Electricity transmission investment in the United States : an investigation of adequacy
Author(s)
Kwok, Peter Jordan![Thumbnail](/bitstream/handle/1721.1/62058/707937446-MIT.pdf.jpg?sequence=5&isAllowed=y)
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Alternative title
Electricity transmission investment in the U.S. : an investigation of adequacy
Electricity transmission investment in the US : an investigation of adequacy
Other Contributors
Massachusetts Institute of Technology. Technology and Policy Program.
Advisor
Ignacio J. Pérez-Arriaga.
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There is a prevailing sentiment that the United States is underinvested in its electric transmission infrastructure. The standard claim is that poor regulation has caused insufficient levels of capital to be devoted to the transmission system and resulted in a network that is economically inefficient and potentially unreliable. Furthermore, it has been postulated that if policy changes are not made to increase investment in the near future, the US will face a crisis within its electricity grid. This investigation assesses these claims and, where regulation or investment is found to be wanting, policy recommendations to remedy the situation are made. Adequacy is defined here in the context of the major goals for transmission in the United States - generator interconnection, economics, reliability, and policy support - and whether the current system is achieving these goals. Adequacy is neither static nor a binary outcome, and at any point in time the system exists along some continuum between perfectly adequate and completely inadequate. This state may be affected by policies in place, the economy, the fuel prices that underlie the economics of the power system, or by other factors, and thus adequacy must be regularly revisited, as is done here. This study begins by finding that many of the indicators traditionally used to assess adequacy of transmission investment do not actually have much utility when it comes to drawing a definitive conclusion. Additionally, data that could potentially indicate adequacy are either insufficient to support any findings on the matter or are inconclusive. As such, other avenues of research are required. Two approaches are settled on as possible ways of addressing adequacy. The first, a "regulatory rationale" approach, seeks to apply logic and experience to deduce what outcomes might result from current regulatory structures. The second, a set of interviews with professional transmission planners, serves to validate the theoretical findings of the regulatory rationale and gain insight into the actual state of the system. The interview responses are analyzed using grounded theory, a structured method for interpreting qualitative data. Based on the two pronged qualitative assessment of system adequacy, the transmission network is found to be more adequate than is commonly claimed. Specifically, the system is quite adequate to serve the goals of generator interconnection and reliability. The conclusions for whether the system is economically efficient are the least clear, but to the extent that is possible within the current planning process, it appears that there is not cause to be concerned about underinvestment. Any major economic opportunities that are being missed are likely a result of the lack of an inter-regional planning process, which in turn means that opportunities for strengthening of economic linkages between regional jurisdictions are probably overlooked. The most concerning category where adequacy may become an issue is policy lines. While a motivating national policy is not yet in place, the type of transmission regulation that would result in transmission expansion to serve policy needs is not in place. Regulatory change is required to ensure that the system does not end up with a regulatory framework that cannot support legislative goals. Based on these findings, a limited number of policy recommendations are forwarded. First, it is suggested that any decisions based on the conventional wisdom be reexamined based on a more rigorous assessment of more complete data on the current state of the system. Next, it is recommended that the economic criteria and planning process be revisited with a focus on ensuring that inter-regional opportunities are not overlooked. Finally, there is a need to create policy certainty about what the future goals are for the power system, which should be supported by improved regulation that will allow for the incorporation of large quantities of renewable power sources.
Description
Thesis (S.M. in Technology and Policy)--Massachusetts Institute of Technology, Engineering Systems Division, Technology and Policy Program, 2010. Cataloged from PDF version of thesis. Includes bibliographical references (p. 89-91).
Date issued
2010Department
Massachusetts Institute of Technology. Engineering Systems Division; Technology and Policy ProgramPublisher
Massachusetts Institute of Technology
Keywords
Engineering Systems Division., Technology and Policy Program.