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Is Transmission Expansion for Decarbonization Compatible with Generation Competition?

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  • Brennan, Tim

    (Resources for the Future)

Abstract

Decarbonization of the electricity sector, and expanding it to facilitate decarbonization of transportation, heating, and other energy applications primarily using fossil fuels, is an important step in mitigating climate change. A widely advocated step in that direction is long-term planning to massively expand the transmission system to deliver electricity generated by wind and solar units that are far away from population centers. The transmission system has seen substantial investment in recent years, with few examples of failure to construct new lines, but future climate imperatives may justify moving away from the process of adding incremental capacity in response to specific requests. However, the planning process may sacrifice much of the benefits of competition that electricity policy has striven to achieve over the past three decades. These benefits are not only those from independent output and capacity responses to market prices but also dynamic benefits from technological innovation and market information acquired over time. Reconciling the benefits of competition with central planning has long been necessary in the electricity sector. I propose options for preserving some of the benefits of competition, if long-term transmission planning remains an imperative.

Suggested Citation

  • Brennan, Tim, 2022. "Is Transmission Expansion for Decarbonization Compatible with Generation Competition?," RFF Working Paper Series 22-12, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-22-12
    as

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    File URL: https://www.rff.org/documents/3491/Working_Paper_22-12_1x8MkMR.pdf
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    References listed on IDEAS

    as
    1. Faruqui, Ahmad & Hledik, Ryan & Tsoukalis, John, 2009. "The Power of Dynamic Pricing," The Electricity Journal, Elsevier, vol. 22(3), pages 42-56, April.
    2. Winston, Clifford, 1993. "Economic Deregulation: Days of Reckoning for Microeconomists," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1263-1289, September.
    3. Brennan, Timothy J., 2006. "Alleged Transmission Inadequacy: Is Restructuring the Cure or the Cause?," The Electricity Journal, Elsevier, vol. 19(4), pages 42-51, May.
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