California Electricity Grid Investment Provides Economic, Environmental Benefits

CERTS Contact: Allan Chen, (510) 486-4210;
Technical Contact: Vikram S. Budhraja, (626) 685-2015;

Berkeley, California—California's investment in its electricity transmission grid brings the state substantial economic, environmental, and energy benefits, according to a recent report prepared by the Consortium for Electric Reliability Technology Solutions (CERTS) for the California Energy Commission (CEC).

The CERTS report, "Planning for California's Future Transmission Grid," is a supporting document for the Commission's "Integrated Energy Policy Report." The new CERTS document describes development of California's transmission system, strategic benefits, planning issues, and policy recommendations to guide long-term transmission planning. The key findings of the report are:

  1. California invested $4.1 billion to develop transmission interconnections that provide 18,170 MW of import capability.
  2. Transmission interconnections provide substantial benefits including:
    • Resource diversity through access to out-of-state renewable, coal, and nuclear power.
    • Import of nearly 6,000 MW of utility owned or contracted generation from Desert Southwest and Utah.
    • Savings from surplus economy energy imports totaling $7.2 billion from the Pacific Northwest and $5.7 billion from the Pacific Southwest.
    • Reliability and reserve sharing benefits that translates to substantial savings.

The report points out that transmission offers significant strategic benefits such as reliability, access to regional markets, fuel diversity, environmental benefits, and insurance against contingencies. Many of the strategic benefits of transmission occur during relatively brief periods, e.g. surplus hydro conditions, major power plant outages, and other events.

According to the document, transmission's strategic value as insurance against contingencies and uncertainties is not captured in traditional planning methodologies. For example, future investment of $3 billion in strategic transmission interconnections for California translates to a transmission rate increase of $2/MWh or less than a 2% increase in residential rates, while the resultant benefits during periods of market disruption and contingencies are likely to be far higher.

The key policy issue for the State is the level of additional transmission investment that is justified as contingency insurance.

The Consortium for Electric Reliability Technology Solutions was formed in 1999 to research, develop, and disseminate new methods, tools, and technologies to protect and enhance the reliability of the U.S. electric power system in the transition to a competitive electricity market structure. For more information, visit http://certs.lbl.gov/.