Electricity Transmission: Policy Options for a Renewable Future

Abstract

In the United States, areas with a high potential to produce renewable electricity from sources such as wind and solar are primarily located far from areas of high electricity demand. As a result, exporting renewable electricity from high capacity areas to population centers requires major transmission infrastructure investments. However, under current policies, these investments may enhance markets for fossil fuel generation even as they connect our most promising clean electricity sources to the grid. This paper evaluates policy options for ensuring that new transmission investments to support renewable development actually deliver clean electricity, including: a % Capacity Mandate, Externality Adders, Environmental Impact Analysis, and Financial Transmission Rights. It concludes that a % Capacity Mandate and Environmental Impact Analysis warrant further consideration as a path forward. Further research is recommended to lower the barriers to a feasible system of Externality Adders, and the allocation of Financial Transmission Rights is not recommended as a solution to this particular aspect of transmission policy.