A new report from the National Renewable Energy Laboratory identifies barriers within rules and operational practices that may limit the value existing interregional transmission can provide to electric consumers and identifies a suite of options that could enable greater use of and value from interregional transmission.
To allow for the variety of power sector structures that exists across the United States, the report divides the evaluation of barriers and opportunities into three sections: common issues found in all regions, barriers between nonmarket or hybrid areas, and barriers between market areas.
The report “also identifies ambitious, transformative national actions that could unlock transmission value across both market (e.g., between regional transmission operators) and nonmarket (e.g., areas that primarily rely upon bilateral transactions) areas,” NREL said.
NREL notes that the report provides an overview, rather than a complete or exhaustive list, of barriers and solution options and generally examines historic issues rather than reasonably anticipated concerns.
In the analysis of barriers and potential opportunities for improvement, “we recognize these are technically complex issues with a diverse set of power system stakeholders and factors that must be considered. We further recognize this report does not fully explore the complicated issues grid operators face when seeking to address these barriers, such as changing financial outcomes and the potential creation of winners and losers in markets.”
The aim of the report is not to make recommendations but to identify options to improve the use of interregional transmission that could be considered alongside other local, state, regional, and stakeholder objectives.
“While this report is focused on issues that prevent existing transmission facilities from delivering maximum potential value, the findings have important implications for future transmission investments,” NREL said.
“In both market and nonmarket regions, we find the absence of a framework for resource adequacy sharing may discourage grid operators from relying on external resources for reliability,” the report said.
NREL said a second common issue is transmission owners and operators have limited operational awareness to anticipate when large power transfers are needed.
“This is especially relevant in response to extreme weather events when interregional transmission could enable large power transfers to maintain reliability.”
Third, planning for within-region transmission networks may not account for large power flows across the network to accommodate increased imports and exports with neighboring regions, the report went on to say.
“Among nonmarket regions or between market-to-nonmarket hybrid regions, we find inconsistent or uncoordinated approaches to scheduling and real-time operations may result in the inefficient use of interregional transmission,” NREL said.
Uncoordinated bilateral trading has inherent limitations that may not be able to identify lowest-cost resources to meet system needs and may prevent the ability to adjust to real-time operating conditions, according to the report. In hybrid regions, regional practices to prioritize market transactions -- even during emergency conditions -- can reduce system reliability, it said.
“Uncoordinated approaches to congestion management can pose reliability risks across critical transmission corridors and limit the ability to use scarce interregional transmission capacity for economically efficient power trades,” NREL said.
“Finally, inconsistent approaches to estimate and communicate available transfer capacity across interregional lines can result in underutilized or oversubscribed transmission lines.”
Market-to-Market Issues
Most of the market-to-market issues relate to inefficiencies in joint operating agreement programs between market regions, the report said.
“First, inaccurate price forecasts and high transaction fees limit the efficient use of transmission capacity through coordinated transaction scheduling,” NREL said.
In daily operations, issues with interface pricing between regions can lead to operational inefficiencies such as loop flows, economic inefficiencies such as redundant charges, and opportunities for market manipulation through sham scheduling where scheduled flows do not match actual flows.
“We also find outdated flow limits and inaccurate modeling of interregional lines leads to excessive costs for congestion management that are borne by ratepayers. Finally, we find most regional markets lack the ability to optimize the use of available merchant high-voltage direct current (HVDC) transmission capacity, which leads to inefficient use of these grid assets.”
For each of the identified barriers, the report details potential options that policymakers, regulators, and system operators could pursue to improve the efficient use of interregional transmission.
These options include actions tailored to the specific needs and power sector structures in different planning regions -- including options for market, nonmarket, or hybrid areas --- as well as options common to all areas.
“These reforms could both significantly enhance the value of interregional transmission and deliver additional within-region benefits not related to interregional transmission,” the report said.
Report Identifies “Transformative Opportunities”
The report “also identifies transformative opportunities that could be implemented more broadly across the multiple regions to maximize the system benefits of interregional transmission,” NREL said.
These options include national transmission and resource planning, multi-region or interconnection-wide optimization, and a combination of these responsibilities.
Although the total benefits of the opportunities are not directly quantified, NREL notes the portion of total benefits attributed to interregional transmission generally increases as the geographic scope and level of coordination increases.
NREL also noted that The National Transmission Planning Study identifies a suite of transmission options that will provide broadscale benefits to electric customers, inform regional and interregional transmission planning processes, and identify interregional and national strategies to accelerate decarbonization while maintaining system reliability.
The NTP Study “demonstrates coordinated planning and operation of the national transmission grid -- including increased development of interregional transmission -- can reduce the cost of meeting energy, reliability, and reserve requirements by hundreds of billions of dollars.”
