Are transmission cost allocation rules keeping low-cost renewable power off the grid?

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The U.S. faces an ambitious goal according to the Biden Administration’s current climate crisis plan: reach 100% clean energy by 2035.  

While many factors play a role in the successful implementation of such a goal—from policy to planning—understanding the mechanisms of cost allocation when it comes to the transmission network remains a critical piece of the puzzle. As clean energy is transmitted from production sites to the places where it’s most needed, the rules for implementing the expansion at scale—and the associated costs—require examination. In fact, such rules may be keeping low-cost renewable power off of the grid.   

We supported the American Council on Renewable Energy (ACORE) by performing a detailed production cost analysis for several network upgrades. In our review of available transmission capacity across the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) markets, we observe chokepoints, limiting the capacity to interconnect future renewables. These transmission upgrades often provide regional benefits. However, the current cost allocation methodology places most of the burden on the interconnecting customer to pay for the transmission upgrades.  

In this paper, we share the results of this analysis and important observations, including:  

  • Significant chokepoints in transmission capacity across the MISO and SPP markets 
  • Regional benefits provided by transmission network upgrades 
  • Potential areas of consumer benefit 
  • Discrepancy between current cost allocation and the Federal Energy Regulatory Commission’s (FERC) cost causation principle   

Download the paper now.  

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Meet the authors
  1. Himali Parmar, Vice President, Energy Advisory Services, Interconnection and Transmission

    Himali joined ICF in 2002 and is an expert in renewable integration, interconnection assessments, production cost modeling, forecasting transmission congestion and losses, and their effect on locational power prices and asset valuation. View bio

  2. Kenneth Collison, Vice President, Energy

    Ken is an expert in electricity market analysis, helping stakeholders improve the planning, operation, and development of the electric sector.  View bio

  3. Vish Sankaran, Senior Manager, Energy and Power Markets

    Vish has over 12 years of experience in the power utility industry helping stakeholders identify and pursue investment opportunities including siting strategy, congestion and curtailment analysis, contract analysis and merchant market assessments, and asset valuation. View bio