Transmission can help reduce the system-wide costs of supplying electricity and provide other benefits such as improving grid reliability and resiliency. The decision to build or not to build transmission depends on cost benefit tradeoffs. Estimating these costs and benefits is challenging and complex. Often, transmission planning focuses on a narrow subset of benefits, primarily related to reliability benefits.
To help provide information about economic benefits beyond reliability, a recent research report by the Lawrence research by Lawrence Berkeley National Laboratory (LBNL) titled ‘Empirical Estimates of Transmission Value using Locational Marginal Prices,’ analyses the congestion value of transmission, an important piece of the larger suite of transmission economic benefits.
The report undertakes the detailed analysis of the benefit of potential regional and interregional transmission links that pose notable economic value from reducing congestion and electricity cost cuts. It finds many current transmission planning techniques probably underestimate the economic benefit of additional transmission infrastructure. It examines historical grid conditions from 2012 through the first half of 2022 and assesses the marginal utility of transmission in promoting trade inside and across regional boundaries by comparing observed changes in nodal wholesale electricity prices. Overall, the study highlights the need for planners to more-comprehensively assess the value of transmission under both normal and extreme conditions.
The report can be accessed here.
