The Value of Transmission: Promoting Cost Efficiency, Access, Innovation

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By Steve Herling, vice president – Planning

PJM oversees 84,000 miles of transmission lines that transport nearly a quarter of the electricity used in the United States.

The sophisticated integration of this high-voltage transmission grid ensures reliable access to the lowest-cost power for more than 65 million people and enables generation of all types, sizes and locations to connect with consumers throughout 243,417 square miles.

Learn more about how PJM is studying the value of transmission.

This spring, PJM will publish a report quantifying the value of transmission, a preview of which we posted today. It will evaluate the wide-ranging impact of transmission projects, operations efficiencies and cost savings, among other topics.

The high-voltage transmission system facilitates competition among power generators throughout PJM’s 13-state footprint. This competition has lowered costs and increased efficiency while providing equal access to consumers for new, innovative resources.

The report also will explore the investment needed to address the evolving makeup of PJM’s generation fleet, the shift in consumer behavior patterns and the increase of renewables.

While the overall demand for electricity is no longer growing as quickly as in the past, new technology is changing the way power is used – from electric vehicles to massive data centers. Add the increasing penetration of distributed energy resources – such as home solar panels – and the result is a geographic shift in the flow of electricity on the grid.

The transmission system must evolve and be flexible. This requires extensive planning. PJM’s Regional Transmission Expansion Plan (RTEP) looks forward 15 years into the future, identifying necessary changes and additions. The long planning horizon affords project developers the time to marshal resources and gain necessary approvals.

Access to Lower-Cost Power

One type of transmission project that directly affects the cost of supplying energy to customers is designed to relieve congestion – physical constraints on transmission lines that limit the electricity that can flow through, increasing the cost of power.

PJM operators schedule the lowest-cost power resources to generate electricity first, adding more expensive resources as they are needed. When bottlenecks occur, PJM must call on higher-cost generators to meet the demand in constrained areas.

Reducing congestion ensures that consumers have access to lower-cost power. Planned upgrades were calculated to save more than $94 million in congestion costs in 2018, and more than $107 million in 2022.

Supporting Innovation

A flexible, robust transmission system also has helped reduce carbon emissions by enabling the entry of new technologies, such as natural gas, demand response and renewable generation.

One way transmission encourages the growth of renewables is by transporting electricity from more remote areas of the grid. Wind-powered generators, for example, are clustered in isolated areas most suitable to their operations. Without transmission, much of the electricity they produce would be stranded.

Over the past 20 years, about 20 percent of all PJM-approved transmission projects have allowed approximately 84,200 MW of new generation to connect to the system. (One MW is roughly enough to power about 1,000 homes.) The remaining projects aimed to evolve the transmission system to meet changing needs and ensure reliability. Transmission is the great equalizer, transporting electrons, no matter how they are fueled, over vast distances and ensuring that consumers, no matter where they are, have access to reliable electricity at the lowest possible cost. This is a basic tenet of our society that the electric transmission system helps make a reality.