$50 to $100 billion in transmission investment will be needed in order to integrate renewable power onto the existing U.S. electricity grid, according to analysts at The Brattle Group.
Johannes Pfeifenberger, principal and utility practice leader at the firm, discussed these estimates during the EUCI Transmission Cost Allocation conference this week in Chicago.
Satisfying current state-level renewable portfolio standards (RPS) will require transmission investments of approximately $50 billion (with estimates ranging from $40 to $70 billion) nationwide over the next 10 to 15 years, Pfeifenberger said.
If a 20% federal RPS were introduced that required states to meet either the higher of their current RPS standards or 20 percent, transmission investment needs would increase to approximately $100 billion (with estimates ranging from $80 to $130 billion), not including baseline reliability upgrades.
“Without a multi-billion investment on the order of $50 to $100 billion, our nation’s transmission capabilities will be insufficient to allow for the integration of enough renewable power sources into the high voltage grid to meet the RPS requirements,” Mr. Pfeifenberger said in his comments.
Uncertainty over cost recovery for these types of regional transmission projects has become one of the most significant barriers to making the necessary investment, he added.
During a separate panel discussion, Pfeifenberger addressed the significant differences that exist in planning approaches between transmission upgrades to address reliability concerns and transmission investments to address public policy and economic objectives. He noted that while the industry utilizes well-established formulaic engineering analyses to diagnose reliability problems on the grid and plan transmission upgrades to address these problems, the attempt to develop a similar approach has backfired when applied to planning projects to relieve transmission congestion and integrate renewables.
Pfeifenberger stressed that effective planning to relieve congestion and address public policy objectives will require the development of a compelling business case in addition to the engineering analyses currently used in the industry.
“Developing a compelling business case for a multi-billion dollar investment is a challenge in any industry,” he noted. “The challenge is particularly great for transmission planning due to the complexity of cost recovery and permitting challenges, as well as the fact that many large transmission projects offer a broad range of economic benefits that are wide-spread geographically, diverse in their effects on market participants, occur over long periods of time, and can be difficult to quantify.”
Pfeifenberger’s presentations from the EUCI conference are available for download at the website below.
A recent report by the New York Independent System Operator (NYISO) found that the states grid could handle up to five times as much wind power as it currently receives. Similarly, California’s electric grid is capable of integrating a 20% renewable energy portfolio standard (RPS) by 2012, according to a study released by the California Independent System Operator Corporation (ISO).
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