Executive summary
The American electricity grid stares down a $600 billion investment gap—if not greater—and much of what needs to be built is high-voltage interregional transmission. A transmission “macrogrid” of high-voltage interregional lines that knit together the country’s fragmented regional grids would significantly increase the efficiency and reliability of the whole country’s electricity system, provide ratepayer savings through eliminating congestion, reduce its overall emissions profile, and promote the interconnection of new clean energy generation and large loads.
Policymakers at the federal and state levels are rightly focusing on reducing the siting and permitting barriers that can hamstring transmission planning by seriously delaying and raising the costs of new line construction. A macrogrid cannot be built without such reforms. Just as importantly, no developer, utility, large load customer, or grid planning institution today has the legal permissions or balance sheet space to proactively build new, necessary interregional transmission infrastructure in anticipation of future demand. There is no mechanism that translates federal and regional identification of critical interregional transmission links into concrete projects that secure financing or access to a cost recovery framework.
This report embraces the urgency and necessity of a federally coordinated macrogrid and enumerates the reasons why existing grid planning, financing, and cost recovery structures cannot bring it about. A federal macrogrid coordination process should procure new transmission lines on the basis of a sufficiently anticipatory planning process, provide financing for those lines to be built in advance of demand signals, and eliminate uncertainty over how those new lines will recover their costs when they begin operating.
Many proposals for grid reform offer targeted strategies for increasing the grid’s headroom, particularly to meet large load demand. But these proposals, too, will require a functioning interregional transmission procurement mechanism. This report highlights how a federally coordinated macrogrid complements these proposals and, in doing so, breaks bottlenecks facing both the development of new energy generation projects and the interconnection of new loads onto the grid.
