Federal Government: It’s Time for More Regional and Interregional Transmission

The U.S. Department of Energy (DOE) has identified a “pressing need” for more electric transmission infrastructure, noting that interregional transmission delivers especially significant benefits.

The demands on and needs of the power grid are changing as the U.S. seeks to bring more clean energy resources online, and increasingly extreme weather events continue to cause reliability challenges. In its recent draft 2023 National Transmission Needs Study, the DOE examined more than 50 reports published over the last five years that discussed current and future system needs amid changing electricity demand, public policy, and market conditions.

The DOE finds that this array of research shows that greater transmission capacity would have a myriad benefits, including improved grid resilience and reliability, greater access to clean energy, reduced congestion and curtailments, and more support for increased electrification. The DOE’s transmission study underscores the urgent need for the U.S. to adopt policies that help quickly expand the nation’s transmission capacity. It’s time for the government to act.

Additional transmission investments will benefit most of the country, with interregional transmission yielding the greatest value, according to the DOE. Areas with high electricity costs – such as in New York, California, the Plains, Midwest, and Mid-Atlantic – would benefit from improved access to low-cost power sources as well.

The DOE noted the importance of developing a grid that can enable the clean energy transition, support changing regional demands, and withstand major weather events. The needs study includes different scenarios for both load and clean energy growth. Under a moderate load and high clean energy future, the Plains, Midwest, Southeast, and Texas will need most significant transmission additions by 2030; nearly all regions will need large deployments of new interregional transmission capacity by 2040 under this scenario.

Source: U.S. Department of Energy’s Grid Deployment Office

Growing need for transmission expansion

Several indicators showed a need for additional transmission capacity: a decline in transmission investment, wholesale power price differentials, and packed interconnection queues. On average, regional entities spent between $0.19 and $5.29 per megawatt hour of annual load on new transmission from 2011 to 2020, according to the report. The bulk of those investments were made early in the decade but tapered off in more recent years.

Extreme conditions and high-value situations played an “outsized role” in transmission’s value from 2011 to 2020, the DOE said. A recent study by Lawrence Berkeley National Laboratory found that about half of the congestion-relief value of transmission occurs during these extreme and high-value periods, yet transmission planners do not always adequately assess this value under extreme conditions. In fact, that study found that transmission planning analyses “may deeply understate the possible value of new transmission.”

Additionally, the nation is transitioning to renewable energy resources, a trend that is expected to continue. Many more clean energy projects are seeking to connect to the grid as well: roughly 1,800 gigawatts (GW) of generation and storage resources were clogging regional interconnection queues at the end of 2022. The DOE concluded that the “generation mix will continue to shift toward more wind, solar, and battery storage technologies.”

The DOE analysis anticipated future transmission and transfer capacity needs for several power sector scenarios across three different future years. Based on capacity expansion model results, Texas along with the Mountain, Southeast, Midwest, and Plains regions will need the largest increase in transmission. Additional ties between the Plains-Midwest, the Midwest-Mid-Atlantic, and New York-New England were identified as the areas of greatest future need.

Source: U.S. Department of Energy’s Grid Deployment Office

Addressing extreme weather events

Most of the nation would benefit from the greater system reliability and resiliency that additional transmission investments would provide. Recent extreme weather events have showcased the importance of building more interregional transmission capacity to connect impacted areas to available generators in neighboring regions.

Regions with stronger transmission ties to one another were able to import more power during Winter Storm Uri in February 2021, keeping the lights on and reducing costs for customers. Interregional transmission ties allowed the Great Plains and Midwest grid operators to import 15 times more electricity during the storm than the Texas grid, helping avoid widespread outages like those that killed hundreds in Texas. An additional GW of transmission ties between the Texas grid and the Southeast could have saved nearly $1 billion during that storm.

A more recent analysis revealed the tremendous benefits interregional transmission could have provided during Winter Storm Elliott in December 2022. Stronger interregional ties would have saved some regions nearly $100 million during the five-day event.

Policy considerations

The need for additional transmission capacity is clear. Congress, the Biden administration, and federal regulators must now adopt policies ensuring the nation can plan, pay for, and permit these critical facilities. Building the grid of the future will require major reforms to the antiquated policies that created the current balkanized system.

Planning: The Federal Energy Regulatory Commission (FERC) has a major role to play in paving the way for long-distance transmission projects. Its forthcoming transmission planning and cost allocation rulemaking should include reforms that set the groundwork for bolstering regional and interregional transmission planning. FERC can require regional grid operators to quantify a minimum set of transmission benefits metrics that would offer some cohesion across the planning regions. The Commission should also initiate a rulemaking focused on creating new interregional transmission lines. This rulemaking should include a minimum interregional transfer capacity requirement, which would help ensure grid reliability during increasingly frequent extreme weather. Congress can provide important direction on these matters, as well as strengthen any future rulemakings by quickly confirming a fifth FERC commissioner.

Paying for: FERC should host a technical conference to discuss removing barriers to interregional high-voltage, direct current merchant transmission lines, which provide significant reliability benefits. Such a technical conference could, among other things, allow regulators to consider ways to compensate developers for the costs of these projects.

Additionally, Congress can incentivize interregional transmission by enacting an investment tax credit for high-voltage transmission lines. A 2021 ACORE and Grid Strategies analysis determined that a 30% credit would create more than 650,000 good-paying jobs and enable an additional 30,000 megawatts of renewable energy capacity. The incentive would also yield $2.3 billion in cost savings for the lower 80% of income brackets.

Permitting: The permitting process for transmission lines can take a decade or more given various regulatory hurdles, resulting in significant project delays and threatening project viability. Congress should pass legislation to reform and streamline the inefficient process for transmission permitting, offering grid developers faster consideration and greater regulatory certainty for key transmission projects. Lawmakers should also enhance FERC’s authority over siting of key interstate transmission lines that provide the greatest reliability benefits.