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GDP, jobs, climate goals all aided by federal support of transmission projects: report


$83 billion of transmission investment identified

Could boost US GDP by $42 billion, create 442,000 jobs

Climate benefits, lower electricity bills also seen

  • Author
  • Jasmin Melvin
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  • Haripriya Banerjee
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  • Energy Transition US Policy

Federal support of already planned transmission investment and policies to foster timely construction of grid expansions would have significant economic stimulus effects in the short term and aid achievement of longer term decarbonization goals, a new report released May 18 said.

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Demand for electricity is expected to see an uptick as the Biden administration's climate goals call for greater electrification of multiple sectors, requiring strategic transmission investment to both boost electrification efforts and tap remotely located renewable resources that are slated to account for a larger portion of the generation mix, power industry observers said.

The new report, commissioned by the transmission advocacy group WIRES, found more than $83 billion of transmission investment has been approved or recommended for approval by grid operators and utilities across the country.

But policymakers and industry experts have alluded to "a number of obstacles in realizing these investment plans," including "institutional barriers around securing customer commitments and/or allocation of costs, regulatory approval for siting, and conflicting and unclear planning frameworks," as well as a "financial environment for investors ... [that] has been in flux" due to a lack of regulatory certainty over return on equity policies, the report, written by the global advisory firm London Economics International, said.


If the identified planned transmission infrastructure can be realized, "construction of this magnitude ... would increase direct local spending [in the US] by nearly $39 billion, boost US GDP by $42 billion and create an additional approximate 442,000 jobs," the report found.

For the utilities sector, this would mean a nearly 14% jump in its contribution to GDP and represent the equivalent of more than doubling the sector's current employment levels.

"In our analysis we purposefully took a very conservative assessment of the figures, and anticipate that the multiplier effect and co-benefits of transmission projects would drive substantially greater economic impact," Julia Frayer, managing director at LEI, said in a statement.

"Those numbers send a message of exactly what it is that we need at this time when we're still in the process of trying to recover from the economic impacts of the pandemic, and I think they feed directly into goals that the administration and Congress are looking to set, both on getting the economy restarted and getting jobs," WIRES Executive Director Larry Gasteiger said in a May 17 interview.

Long-term benefits over the transmission assets' lifecycle would include an annual increase in GDP by $1.6 billion and almost 9,000 jobs per year from spending to operate and maintain the new infrastructure, according to the report.

"There is a big payoff in connection with investment in transmission, and ... the benefits extend beyond" job creation and GDP growth, Gasteiger said, pointing to other benefits addressed in the report including lower electricity prices for customers, increased generation from renewables and progress towards decarbonization efforts.

The report explained that electricity prices would come down as new transmission projects alleviated transmission congestion, which tacked an extra $3.7 billion a year on average to consumers' power bills over the last four years. Prices would also drop as new transmission capacity spurred new, low-cost power to come online, the report said.

A large portion of that new generation is expected to include intermittent wind and solar resources, which have amassed a sizeable backlog in regional grid operators' interconnection queues. "Facilitating and fostering investment in transmission infrastructure will help bring some of proposed generation also online," the report said.

By enabling more renewable power in remote locations to reach market demand centers rather than be curtailed, new transmission is also seen helping to reduce the need for fossil fuel-fired generation, complementing decarbonization goals, the report contended.


"There is no need for the government to step in and completely fund construction of such infrastructure with taxpayer funds," the report said. "However, federal government involvement through policy support could be invaluable in ensuring that the construction of these planned transmission investments not get unnecessarily delayed, so that the positive impacts on GDP and employment contribute to longer term recovery of the US economy."

Regulations that improve siting and permitting, better coordinate interregional transmission planning and craft a more pragmatic framework for cost allocation were noted in the report, as well as economic stimulus measures to encourage continued private sector investment, such as provisions that promote "stable and commercially reasonable" transmission rate designs and ROEs.

Gasteiger said the recommendations called for a mix of action by Congress and the Biden administration, primarily through the Federal Energy Regulatory Commission, to spur investment in transmission as the consequences of inaction will be felt by future generations.

"We can't afford not to address issues related to reliability ... but we also don't want to see slippage on meeting climate and clean energy goals and mandates," he said. "I can't overemphasize the need for urgency on getting moving on transmission. My sense is that the planning processes are very focused on issues like reliability ... I think the ones that unfortunately are more likely to be potentially jeopardized are the ones that are going to be used for addressing things like meeting clean energy goals."

Gasteiger added: "Because transmission can take about 10 years or so in order to get built, time is absolutely of the essence in terms of trying to meet those goals. So, if we're looking at 2030, the timeline is already potentially too late. If we're looking at 2035, we don't have much time to lose."