Large-scale transmission expansion: what’s the prognosis? (Pt. 2)

In the last post I discussed the cost-effectiveness of the VNI-West transmission project in Australia that is designed to facilitate renewable integration. Various transmission projects have also been proposed in the US to transport large amounts of renewable energy from renewable rich regions to demand centers, typically crossing several state boundaries. For example, the US National Renewable Energy Laboratory (NREL) discusses potentially nearly tripling the US transmission capacity to achieve full decarbonization. The Princeton Repeat Project finds that an expansion of around 40% is necessary to unlock the emissions potential of the US Inflation Reduction Act, while the benefits will be significantly lower if transmission expansion is constrained. A recent US Department of Energy report synthesizes these and other reports and concurs with the need for significant transmission buildout in the US.

In this post, I will consider the cost-effectiveness of large-scale inter-state transmission to support renewables in the US. Spoiler alert: I will argue that the greatly expanded large-scale interstate transmission being proposed is not cost-effective to support renewables in the US.

Similar to VNI-West in Australia that was discussed in my last post, much of the proposed transmission in the NREL, Princeton, and several other US studies would have to be on new corridors, or would involve large expansions of existing corridors and would cross state boundaries.  In a weakly meshed system such as in Eastern Australia, there are potential system security benefits from more strongly connecting regions such as Victoria and New South Wales that might justify, for example, VNI-West even in the absence of compelling benefits regarding renewable access. In contrast, the proposed expansions in the US are to systems that are already highly meshed. That is, the proposed expansions in the US are presumably primarily providing benefits associated with transmitting renewable energy and not providing other system benefits. To an even greater degree than with VNI-West, the changes in relative costs of transmission and renewables will strongly affect the overall desirability of the US developments.

It is certainly true that both expanding existing transmission corridors and co-locating lines with existing highway and railway corridors can be more palatable to nearby communities and therefore lower cost than new greenfield corridor acquisition. Moreover, recent US DOE and FERC announcements suggest that US Federal permitting horizons may be shortened and the US DOE has just established a several billion dollar revolving fund to facilitate interstate projects.

However, the upper end of the scale of new transmission buildout proposed in the US by NREL is not credible to me, given the controversy and opposition that transmission proposals bring and the total investments in the hundreds of billions that all must be approved through various regulatory authorities. While the amount of buildout in the Princeton Repeat study is less than NREL proposes, it still involves a large amount of inter-regional transmission construction.  This level of buildout of new transmission seems unlikely because its direct transmission construction costs will be such a large fraction of the renewable construction costs and because the true societal cost of the proposed transmission will be even larger.

Fortunately for decarbonization efforts, there are four other factors that mitigate the need to build so much new overhead transmission, both in the US and Australia.

First, the cost of renewables has decreased so significantly that there is now a much more feasible trade-off between renewable site quality and renewable overbuilding. Some recent US decarbonization proposals emphasize distributed as well as utility-scale renewables. Building some of the renewables closer to or within demand centers will reduce needed transmission buildout but result in less ability to utilize (possibly limited) diversity and will likely result in lower capacity factors.

Second, the electrical conductors in existing transmission lines can be replaced with higher capacity lines. This reconductoring results in an increase in capacity of existing lines that are thermally limited. This can allow more renewable generation to be built in regions of existing utility-scale renewables, albeit further reducing diversity of renewable production. A recent report suggests that this approach can be used to greatly enhance the existing transmission system and access renewables.

Both of these developments result in less renewable diversity than was presumably anticipated in the NREL and Princeton plans.  However, a third development, the decreased costs of storage, will play a role in smoothing out local variations of renewable production and help to compensate for lower diversity in renewable production due to the reduced amount of transmission interconnection.  For example, Green Mountain Power in Vermont is proposing to locate storage in all of its customer premises.

However, there are drawbacks. Greatly expanding the footprint of distributed renewables and storage will likely require at least some distribution system upgrades together with the telemetering and control infrastructure to provide visibility and control of these assets to system operators. Furthermore, challenges related to the interactions between the control of distributed resources will need to be addressed if such resources become the dominant generation sources in distribution systems.

Fourth, while undergrounding conventional AC transmission is typically impractical over long distances because of reactive power issues, technology for DC transmission is improving and is amenable to undergrounding even over long distances.  While underground transmission is typically much more expensive than overhead, integrating with upgrades of civil infrastructure such as highway and railway corridors can potentially decrease the cost of excavation compared to dedicated excavation of a trench for buried transmission.  Potentially, the cables could even be laid in concrete conduits at grade in highway and railway corridors without significant excavation. Judicious use of long distance DC transmission may provide for some new inter-regional capacity in cases where the renewable diversity benefits are high.

Certainly, existing transmission capacity and some upgrades, including reconductoring, and some new transmission capacity together with innovations such as dynamic line rating will enable increased transfers of renewable production between regions; however, I think it is time to stop pretending that huge amounts of new transmission buildout are viable in the coming one to two decades as part of decarbonization. Yes, there are cost-effective wind and solar resources such as West Texas, New Mexico, and elsewhere that will continue to be developed and connected to demand centers with long-distance transmission. But much of the new transmission buildout to support huge transfers over long distances will not be cost-effective. Instead, we need to expand utility-scale renewables within regions and also develop more resources closer to demand centers.