission upgrades.

"Transmission does more than just keep the lights on. It's an enabling resource that paves the way for numerous benefits to our stakeholders and their customers," Nick Brown, president and CEO of SPP, said in a statement issued alongside the report. "A modernized transmission system increases reliability, reduces costs by providing access to a wholesale energy market and effectively integrates wind and other renewable energy to the grid."

SPP said that based on actual experience during the Integrated Marketplace’s first year, fuel savings amounted to $660,000 per day, and would exceed $10 billion over the next 40 years.

The report also included a letter from Brattle Group, which did its own independent assessment of the report. "The SPP Value of Transmission study is a path-breaking effort. It provides a more accurate estimate of the total benefits that a more robust and flexible transmission infrastructure provides to power marketers, market participants and, ultimately, retail electric customers," Brattle said.

Another recently-released study said deep decarbonization of the grid is possible by extensive invesment in a network of transcontinental transmission to link demand with distant clean energy sources. That study attracted attention this week partially due to its conclusion that significant deployment of energy storage is not a requirement for deep decarbonization due to the potential of transmission upgrades.