MIT Study: Transmission Is Key to a Low-Cost, Decarbonized US Grid

Source: By Jeff St.John, Green Tech Media • Posted: Sunday, January 10, 2021

Modeling shows a nationwide transmission network could tap existing solar, wind and battery tech to reach zero-carbon power.

But a new Massachusetts Institute of Technology study indicates that a massive U.S.-wide transmission build-out could also slash the costs of reaching a zero-carbon grid with wind, solar and battery technologies that are cost-effective today.

Whether it’s politically possible for the U.S. to meet the study’s assumptions of doubling its transmission network capacity and creating new interregional and cross-country links to shift clean energy from where it’s most efficiently generated to where it’s needed remains an open question.

But according to Patrick Brown, the MIT researcher who conducted the study, the costs of doing so would be much lower than forcing regions without transmission connections to overbuild renewables and energy storage to reach the same decarbonization goals.

“It has a huge impact,” Brown said. “The costs are relatively small, and it delivers oversize benefits.”

There are two main reasons for this. First, nationwide transmission allows power-sharing across regions facing widely different weather systems that drive variation in wind and solar generation. This geographic diversity reduces the likelihood that renewables won’t be able to meet demand, thereby decreasing the amount and duration of energy storage required to cover those gaps, he said.

Second, it allows wind and solar development to be concentrated in the sunniest and windiest parts of the country so that more clean energy can be supplied by less installed generation capacity, as well as requiring it to be curtailed less often, Brown said.

All of these benefits can be captured with solar, wind, existing hydropower and lithium-ion battery technologies at projected 2030 prices, he added. That means building out transmission could avoid the need for long-duration energy storage, new nuclear power technologies or green hydrogen and other carbon-neutral replacement fuels for natural-gas power plants — technology options that are often seen as necessary to reach 100 percent carbon-free electricity but which are untested and may not reach cost-effectiveness in the next few decades.

“We don’t want the whole decarbonization plan to be riding on something like that,” he said in an interview. “It’s important to consider the contingency options with technology we can deploy at scale now.”

Breaking down transmission’s costs and benefits

The chart below indicates the linkage between transmission build-out and electricity cost, with costs falling as the integration between existing transmission grid regions increases.

The current status of U.S. transmission integration is approximately represented by the “US-AC-DC” category, which presumes the existence of significant transmission links within the footprints of the country’s existing regional transmission organizations (RTOs) and independent system operators (ISOs) but with relatively little linkage between them.

In this scenario, a zero-carbon electricity system would drive wholesale power costs of about $90 per megawatt-hour on average. That’s roughly three times higher than typical average prices today, but still much less than the estimated $135 per megawatt-hour for reaching zero-carbon in a system limited to state-by-state action alone.

Adding new links between ISOs and RTOs — a major challenge under today’s regulatory and cost-recovery environment — could reduce those costs further to a little more than $80 per megawatt-hour.

And establishing high-voltage direct-current links between North America’s three macro-grids, the Eastern, Western and Texas interconnections, could cut average wholesale costs to just over $70 per megawatt-hour. That’s an even more challenging prospect, but one that the Energy Department’s interconnection seam study indicates could yield a nearly 3x cost-benefit ratio in terms of sharing generation capacity and flexibility across regions.

These results come from a linear optimization model that uses hourly weather data from 2007 to 2013, encompassing heat waves, winter storms and other weather events that can disrupt renewable power supply, Brown noted. It co-optimizes grid capacity investments and hourly operations costs of generation, storage, and transmission to meet projected electricity demand in 2040.

The differences in costs add up to big numbers over the course of the next two decades, he said. Each $10 per megawatt-hour in savings equates to roughly $44 billion per year by 2040.

But the biggest savings may well come at the final stages of decarbonization, which are acknowledged to be the most costly.

“If you want to go to zero-carbon, there’s a very steep additional cost, to go from, say, 90 percent decarbonization to 100 percent,” Audun Botterud, principal research scientist in the MIT Laboratory for Decisions and Information Systems and a consultant on the report, said in an interview. “[But] when you allow for transmission coordination across the country, the cost of going to zero is much lower.”

Translating transmission’s theoretical benefits to the real world

Johannes Pfeifenberger, a principal at energy and economic consultancy The Brattle Group who advised on the MIT study as a visiting scholar, said it adds to a growing body of research indicating the value of transmission when it comes to greening the U.S. grid.

“Over the past 10 years there have been a dozen, maybe two dozen, studies showing that if a higher share of renewable generation is the objective, then a more robust regional and interregional transmission grid is the most cost-effective solution,” he said in an interview. “Patrick’s study shows that even with low-cost storage and renewable resources now available, implementing clean energy policies on a national scale, rather than state by state or region by region, is quite compelling in its ability to reduce the total cost of supplying electricity.”

Similarly, a study from the University of California, Berkeley and GridLab released in June 2020 indicates that achieving a 90 percent clean-powered grid by 2035 could deliver wholesale electricity costs 13 percent lower than today, boosted by about $100 billion in transmission expansion investment.

Another study led by Princeton University released last month, which charts a $2.5 trillion pathway to a zero-carbon U.S. economy by midcentury, indicates that $350 billion in transmission investment will be needed to increase the size of the country’s high-voltage network by 60 percent by 2030 and as much as triple its current scale by 2050.

And a Wood Mackenzie analysis from last month shows that the biggest driver in achieving a 37 percent carbon-free grid by 2030 could come from roughly $70 billion in transmission investment — a relatively small share of the $690 billion in total investment needed to replace fossil fuel power plants with clean energy and batteries.

The big question for studies like these is how their findings might be translated into action in expanding the U.S. transmission grid. After some significant build-outs in the first half of the decade, transmission developments have slowed significantly in recent years, weighed down by the complexities of building massive capital projects across multiple jurisdictions, each capable of halting decade-long development processes through legal or regulatory challenges.

The incoming Biden-Harris administration’s goal of decarbonizing the U.S. electricity sector by 2035 will almost certainly require major changes in transmission planning, siting and cost allocation policies to achieve, according to industry groups and regulators.

The Federal Energy Regulatory Commission and the Department of Energy will play key roles in creating coordinated planning regimes that can shift from current models, which primarily look at relieving existing congestion, toward new approaches that take future clean energy growth needs into account, these observers agree.

“Because transmission has such a long lead time, it’s important to start thinking about these things now,” Brown said.