Interregional transmission can help address resource adequacy concerns around the country, according to a report released by Americans for a Clean Energy Grid and Grid United ahead of FERC’s two-day technical conference. (See FERC Resource Adequacy Conference Comes with Markets at a Crossroads.) 

“The last several Summer Reliability Assessments from [NERC], including this year’s, continue to demonstrate resource adequacy risks facing the power system given hotter summers, load growth and an aging generation fleet,” said co-author Adria Brooks, director of transmission planning for Grid Strategies. “This report demonstrates yet another benefit of interregional transmission, adding to a growing list of reliability and cost benefits. We have to stop ignoring the value of interregional transmission and instead create mechanisms to build it.” 

Interregional transmission offers value because different regions have different resource mixes and their peak demand is often at different times, the report says. 

“Interregional transmission allows capacity resources to be shared between regions with noncoincident demand,” the report says. “The interregional transmission assets themselves tend to be available nearly 100% of the time. Consumers benefit from this sharing of reserves, both in terms of improved reliability and reduced costs. These reliability and economic benefits are heightened during grid stress events.” 

To move forward with more interregional transmission investment, the industry will need to integrate capacity value into its resource adequacy assessments, which can be calculated using standard industry methods such as effective load-carrying capacity (ELCC). 

“ELCC considers the difference in loss-of-load expectation (LOLE) — or any other RA metric — for the system with and without the supply resource and calculates how much additional load the resource can serve to return the system to the standard LOLE baseline of one day in 10 years,” the report says. “This method has been successfully applied in several recent transmission facility or resource adequacy studies to derive the capacity value of several interregional transmission lines both in the United States and abroad.” 

System planners historically have not calculated the LOLE reduction from an individual transmission line and converted it to a capacity value. But most have calculated the cut in LOLE associated with the current fleet of interregional lines, which is called “external assistance,” “tie benefits” and “firm and non-firm imports” in different regions. 

Without a benefit that load-serving entities can credit to their resource adequacy obligations that indirectly provides value to transmission developers, or direct payments to transmission for its resource adequacy contributions, the industry will have fewer incentives to build interregional lines. The valuation and compensation can be done for either fully regulated transmission or merchant lines. 

The report argues that considering the benefits of lower planning reserve margins from interregional lines will not worsen reliability; it would represent a cut in the amount of capacity needed to maintain resource adequacy. Those benefits can even come from non-firm imports, with grid planners using a probabilistic treatment of available imports to avoid overcounting such resources. 

“All regions we surveyed include firm imports from neighbors in their resource adequacy assessments, but only a handful also consider the contribution of non-firm imports,” the report says. “Those that do incorporate non-firm imports rarely accredit the interregional transmission [that] enables non-firm imports with a capacity value for their contribution to resource adequacy.” 

Non-firm imports are a way to quantify the “net load diversity” between regions, such as when one region faces a shortage but its neighbor has excess supply. 

“Non-firm imports are a vital resource to the system, allowing operators to keep customers’ lights on even when there are no more internal resources to call on for support,” the report says. “However, these imports are not consistently incorporated into resource adequacy assessments. This omission may result in the over-procurement of capacity resources internal to the planning region to meet the planning reserve requirement, raising costs for ratepayers.” 

At the simplest level, planners can look at historic imports to determine how many non-firm imports can be included in LOLE studies. Doing that seasonally, or only during tight-capacity periods, provides more confidence that external support will be available in the future.