Note: this blog is cross posted from the original source at the Energy Systems Integration Group. Check out our latest report, Multi-Value Transmission Planning for a Clean Energy Future
The United States has a transmission problem. Wind and solar curtailments are increasing, interconnection queues for new projects can take years to complete, reliability is eroding, and in some places we are unable to retire expensive, aging, and polluting power plants because there is no way to bring in other resources. Our transmission investment is clearly not enough. Ninety percent of new transmission is designed to solve local reliability challenges or replace existing lines, while only 10 percent is allocated to economic projects designed to improve efficiency and bulk system reliability.
But if we want to build transmission better, we need to first get better at planning transmission. Our regional planning efforts are as antiquated as the underlying infrastructure. As planners, we do not look out far enough in the future or wide enough to capture interregional opportunities. We also do not look deep enough, and instead only evaluate a fraction of the benefits transmission can bring.
Considering the Full Range of Transmission Investments
Recognizing these limitations, Federal Energy Regulatory Commission (FERC) recently issued a Notice of Proposed Rulemaking on regional transmission planning to modernize our approach to transmission investments, including the way we quantify transmission benefits. While some regions like the Midcontinent Independent System Operator (MISO), and Southern Power Pool (SPP) have been using multi-value frameworks successfully, other regions, like the Electric Reliability Council of Texas (ERCOT) just recently received authority — and a mandate — to evaluate other value streams.
Texas is not unique in this respect. Today, in most places most of the time, new transmission investments are only evaluated against production cost savings (i.e. fuel costs). This is the de facto metric for quantifying and evaluating transmission benefits. But as our grids bring on more wind and solar, production costs inherently decrease, making the savings attributed to transmission smaller at exactly the same time the need for new transmission grows larger. Perhaps more importantly, the evaluation of transmission benefits needs to extend to the many benefits beyond production cost savings.
When we purchase a car we do not just consider the cost and the fuel economy. We consider reliability and the likelihood of things breaking down. We consider future uncertainty and potential needs a few years down the line — that third row of seats could come in handy if another kid comes along. And we think about what could happen when things go wrong. Will this car keep my family safe in an accident? If we follow this line of thinking when we buy a car, why don’t we do it when we invest in transmission?
If we do not consider a wide range of transmission benefits, at best we are leaving a lot of value on the table. At worst we are over-investing in new fossil plants, a potential stranded asset in a clean energy future, while under-investing in enabling infrastructure for a new resource mix. Even worse, we may end up with an unreliable grid, and simply watch as rolling blackouts occur, despite having neighboring systems with ample resources to share.
Using a Multi-Value Approach
The Energy Systems Integration Group convened a Transmission Benefits Task Force to propose a new framework for transmission planning. This multi-benefit approach not only helps quantify the true value that transmission brings to the system, but also helps with cost allocation — how stakeholders determine who pays, and how much, for new projects. The task force assessed a set of six benefits that transmission can bring to the system and thus should be quantified in cost-benefit analysis.
Here's what that looks like in our ERCOT case study. To learn more, check out the full report.