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Collaboration is Key for Expanding Transmission Capacity

March 22, 2024
Policymakers should take care to foster, rather than discourage or prevent, effective collaboration in transmission development.

It is a national priority to expand transmission capacity. Last fall, the US Department of Energy (DOE) National Transmission Needs Study found that the U.S. needs to double intra-regional transmission capacity by 2035 and quadruple interregional capacity. Other studies from Princeton and MIT find that transmission capacity must double or triple by 2050, in order to maintain overall grid reliability and connect a changing resource mix to increasing load growth due to electrification and the onshoring of industry from federal legislation.

Large-scale transmission also provides numerous benefits. It improves grid reliability and resilience making the country less vulnerable to power outages or other national security threats. Numerous studies have demonstrated the value of transmission to consumers, especially during extreme weather events by providing an insurance policy against large-scale loss of power plants due to equipment failures or interruptions to natural gas supplies by delivering power from other less affected regions. Transmission also allows for the interconnection and delivery of clean, lower-cost power to consumers, reducing electric bills. 
Building large-scale transmission is notoriously difficult. Construction of new high-voltage transmission lines has significantly slowed in the United States over the last decade, and there are high-profile examples of major transmission projects taking almost 20-years to complete.

However, there are also numerous instances of successful transmission expansion that prove such development is possible. In our recent report, Fostering Collaboration Would Help Build Needed Transmission, we reviewed dozens of successful major transmission expansion efforts to draw lessons from what has succeeded in the past.

We found that collaboration has been a key element of U.S. transmission system expansion. The most important aspect of collaboration is the sharing of information, including in the form of expertise held by experienced system planners. All of the examples we reviewed included elements of information sharing that led to a successful outcome. Other common features of successful transmission expansion planning included voluntary interactions by willing participants, equitably shared cost allocation and recovery, and upfront certainty and agreement on project ownership. 

We found collaboration provides multiple benefits, such as improving the quality and quantity of information used in transmission planning, enabling a more holistic view of system needs, allowing better use of existing assets and rights-of-way, driving more efficient technology choices, facilitating faster development, allowing for improved coordination of outages during and after construction, and facilitating stakeholder and policymaker consensus on need and thus, cost allocation and recovery. 

The importance of collaboration to successful transmission planning and development is not surprising given that there are 330 owners of transmission assets spread across the nation’s three integrated networks and that every major transmission asset affects neighboring systems and the regional network. The transmission system is a shared network that cannot be expanded without extensive coordination among its various owners, operators, and planners. 

The finding is also not surprising given the natural monopoly characteristics of transmission. In contrast to structurally competitive sectors such as generation, the standard elements of a natural monopoly persist in transmission. It remains more efficient to have one owner of the system in a given area, with economic regulation of that owner, and to avoid duplication of network assets and other utility functions. 

Collaboration on transmission planning and development has been a national priority for most of the electric industry’s history. Our review of legislative and regulatory actions going back one hundred years suggests that there have been longstanding and continuous efforts to encourage collaboration among transmission entities. In some cases, we found the delay caused by limiting collaboration could amount to a few billion dollars in a single region. 

Policymakers should be interested in fostering collaboration because policy choices significantly impact the amount of information sharing and other forms of collaboration that will occur, ultimately impacting the value of transmission expansion for consumers. The electric supply industry is now partially regulated and partially competitive, due to policies which introduced competition into the generation sector. In general, in a regulated natural monopoly sector, unlike in a competitive market, information sharing is allowed and, ideally, encouraged. 

We find that collaboration in transmission is entirely compatible with and supportive of competition in upstream and downstream sectors that are structurally competitive. In particular, we find that transmission policies which prioritize collaboration and information sharing are in fact pro-competitive by enabling more competition within the generation sector. 

We conclude that effective collaboration between transmission owners, operators, and planners has been a critical element of building needed regional and interregional transmission over multiple decades and across the country. Unfortunately, a number of barriers remain preventing collaboration in transmission planning today. For example, information sharing is sometimes discouraged by incentives (intentional or otherwise) created through regulatory efforts to depart from models that have a proven track record of fostering collaboration. Regulations directing collaboration may not be able to overcome such incentives, so regulatory policy should address both incentives and rules. Policymakers should therefore ensure that regulatory rules foster, rather than hinder, information sharing and other forms of beneficial collaboration. 

Given the challenges of developing electric transmission and the need for infrastructure expansion in the coming decades, it is especially critical to learn from hard-earned experience in terms of what drives success. Policymakers should take care to foster, rather than discourage or prevent, effective collaboration in transmission development.

Rob Gramlich is president of Grid Strategies, LLC.

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