THE BRATTLE GROUP

interregional transmission capabilities. These benefits obtainable through a more robust
interregional transmission interties are associated with:
1. Increased load diversity (which reduces installed generating capacity needs)
2. Increased diversification of wind and solar generation; and
3. Reduced ancillary service needs.
The MISO presentation also noted that additional benefits (not yet estimated) would likely be
realized under more stringent, carbon-constrained environmental regulations, such as EPA’s Clean
Power Plan. While the cost of such a HVDC network has not yet been estimated, it is likely that at
least several of the interregional components of this overlay would be found to be cost effective—
particularly in a more carbon constrained future.
2. National Co-Optimization of Transmission and Generation Study
As briefly noted earlier, the benefits of interregional planning on a national and easterninterconnection-wide
basis have recently been analyzed by researchers from a consortium of
five universities. Their research results, presented in the study, “Co-optimization of Transmission
and Other Supply Resources” prepared for EISPC and NARUC with funding from the DOE, 34 shows
that the traditional planning approaches for transmission and generation are no longer adequate to
achieve least-cost outcomes in light of challenges such as plant retirements, renewable generation
integration, and increasingly stringent environmental regulations that lead to significantly more
complex and less predictable power systems. As noted earlier, the study finds that traditional
planning processes yield suboptimal levels of transmission investments that increase the combined
generation and transmission costs by 5–10%. Improved planning processes, if applied nation-wide,
were estimated to save $150 billion in total costs by spending $60 billion more on interregional
transmission (yielding a benefit-cost ratio of 2.5:1) compared to traditional approaches in which
generation is planned first and transmission is then built to deliver that generation.
These cost reductions, however, can only be achieved through regional and interregional planning
processes that consider a range of transmission-related benefits. In particular, the study shows that
co-optimized interregional planning that explicitly considers planning uncertainties and anticipates
generation investment needs, as well as generation investment responses to transmission expansion,
would be able to reduce overall system-wide costs through:
1. Savings of transmission and generation investment and operating costs;
2. More efficient decisions concerning generation retirements and uprates;
3. More appropriate treatment of variable resources;
34
EISPC (2013)
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