Achieving the country’s rapid decarbonization and renewable energy goals requires investment in and expansion of the underlying transmission network.
Using Multi-Value Planning to Evaluate Transmission Investments
Current transmission planning processes are largely focused on the local level and are not necessarily aimed at improving economic efficiency or bulk system reliability. The current planning framework fails to protect consumers from tail-end risks—low-probability but high-impact events—and potential exposure to extreme costs.
A wide range of benefits needs to be considered when evaluating transmission and include reduced operating costs, environmental benefits, access to low-cost renewable energy, generation capital cost benefits, risk mitigation benefits, and improvements in reliability and resilience. Transmission planning horizons should reflect the lifetime of the asset, going out far enough to see the benefits that arise with system changes.
A robust transmission system can move low-cost renewable energy across long distances and improve reliability, as the grid spans regions having different weather patterns and experiencing periods of scarcity or abundance at different times. When one region faces a power shortage, a well-designed transmission grid provides support from neighboring areas.
Case Study of a Methodology to Quantify a Range of Benefits
This report describes the results of a case study undertaken by the Energy Systems Integration Group’s Transmission Benefits Valuation Task Force to demonstrate useful methodologies for employing a multi-value framework to plan transmission effectively. It quantifies two types of transmission upgrades: large-scale transmission upgrades connecting the West Texas renewable energy zones to East Texas and the Houston load center, and a transmission line between the Electric Reliability Council of Texas (ERCOT) and the southeastern United States (Georgia, Mississippi, and Alabama).
This case study seeks to revitalize multi-value transmission planning, provide a playbook for transmission planners to implement on their own system, and inform comments and proposals to the Federal Energy Regulatory Commission’s Notice of Proposed Rulemaking (FERC NOPR) and ongoing stakeholder efforts at independent system operators and regional transmission organizations on transmission planning reform.
The multi-value framework showed that when a full range of benefits was evaluated, the transmission projects studied had significantly higher benefit-cost ratios. Recognizing these benefits could ultimately change transmission investment decisions. The results also highlight a key finding for transmission planning: different transmission projects can have large differences in the types of value they bring. Transmission that helps to access new, low-cost generating resources, and deliver that energy to load centers, yields large production cost savings and environmental benefits, helps meet public policy goals, and brings risk mitigation benefits. Other transmission projects that help a region access more diversified resources are better suited to provide resource adequacy and resilience benefits. The latter have relatively greater generation capital cost benefits and provide a hedge against macroeconomic volatility, extreme weather, and other unexpected events.
The multi-value framework also examines the potential avoided cost for ratepayers during extreme events or macroeconomic uncertainty, showing that transmission is a valuable insurance policy for the system and one that will pay dividends throughout the energy transition.
Recommendations for Transmission Planners, Policymakers, and Regulators
The report outlines the following recommendations for transmission planners, policymakers, and regulators:
1. Go beyond production costs and implement a multi-value benefit framework.
Accurately assessing the wide range of benefits from transmission is important as the system transitions to zero-marginal-cost renewable resources. These benefits should be identified, prioritized, and clearly defined early in the transmission planning process.
2. Plan for the long term and start today.
Transmission infrastructure can be a 40- to 50-year asset. The planning horizon should reflect that and go out far enough to see the benefits that arise with specific system changes.
3. Get comfortable with uncertainty and adopt established methods to deal with it.
Significant improvements in data science and statistics have been applied in other sectors, such as the tech and finance industries, and are now migrating to the energy field. Modern power planning tools offer significantly improved capabilities to better quantify risks and benefits.
4. Quantify resource adequacy and resilience benefits.
Through transmission expansion, individual regions can achieve reliability with lower capacity investments than if they were unable to share energy with neighbors and had to build a full suite of resources themselves. When extreme weather strikes, not having built new interregional transmission can have devastating consequences for ratepayers.
5. Break down silos and plan interregional projects.
Reliability and resilience benefits accrue most strongly from transmission that connects electrically diverse systems, but market and planning constructs need to account for value from sharing between neighboring systems. Enabling a proactive, scenario-based, multi-benefit framework for long-term regional transmission planning will ensure that the power system is reliable, efficient, and increasingly clean for today and into the future.
 Federal Energy Regulatory Commission Notice of Proposed Rulemaking, April 2022, https://www.ferc.gov/news-events/news/ferc-issues-transmission-nopr-addressing-planning-cost-allocation.