Transmission

^{Cover image by American Public Power Association/Unsplash}

High-voltage transmission networks are key to enabling cost-effective emissions reductions and maintaining reliable electricity service. Long-distance wires connect customers with large-scale renewable energy sources, while helping alleviate variability in wind and solar generation across regions experiencing different weather and levels of electricity use. Transmission can also help maintain more affordable and reliable service by sharing resources across larger regions; this lowers costs by reducing the amount of generation capacity that needs to be kept in reserve. In addition, sharing resources can help meet high demand during extreme weather.

U.S. Investment in Transmission to Date

While the vision for an inclusive, resilient transmission system is achievable, there are serious hurdles to clear along the way. Today’s system was largely built by utilities to serve customers within their own territories. This piecemeal buildout of transmission does not incorporate the longer lines needed for renewable power integration and adapting to extreme weather.

Transmission is typically paid for by electricity customers through their utility rates, and cost allocation determines who pays based on the benefits they receive. Therefore, while utilities generally have access to capital, they may not have incentives to deploy that capital on longer lines which enable more resource sharing between different utilities. In addition, transmission planning is currently a bottom-up, black-box approach in most regions of the U.S. The output of these processes is mostly local upgrades and projects totaling around $20 billion per year.

Moving forward, project planning and siting and determining who pays for transmission infrastructure will be key to widespread implementation. Inclusive, transparent planning is the first and most important step; this process can ensure projects offer broad benefits and help ease disputes over siting and how costs are allocated. 

Transmission Initiatives Under New Legislation

The Bipartisan Infrastructure Law and Inflation Reduction Act include provisions to help overcome transmission planning and siting challenges and create financial incentives to pursue projects that could help bring more renewable energy online.

Separately, the Federal Energy Regulatory Commission (FERC) has opened several proceedings to reform transmission planning, cost allocation, interconnection and extreme weather planning.

Transmission provisions in the Bipartisan Infrastructure Law

The Bipartisan Infrastructure Law includes various provisions administered by the Department of Energy (DOE) to help facilitate siting, planning and funding for transmission.

First, the law clarified existing federal backstop authority for interstate transmission siting. Backstop authority allows FERC to issue siting permits if a state withholds or denies application, provided that the permit applicant has engaged states and non-federal entities in good faith consultations and in a timely manner, and that the project meets certain criteria. The law added criteria to DOE’s National Interest Electric Transmission Corridor (NIETC) designation, which defines projects eligible for federal backstop permits. NIETCs are intended to promote goals such as energy security or use of wind and solar resources. Among other criteria, eligible designations should:

• Employ existing rights-of-way as much as possible.
• Minimize siting on sensitive environmental areas and cultural heritage sites.
• Result in transmission that would reduce customer electricity costs.

An interstate compact to organize state collaboration on siting could forestall federal backstop authority.

In addition, the Bipartisan Infrastructure Law created the Transmission Facilitation Program, a $2.5 billion revolving loan fund for at least 1,000 megawatts (MW) of new transmission or upgrades to existing infrastructure of at least 500 MW. The program also supports connection of an isolated microgrid in Alaska, Hawaii or a U.S. territory. In implementing this program, DOE must prioritize projects that enhance the capacity, efficiency, resilience or reliability of transmission; facilitate interregional transfer capacity; and lower electricity sector greenhouse gas emissions. For a project to be eligible, this funding must enable it to be constructed more quickly or with more transmission capacity than in the absence of federal assistance. Project proceeds should be able to recover the cost of a capacity contract or repay any amounts borrowed.

To implement transmission measures in the Bipartisan Infrastructure Law, DOE has launched its Building a Better Grid initiative to allocate funding from Congress, facilitate stakeholder engagement and siting, and conduct studies, including a national transmission planning study.

Transmission provisions in the Inflation Reduction Act

The Inflation Reduction Act created a DOE grant program for state and local governments to facilitate siting of certain onshore and offshore transmission lines. Funds can be used to cover project studies, host negotiations, participate in federal and state regulatory proceedings and promote economic development in affected communities. Similarly, it provides funding to DOE for interregional and offshore wind transmission planning, modeling and analysis, and stakeholder convening. This may include planning for extreme weather impacts on grid reliability and resilience.

DOE will also deploy about $10 billion in funding through resilience programs to prevent outages and promote resilience research and development (R&D), which could include transmission infrastructure.

The Inflation Reduction Act created a $250 billion temporary loan guarantee authority for projects that repower, repurpose or replace energy infrastructure. “Energy infrastructure” includes transmission facilities. Projects must enable operating infrastructure to avoid, reduce, utilize or sequester air pollutants or anthropogenic greenhouse gas emissions. It also creates a direct loan program for development of certain transmission projects located in National Interest Electric Transmission Corridors.

The Inflation Reduction Act allocates additional funds to the following projects which could support transmission infrastructure and resilience:

• Smart Grid Investment Matching Grant Program ($3 billion): Intended to increase the network’s operational transfer capacity and anticipate and mitigate impacts of extreme weather events or natural disasters.
• State Energy Program ($500 million): Can support transmission and distribution planning activities, including for local governments and tribes; feasibility studies for transmission line routes and alternatives; preparation of necessary project design and permits; and outreach to affected stakeholders.
• Bonneville Power Administration borrowing authority ($10 billion): Funds can be used for many purposes, including transmission.
• DOE Office of Electricity ($8.1 billion): Funds granted to carry out programs established in the Bipartisan Infrastructure Law, including transmission projects.

Next Steps for Advancing Transmission Reform

State and local decision-makers can take the following steps to leverage transmission investments and policies in the Bipartisan Infrastructure Law and Inflation Reduction Act:

• Participate in the national transmission planning study and ask for studies and alternative options to select projects that benefit their region. Local practitioners should ask for anticipated emissions impacts resulting from specific transmission projects and include emissions considerations in decision making.
• Improve mapping tools with environmental justice data and ensure data from their region is accurately represented in the mapping tools. Local decision-makers should advocate for the use of these tools early in the planning process as a screen to identify siting risks.
• Check that local siting and interconnection rules are not unreasonably impeding the ability to connect renewables, customer loads seeking access to renewables, or distributed energy resources to the grid.
• Work with other states and relevant entities in planning, permitting and siting and raise concerns early in the process. States can seek DOE funding and technical assistance for planning, modeling and analysis for interregional and offshore transmission. They can also consider forming an interstate compact for siting purposes and seek DOE funding to study and facilitate discussions on siting.

Decision-makers should also take steps to ensure that existing infrastructure and rights-of-way are optimized:

• Obtain information from regulated utilities on the capacity of existing rights-of-way and consider technologies that can expand capacity on these rights-of-way.
• Obtain information from regulated utilities on how they might improve the efficiency of their systems, for example, by lowering line losses and routing electricity more efficiently via optimization software.
• Entities that are not currently part of an organized wholesale market should ask for studies showing the benefits, costs and risks of joining markets that can optimize the ability to exchange electricity over the transmission system.
• Co-locate transmission with highways and railways when feasible, which could reduce land-use conflicts and help prepare infrastructure for transportation electrification.
• Comment on the National Transmission Needs Studies which will inform NIETC designations for backstop siting purposes under the Bipartisan Infrastructure Law and enable projects within these corridors to access direct loans under the Inflation Reduction Act.

Overcoming Implementation Challenges

While the Bipartisan Infrastructure Law makes significant progress towards building a more efficient, inclusive and resilient grid, more needs to be done. Funding from the Inflation Reduction Act can facilitate some of these activities:

• Conducting an inclusive national transmission planning study is a solid first step, but this work must translate into an actionable plan. FERC’s proposed rule requiring regional transmission planning to study future resource mix and demand changes may help but does not address the geographic scope of planning needed. Other relevant FERC dockets include one on interconnecting new generation and one on planning for extreme weather. The FERC/NARUC Task Force is another forum for states to engage with FERC on transmission issues.
• Siting risks should be considered early as part of a transparent planning process. Open-source mapping tools updated with environmentally sensitive and cultural heritage site considerations, environmental justice screens and existing rights-of-ways could facilitate identifying siting risks earlier in the process.
• Siting and permitting could be better coordinated to reduce the overall timeline for such processes. Updating the FAST-41 siting/permitting dashboard to include more projects, as well as state and local (in addition to federal) siting and permitting actions, could identify where approvals can be processed in parallel and provide transparency.
• Exploring and facilitating joint ownership and other means of involving the community in transmission projects can reduce reliance on eminent domain.
• Optimizing existing and future infrastructure through markets, both between regional transmission organizations (RTOs) and in non-RTO regions, is critical to achieving the stated goals underlying transmission build out. ​Markets must operate seamlessly on an interconnection-wide basis to get the most out of an interconnection-wide grid. Improvements to physical interconnectedness between regions expand the grid only as far as the markets allow. The Organized Wholesale Electricity Market Technical Assistance Grant in the DOE Grid Deployment Office’s budget request can help states and regions establish and improve centrally organized market components and bilateral market arrangements to ensure a clean, reliable, resilient and equitable grid.
• Additional directed funding could bolster R&D to reduce the costs of undergrounding high-voltage direct current (HVDC) transmission and converting HVDC to and from alternating current (AC) power. This could help overcome transmission siting challenges.
• Not all transmission is equally beneficial, and funding should be conditioned to ensure that supported projects produce the greatest benefits for the money spent. The Transmission Facilitation Program has some criteria that could be expanded to apply to other funding opportunities.

Return to view all sectors