Advanced transmission technologies (ATTs) can help utilities meet the rising levels of demand that are stressing the grid, according to a report released Sept. 17 by the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research (CEEPR).

ATTs are a suite of technologies that include grid-enhancing technologies (GETs). The most widely used ones are dynamic line ratings, advanced power flow control devices, topology optimization and high-performance conductors.

“Increased use of advanced transmission technologies can play a major role in meeting this demand growth quickly and cost-effectively,” the report says. “However, electricity market structures — which disincentivize investment in innovation — are impeding progress towards modernizing the electric grid.”

“A Roadmap for Advanced Transmission Technology Adoption” was written by Grid Strategies President Rob Gramlich, along with CEEPR Fellow Brian Deese and Research Associate Anna Pasnau, both of whom previously worked at the White House for President Joe Biden.

The technologies have been used for decades and are more widely deployed abroad. In the U.S., the lack of incentives for transmission providers, information provided to regulators and some features of electricity markets hold them back, according to the report. The profit structure of electricity markets does not offer the right incentives for transmission providers to adopt many forms of ATTs, despite their consumer benefits and the ability to quickly add transmission capacity to the grid, it says.

“Under the current electricity industry regulatory structure, utilities earn profits from capital expenditures, meaning that they are incentivized to make more costly capital investments (e.g., building a new power plant) over changing their operating expenses or lowering and smoothing demand for electricity — even when those capital expenditures ultimately increase costs for consumers,” the report says.

The “capex bias” is an accepted and well-known feature of cost-of-service regulation, according to the report. It disincentives utilities from deploying GETs because they would avoid the need to invest in new transmission — cutting their capital expenditures and thus their profits. Part of regulators’ job is to prevent utilities from taking advantage of that bias and ensure investments are in line with consumer interests, the report says.

“However, both transmission providers and regulators can struggle to identify the best way to expand capacity against a backdrop of multiple options, and for some technologies, they need new modeling practices to assess benefits,” the report says. “Transmission providers and their regulators have historically focused their cost-benefit analyses on a narrow set of risks and thus are slow to scale innovations, preferring the status quo.”

Some policies around ATTs have already improved, with states passing laws aimed at encouraging them, the report notes. Other policies have sought to align utility incentives with key performance metrics; FERC Order 1920 requires transmission providers to consider ATTs in the planning process.

Those steps are in the right direction, but the paper proposes five more to spread the use of ATTs across the grid:

• • Regulators should require the use of ATTs in certain contexts, with the paper suggesting FERC require DLRs on highly congested lines to increase their capacity at one-tenth the cost of reconductoring. The Department of Energy should adopt a national conductor efficiency standard, which would ensure utilities use more efficient lines that can cut line losses by 30%.
  • Transmission providers and regulators should have to conduct robust analyses of the value of ATTs for the electric grid. Order 1920 requires they be considered, but it lacks specificity on how robust of an analysis will be required. The paper suggests states adopt laws requiring more stringent analyses to complement the FERC rule.
  • FERC should create financial incentives for transmission providers to adopt ATTs where they provide high benefits. The commission should adopt a shared-savings incentive nationally, giving utilities a cut of ratepayer savings from GETs adoption, and where possible state legislators should authorize additional returns on equity for ATT investments.
  • The commission should require transmission providers to share additional information publicly so third parties can evaluate ATT adoption and hold utilities accountable when they fail to make sensible investments.
  • FERC should open up the planning process for a third party to work on deploying ATTs. The paper suggests the commission could require transmission providers to release relevant data to the National Renewable Energy Laboratory, or another qualified nonprofit entity, to come up with plans for each grid operator to adopt ATTs and update them on a regular basis.