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Transmission Investment: All Talk and Little Action

Except for local reinforcements and new generation interconnections, few transmission construction proposals are moving forward.
Fortnightly Magazine - July 2004
  • regulated, vertically integrated utilities that trade primarily with their close neighbors, less new transmission will be required.
  • Magnitude of production-cost differences among power plants: Large spatial and temporal differences in production costs provide strong economic motivation to build transmission lines to permit the movement of cheap power from generators to load centers.
  • Level of bulk-power reliability we want and are willing to pay for: Greater reliability will likely require additional investments in transmission, generation, and demand management, as well as in improved system control and operations.
  • Amount of additional capacity that can be wrung out of today's transmission system: The application of existing and new computing, communications, and control technologies could enhance reliability and permit more transactions to flow across the grid. Other solid-state technologies enhance the ability of the grid to respond rapidly to changes in power flows and voltages to improve stability and voltage control. Better operations permit system operators to run the grid closer to its physical limits without imperiling reliability.
  • Use of nontransmission solutions (, suitably located generation and demand-management programs) to transmission problems: More generally, will economic signals-especially locational marginal prices and congestion revenue rights, key elements of FERC's standard market design-stimulate the construction of generating units and the creation of demand-management programs at locations that reduce congestion? Will these economic signals motivate construction of appropriately located merchant transmission projects?

More broadly, new transmission can be built for different purposes, including:

  • Interconnection of new load or generation: Facilities required to connect to the transmission grid, but not necessarily to transport power across the grid.
  • Reliability: Facilities required to meet North American Electric Reliability Council (NERC), regional reliability council, and other standards.
  • Economics: Facilities that lower the cost of electricity production by reducing losses and congestion to permit greater use of low-cost generators to serve distant load centers.
  • Replacement: Facilities that replace old, worn-out, and/or obsolete equipment.

Endnotes

  1. A.B. Richardson, "$27.5 billion of new transmission projects planned,", 10-15, Fall 2003.
  2. "[Department of Energy] Secretary Spencer Abraham suggested ... that $50 billion in new transmission system investment is needed. Others have suggested that the total amount needed is over $100 billion" (D. White et al., "The 2003 Blackout: Solutions That Won't Cost a Fortune," 16(9), 43-53, November 2003.

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