Dive Brief:

• The creation of a West-wide regional transmission organization could generate between 159,000 and 657,000 permanent jobs through 2030, as well as up to $79.2 billion in additional gross regional product per year across the 11 Western states, according to a new report.
• The report, commissioned by Advanced Energy Economy, found that every individual Western state, as well as the region as a whole, would see economic benefits from forming an RTO.
• Challenges like extreme weather, drought and rising energy costs in the West are pushing policy-makers to look at in-state and regional solutions, and “obviously the conversation around development of a Western RTO, a more integrated power system across the West, is something that continues to gain traction,” said Amisha Rai, managing director at AEE, at a media briefing Tuesday.

Dive Insight:

While the California Independent System Operator currently manages a portion of the electricity grid in the West, the remaining areas include a patchwork of nearly 40 independent balancing authorities. Policymakers have been discussing the creation of a wholesale electricity market in the region for more than two decades, and organized market options in the West have in fact expanded recently, the report noted — for instance, the creation of the Western Energy Imbalance Market in 2014 has provided utilities with savings of more than $2 billion.

“The simplest way to think about [RTOs] is that they enable better and more automated sharing of generation and transmission resources across utility footprints,” explained Caitlin Liotiris, principal with Energy Strategies, which prepared the report along with Peterson & Associates.

While there have been a number of reports that outline the electricity system benefits and cost savings of a Western RTO, there has not been a lot of research looking at how those savings might flow into the broader economy, creating ripple effects like additional jobs, she added.

“This study really aims to fill that gap, looking at high-level impacts of the Western region as a whole,” Liotiris said.

The study found that a western Western RTO would generate up to 657,000 jobs through 2030 — averaging a total compensation of around $73,000 per year — as well as between $18.8 billion and $79.2 billion in gross regional product annually, which amounts to between 0.4% to 1.6% of the region’s current gross regional product. It would also result in additional tax contributions of between $619 million and $2.4 billion per year. An RTO could benefit the regional economy by lowering electricity prices and driving clean energy development, among other results, according to the report. 

“I’m very excited about the economic benefits that the analysis has shown,” Mona Tierney-Lloyd, head of U.S. public policy at Enel North America. Enel has over 8 GW of renewable capacity centered mostly in organized markets, “so we see an organized market as a way of encouraging further development of renewable technologies,” she said at the briefing. 

Operating so many “sub-grids” in the West leads to a lot of inefficiency, “and I think one of the highlights of this study [is that it] really shows that if we can move more rapidly to an RTO, there’s huge savings for customers. But there’s also a huge upside for new investment, new jobs, and how that ripples out to the rest of the economy,” Colorado State Sen. Chris Hansen, D, said during the briefing.