Monday Study: The Benefits of Big Transmission Across The U.S. East
Economic, Reliability, and Resiliency Benefits of Interregional Transmission Capacity Case Study Focusing on the Eastern United States in 2035
September 2022 (General Electric Energy Consulting and Natural Resources Defense Council)
The United States electric grid is in a state of transition. The country is shifting towards lower carbon sources while facing more frequent extreme weather events that challenge the ability to keep the lights on. Greater grid flexibility is the key to reliable decarbonization in the face of uncertainty. One of the most cost-efficient forms of flexibility while maintaining resiliency is greater reliance on interregional imports and exports of electricity.
GE Energy Consulting (GE) knows the value of interregional flexibility from its own study experience. Back in our 2010 Western Wind and Solar Integration Study, GE and the National Renewable Energy Laboratory (NREL) identified the value of higher interregional flexibility to support California’s decarbonization goals. This work helped support the 2014 launch of the Western Energy Imbalance Market that is operating today and has enabled over $2B in gross benefits across its 17 members.
In this study, we broaden our perspective to ask and illustrate the more general question: What are the benefits of interregional transmission? Answering this question should be based on the three types of ratepayer benefits:
Interregional transmission expansion can lower the overall capacity required given grid uncertainty. In the face of frequent and extreme weather events, interregional transmission expansion can allow access to generation that otherwise would not have been accessible and minimizes the likelihood (or in the worst case, the impact) of shedding load (i.e., blackouts). In addition, a reduction in overall generating capacity is needed as interregional capacity takes advantage of diversity in load shapes. Stability With the shifting generation mix comes increased reliance on inverterbased resources. Interregional capacity can strengthen voltage, which is especially important for regions with large amounts of high inverter-based resources. Interregional transmission can reduce the amount of generation capacity that is required for meeting such stability needs.
Interregional transmission expansion allows ratepayers with expensive generation to access generation from areas with less expensive generation. By enabling greater transmission access to these low-cost resources, ratepayers with more expensive generation can benefit.
With the shifting generation mix comes increased reliance on inverterbased resources. Interregional capacity can strengthen voltage, which is especially important for regions with large amounts of high inverter-based resources. Interregional transmission can reduce the amount of generation capacity that is required for meeting such stability needs.
In this study, GE modeled generation differences between a transmission-constrained and an unconstrained transmission grid to estimate the resiliency, economic and stability benefits. GE found that fully unconstraining the transmission system in the Eastern Interconnection (EI) would result in limited to no loss of load during extreme weather events and $12 billion in net benefits. GE believes these benefits are conservative due to a number of factors including:
• Study evaluated average power flows between regions rather than maximum power flows;
• Study assumed all regions maintained resource adequacy, and for estimating capacity and ancillary service savings, assumed a flat reserve margin rather than conducting a loss-of-load-expectation analysis;
• Many assumptions in GE’s production cost model were locked in place in April 2022 to maintain the integrity of the comparative analysis conducted for this study. Had the study included 2022 updates to load forecasts, which incorporated more aggressive electrification assumptions by Independent System Operators, and most recent natural gas price forecasts, GE believes the benefits would have been higher. Nevertheless, the benefits of interregional transmission are significant and are highlighted in this study.
GE also recognizes that the production cost modelling conducted for this study assumes rational economic behavior and that all stakeholders in the Eastern Interconnect would utilize the increased transmission capacity by increasing exports and imports to and from neighboring regions. There are a number of operational and planning limitations which could limit the realization of potential benefits of increased interregional transmission. Examples of limitations could include operational governance of the commitment and dispatch decisions of imports and exports in both dayahead and real-time markets; planning requirements limiting imports to serve a regional grid in all but the most limited circumstances; and sharing of resources to meet reserve margins across multiple jurisdictions. This study is designed to exemplify the benefits of increased interregional transmission and does not specifically address potential barriers to those benefits…
This report illustrates the broad range of benefits of expanded interregional transmission. GE determined the incremental interregional transmission needed via an increase in average power flows enabled by unconstraining transmission across normal and extreme weather events. These example simulations showed that:
• Greater incremental interregional transmission can avoid load shedding during multiple types of extreme weather events. In the example cases presented, power losses due to extreme weather cost $875 million - $1 billion.
• Greater incremental interregional transmission enabled ~$3-4 billion/year production cost savings under normal weather conditions.
• More interregional transmission could result in upwards of $12 billion in net benefits. Although costs for more intra-regional transmission are not included in t his estimate, this net benefit estimate is likely low as noted earlier in this analysis.
• Grid stability is increasingly a factor in grid resiliency. An AC interregional transmission capacity requirement can increase grid stability, but alternate technologies may provide greater stability benefit such as DC transmission ties
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