A report prepared for WIRES by The Brattle Group found that $30bn to $90bn of incremental transmission investments will be necessary in the United States by 2030 to meet the changing needs of the system due to electrification, with an additional $200bn to $600bn needed from 2030 to 2050.
Those investments will be in addition to the investments needed to maintain the existing transmission system and to integrate renewable generation built to meet existing load, the report said, adding that that level of investment is equivalent to $3bn to $7bn per year on average through 2030, a 20% to 50% increase over annual average spending on transmission during the past 10 years; and $7bn to $25bn per year on average between 2030 and 2050, a 50% to 170% annual increase in transmission investment.
Two primary factors drive the need for more transmission infrastructure in an electrified future: connecting additional renewable generation resources to serve the total energy demand, and ensuring that the electricity system remains reliable with increasing peak demands, the report said. Both drivers depend on the pace and scale of the adoption of electrification across the economy, the report noted.
As noted in a March 7 statement, “The coming electrification of the North American economy: Why we need a robust transmission grid” report, examined transmission investment based on two scenarios:
- A “base case,” where the current momentum towards electric vehicles (EVs) continues to accelerate, and heat pumps become a competitive space heating technology in some parts of the United States
- A “high case,” where electrification powers all transportation, as well as space and water heating by 2050
By 2030, electrification could increase nationwide annual energy demand by 5% to 15%, as well as by 25% to 85% by 2050. For those projections to materialize by 2030, the report added, the current momentum towards electric vehicles (EVs) continues to accelerate and heat pumps become a competitive space heating technology in certain markets.
Between 2030 and 2050, electric transportation becomes the dominant transportation technology and heat pumps penetrate a significant portion of the housing stock, the report said. The high electrification case assumes that electrification “powers” all transportation, as well as space and water heating needs, by 2050.
The mix of new generation resources serving electrification-related demand will differ by region due to differences in resources availability, technology costs, and policy objectives, the report said. Overall, 70 GW to 200 GW of additional new power generation will be necessary by 2030 to meet the additional electrification-related demand, assuming a 75% share of renewable resources and a 25% share of natural gas-fired resources.
Assuming that the share of renewable generation further increases to 90% by 2050, an additional 200 GW to 800 GW of generation resources need to be built between 2030 and 2050 to meet the anticipated incremental electrification demand, the report said. Those generation additions are incremental to the new resources that will replace generation from existing power plants or to meet the load growth of traditional electricity end uses, the report noted.
While distributed solar photovoltaic (PV) generation may meet some of the incremental load, most of the incremental renewable generation will likely be utility scale solar and wind generation, according to the report. Local resources like distributed solar PV in most cases are not substitutes for transmission and will still rely indirectly on the high-voltage transmission system due to their variable nature and the mismatch between the timing of their generation and electricity demand, the report said.
While those incremental transmission investments are substantial relative to historic investment levels, the resulting impact on customer rates is likely modest or even beneficial because:
- Transmission costs represent a small share of customer rates
- The total transmission investment will be spread over greater electricity demand with electrification
- The higher costs of transmission are likely to be offset by lower generation costs
The report added that the 20% to 50% increase in transmission spending projected by 2030 represents a 1% to 4% increase in rates on a per kilowatt-hour basis before accounting for offsetting savings in generation costs.
Savings can only materialize, however, if the transmission system is built out in anticipation of the rising demand from electrification of various sectors and the associated need for renewable generation additions, the report noted.
That scale of transmission needs and the long lead times for transmission investments highlight several key takeaways for transmission planners and policymakers, including:
- It is increasingly important for policymakers that set clean energy and decarbonization goals to gain an appreciation for the transmission system investments that will be necessary to cost effectively achieve those goals and the potential risks of coming up short on achieving those goals, or doing so at higher costs to the consumer, by moving too slowly on upgrading the transmission system
- Transmission planners will need to start anticipating the impact of electrification and integrate it into their transmission planning processes
- Transmission planners will need to adapt their analyses to account for the uncertainty in the timing, location, and scale of the adoption of electrified loads and the addition of renewable resources
- Transmission planners should continue to expand their consideration of larger-scale interregional, and even national-level, projects in their studies
The report also noted that since charging infrastructure is an important enabler of the electrification of transportation, existing transmission infrastructure could also facilitate the development of highway corridor and urban fast charging stations. Direct current fast charging (DCFC) is essential to making long-distance trips via EVs feasible, the report said, adding that since fast charging requires large amounts of power, DCFC complexes, especially along highway corridors, will likely become major sources of demand over time with each one representing 5 MW to 10 MW of peak demand or more.
Connecting loads of that size to the existing distribution system can be time-consuming and require costly network upgrades, the report said, adding that close proximity of transmission infrastructure to convenient locations for DCFC complexes could provide opportunities for cost savings and faster build-out of charging infrastructure.
Recent research suggests that 400 to 800 DCFC complexes would be needed to establish an initial network capable of overcoming existing hurdles related to EV adoption if spaced 35 miles to 70 miles apart along major highways, the report said.
There are about 400 substations with transformers of 69 kV or less located less than a mile away from highway exits, the report said, noting that those locations are potential candidates for siting a DCFC complex that is conveniently located within close proximity to highway corridors; about 1,500 more are located less than two miles from such a transformer.
Determining the locations best suited for developing DCFC stations along highway corridors requires a more in-depth, location-specific analysis, including whether or not particular existing transmission assets have spare capacity, existing rights of way, potential for permitting issues, or whether connecting to a local distribution network could be a lower cost alternative, the report said.
“The writing on the wall is clear; we’re headed toward a cleaner energy future. The transportation and heating sectors will be electrified — it’s just a matter of when,” Brian Gemmell, president of WIRES Group and vice president of Transmission and Asset Management with National Grid, said in the March 7 statement. “Transmission is the enabler of our electrified energy future, so we need to start planning now in order to keep pace with the coming increased demand and to ensure continued reliability of the [U.S.] electric system.”
James Hoecker, executive director of WIRES, said in the statement: “The findings in this report are great news for electricity consumers. While the size of potential transmission investment is remarkable, the amount that customers pay for transmission services, and probably for delivered electricity overall will remain low. That’s because the transmission costs are a public investment spread over all customers and will be offset more efficient markets and by wider deployment of lower-cost renewable energy resources. The report shows that, if we are smart, the next 25 years will be a great leap forward.”