To facilitate market access for all sources of electric generation, including renewables, and minimize transmission congestion.
It is time for a fresh perspective on transmission. It must be recognized as critically important to advancing other aspects of the industry beyond just delivery of electricity to customers. WIRES seeks to inform policymakers and the public of the fundamental role transmission plays to foster fuel diversity, reliability, markets, and the development of renewable energy.
First, the old paradigm of sending siting signals to generators does not necessarily apply, and we now need to build the grid out to where the generators will site. Unlike most generation sited a decade ago, many new resources will be remote from load centers and location-specific. Transmission facilitates market access to such remote and diverse generation resources with different fuels, operating characteristics, and environmental impacts. This diversity in turn can enhance reliability and reduce risk to customers due to over-reliance on any one source of electricity. Diversity will help reduce costs to customers by giving them access to a wide array of competitive resource options. It will also allow for entry of renewable resources which can reduce the environmental impacts of electricity production.
Second, transmission is not itself a competitive resource option, though it is often mistakenly characterized as such. WIRES contends that, instead, transmission is the necessary delivery infrastructure on which competitive markets rely. The mistaken view that the transmission system is itself a market commodity that competes directly with generation or demand-side options only serves to discourage the development of needed transmission infrastructure and therefore delays geographically broader, more competitive, and more efficient electricity markets. While generation and demand-side resources can mitigate reliability and/or economic needs for transmission upgrades in certain circumstances, non-transmission solutions are not effective substitutes for a robust transmission infrastructure, which supports and expands markets.
Customers face a choice. Generally speaking, they will pay for the costs of increased transmission infrastructure or the costs of short supply due to the absence of adequate transmission. In most cases, the costs of transmission are small compared to the benefits associated with the reductions in supply costs that it delivers. Under-investment in transmission in the U.S. continues to contribute to a high level of congestion-related costs in many regions. New transmission will facilitate access for competitive generators into high-cost constrained areas, increasing customer welfare, placing downward pressure on the prices of protected suppliers.