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September 01, 2016
Brattle Economists Discuss Importance of Improved Transmission Planning in Brink Article

Brattle Principals Hannes Pfeifenberger and Judy Chang, and Senior Associate Onur Aydin have authored an article published on Brink that examines the need for improved transmission planning that increases flexibility to comply with evolving future regulations, while meeting anticipated policy goals at lower costs and lower risks for customers.

The article, “Improved Transmission Planning for a Carbon-Constrained Future,” argues that the electric transmission industry’s traditional planning processes are not yet sufficiently focused on identifying valuable transmission solutions that can address long-term uncertainties and reduce overall customer costs as countries decarbonize their economies. The authors discuss that as the electric industry transforms and as clean energy policies are implemented over time, a well-planned, flexible transmission system provides valuable options and an “insurance policy” without which electricity customers will face higher risks of significant cost increases.

Additionally, the authors encourage regulators and state policymakers to urge transmission planners to move beyond today’s traditional and mostly reliability-focused planning approaches, especially as they face unprecedented challenges in the industry, such as accelerated technological changes, shifting customer preferences, and new climate and environmental regulations.

The article is based on a June 2016 report authored by Ms. Chang and Mr. Pfeifenberger that examines how effective transmission planning could help reduce overall costs in the face of shifting generation mix, evolving regulatory requirements, and changing demands of electricity customers. Prepared for WIRES, their report estimated that in the U.S. the net savings associated with a proactive transmission planning and development process would range from: (a) $30 to $70 billion of savings in total generation and transmission investment costs through 2030 for compliance with current regulations; to (b) $47 billion per year of savings in annual customer bills under an even more environmentally-constrained future in which a well-planned grid significantly reduced generation investment and operating costs. Other studies identified similar savings potentials for Europe.

To read the article in its entirety, please visit the Brink website.

Additional information on the WIRES report can be found here.