New Transmission Projects Will Unleash Midwestern Wind Power—And Save Billions

December 8, 2017 | 10:44 am
Sam Gomberg
Senior Analyst

As we look ahead to our clean energy future, a key piece of the puzzle is building the transmission system that will carry utility-scale renewable energy from where it’s generated to where it’s consumed. A recent study from the Mid-Continent Independent System Operator (MISO) shows that, when done right, transmission projects integrated with renewable energy can pay huge dividends. They decarbonize our electricity supply, improve efficiency, and lower costs to the tune of billions of dollars in benefits to electricity customers.

A long journey to get it right

Transmission projects can cost-effectively accelerate our clean energy transition. But it must be done right with proper planning, stakeholder engagement, and diligent analytics.

Ensuring long-term investments in our transmission system provide benefits to customers is a lengthy process. Beginning in 2003, MISO—which operates the electricity transmission system and wholesale electricity markets across much of the central US—began to explore a regional planning process that would complement the local planning and activities of the utilities, states, and other stakeholders operating in its territory.

After several years of scoping, planning, analysis, and legal wrangling, a set of 17 “multi-value” transmission projects (MVPs) were approved in 2011 based on their projected ability to (1) provide benefits in excess of costs, (2) improve system reliability, and (3) provide access to renewable energy to help meet state renewable energy standards.

Even six-plus years after being approved, most of these projects are currently under construction since transmission projects typically take several years to move through the approval process, permitting, siting, and construction. But even as these projects are being developed, MISO has continued to evaluate them based on the most recent information available—making sure that they are still expected to deliver the benefits originally projected.

The most recent review, fortunately, shows that they are truly living up to their “multi-value” moniker. And like a fine wine, they seem to be getting better with time.

Latest review shows benefits increasing compared to original projections

Overall, the latest review shows a benefit to cost ratio ranging from 2.2 to 3.4—meaning these projects are expected to deliver economic benefits on the order of $2.20 to $3.40 for every dollar in cost. This is an increase over the original projection of a cost benefits ratio of 1.8 to 3.0. The latest cost/benefit analysis equates to total net economic benefits between $12.1 and $52.6 billion over the next 20 to 40 years. The figure below shows how the multiple values projected from these projects add up.

The chart above shows the categories – and projected value – of benefits (columns one through 6) that MISO considers in identifying and approving projects. When stacked up, the total benefits range from $22.1 to $74.8 billion. When total costs are also considered, net benefits (the last column on the right) to the MISO System and customers that rely on it drop to between $12 and $52.6 billion. Source: MISO

As shown in the figure, the bulk of economic benefits flowing from the MVPs are from relieving congestion and saving on fuel costs (shown in column 1). These are typically characterized as increasing “market efficiency” by opening up wholesale electricity markets to more robust competition and spreading the benefits of low-cost generation throughout the region—essentially allowing cheap energy to flow where there’s demand. Because renewable energy has zero fuel cost, enabling more of it onto the grid allows the overall system to operate more cheaply. These savings ultimately flow to ratepayers that are typically on the hook for fuel costs incurred by their utility.

And the amount of wind energy that is being brought onto the system because of these MVPs is significant. This latest review by MISO estimates that the portfolio of projects, once completed, will enable nearly 53 million megawatt-hours of renewable energy to access the system through 2031. To put that in perspective, a typical home uses about 10 megawatt-hours per year. So that’s enough energy to power 100,000 households for more than 50 years!

A lot more than just electricity

When put together, the combination of well-thought-out transmission investments and renewable energy development in the Midwest also provides a host of additional social benefits, including:

  • Enhancing the diversity of resources supplying electricity to the system
  • Improving the robustness of the transmission system that decreases the likelihood of blackouts
  • Increasing the geographic diversity of wind resources, thereby improving average wind output to the system at any given time
  • Supporting the creation of thousands of jobs and billions of dollars in local investment
  • Reducing carbon emission by 13 to 21 million tons annually

Let’s think about this for one second more…

Through proper planning, stakeholder engagement, and diligent analytics, here in the Midwest we are building a portfolio of transmission projects that will significantly lower carbon emissions, enable billions of dollars in investment and thousands of new jobs, make our electricity supply more reliable, and provide billions in economic benefits to ratepayers.

Maybe we should think about it for one more second. Or maybe we should start thinking about what’s next?