Unsurprisingly, the challenges and delays associated with getting connected to the transmission network has boosted the value of the transmission network. As noted by a recent report by the Lawrence Berkeley National Laboratory (LBL) in 2022, additional transmission assets in the US could have reduced electric system costs by more than in any year since 2012. High electricity prices due to high natural gas prices coupled with more frequent and severe extreme weather events and other factors resulted in the high value for transmission with high transmission congestion-relief values in many regions of the country.
The LBL report noted that a number of interregional links experienced $2-300 million per 1000 MW of value for transmission capacity which translates to $23-34 per MWh as reflected in the accompanying map.
The LBL report highlights the role of transmission in helping manage periods of grid stress such as during winter storm Elliott at the end of 202 (see related article on PJM on page 23). The study identifies – in case it was not already obvious – the value of additional transmission infrastructure – which is sorely lacking as described in the preceding article.
LBL: Transmission values never this high
Map highlights high transmission value in many regions in 2022. The annual cumulative value of a hypothetical 1000 MW transmission link is shown. These values are marginal (applying to the next unit of transmission) and based only on hourly energy price arbitrage. Note that we were unable to analyze transmission value where pricing data was limited or not available, for example in the non-ISO Southeast region.
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High transmission value, or equivalently, potential cost savings, was concentrated in a small portion of total hours: roughly 50% of value was derived from 5-10% of the hours in 2022. The high value of a small set of hours with extreme weather or unexpected conditions, suggests that planning approaches that do not adequately model or consider these conditions will likely understate the economic value of new transmission infrastructure.
Wholesale pricing patterns during winter storm Elliott illustrate the role of transmission in helping manage periods of grid stress. The value during this short period provided up to 20% of annual value for some links.
Transmission lines, like generation or the distribution networks, get congested infrequently, but when they do, it is bad news for the entire network. Adequate infrastructure is needed all along the value chain to maintain reliability with the weakest link determining when the lights go out. With climate changing and more extreme weather becoming more frequent and severe, more investment is needed across the board, especially to integrate the vast amount of new renewable generation getting built. n
https://emp.lbl.gov/publications/latest-market-data-show-potential
This article originally appeared in the April 2023 issue of EEnergy Informer, a monthly newsletter edited by Fereidoon Sioshansi who may be reached at [email protected]