Transmission & Distribution
Will Grid Upgrades Pay Dividends?
Addressing challenges to today’s electric transmission system will pay major dividends beyond “the long-term economic and reliability benefits of a more robust grid,” according to a recent report.
A new report says needed upgrades to the grid will offer an “exponential” payback. (Photo By: JacquesKloppers)
In the document, prepared for the Working Group for Investment in Reliable and Economic Electric Systems (WIRES), the Brattle Group estimated the cost of bolstering the grid at between $240 billion and $320 billion during the next 20 years.
According to its website, WIRES’ mission includes “provid[ing] a forum within which owners, investors, and customers of electric transmission … can promote a legal and public policy climate, as well as a public understanding, which encourages development of a robust high-voltage transmission grid.”
The Brattle report says that such a system, needed to underpin reliable and competitive wholesale power markets and serve new sources of electric generation, would necessitate annual investments of $12 billion to $16 billion through 2030.
However, this would stimulate $30 billion to $40 billion in annual economic activity, Brattle estimated. This would support 150,000 to 200,000 full-time jobs each year during this period, it said.
The report, Employment and Economic Benefits of Transmission Infrastructure Investment in the U.S. and Canada, also estimated $45 billion in Canadian investments through 2030, supporting between 20,000 and 50,000 full-time jobs north of the border.
“Transmission is the ‘great enabler’ of competition and new technologies, and, by integrating generation and load, it creates wealth and enhances productivity,” WIRES said in a preface to the report. “But even the simple act of constructing an adequate power system creates and sustains employment.”
In addition to the employment and economic stimulus benefits from constructing the facilities and manufacturing equipment, Brattle pointed out, strengthening the transmission grid would provide other important benefits:
- Reduced transmission losses, production cost savings, enhanced wholesale power market competition and liquidity;
- Increased reliability, insurance against high-cost outcomes under extreme market conditions, and increased flexibility of grid operations; and
- Generation investment cost savings and access to lower-cost renewable generation.
These benefits tend to be widespread geographically, diverse in their effects on individual market participants, occur over several decades and more than offset the rate impacts of investment cost recovery, Brattle said.