Investing in the Energy Future: Planned transmission projects create jobs and bring benefits home to consumers 

In two recent posts, we discussed the components of the electric grid and the important role that transmission plays in maintaining grid reliability and lowering energy costs. This background is essential to understanding why recently proposed projects will benefit the grid and utility customers. This post introduces the transmission system expansion currently underway in Minnesota and surrounding states and explains how these investments will benefit households, businesses, and the economy.

Last year, the Midcontinent Independent System Operator (MISO) approved what it calls “Tranche 1,” the first set of projects in its long-range transmission plan. MISO oversees the transmission grid across 15 states—including Minnesota—and Manitoba. In that role, MISO manages electricity supply and demand, and helps to ensure that enough energy is being generated and transferred to serve the needs of customers at all times. In order to facilitate these energy transfers, MISO is planning transmission expansions that will revitalize the aging electric grid and keep up with states’ energy goals. Tranche 1 involves building 18 new transmission lines in MISO’s northern service territory, four of which will be located in Minnesota. This is the first step towards creating a more robust energy system that will bring billions of dollars’ worth of benefits to utility customers. This blog focuses on the importance of these transmission projects, why they are in the public interest, and what customers can expect from this grid expansion.

Need for Transmission Projects

The first blog of this series described the electric grid and explained how each part of the energy system—generation, transmission, and distribution—works together to deliver electricity to customers. For us to use energy in our day-to-day lives, these different grid components must operate efficiently and reliably. Unfortunately, the energy infrastructure in the United States has not been performing as well as it should. The American Society of Civil Engineers (ASCE), which evaluates the condition of critical infrastructure, rated the country’s electric grid at a “C minus” in its most recent report card. 

Nationwide, ASCE estimates that power outages result in losses of $28 to $169 billion every year. From food spoiling when your refrigerator shuts down to losing production time at factories, these impacts underscore the need for investments that ensure the reliability, safety, and security of the electric grid. As discussed previously in this series, the increasing prevalence of extreme weather has reinforced the urgency of making foundational changes that will strengthen electric infrastructure for years to come. Against this backdrop, MISO engaged in a long-range transmission planning (LRTP) process to identify where its own transmission systems could be improved. The results of that study indicated the Midwest Subregion (Minnesota, Wisconsin, Iowa, Illinois, Michigan, Indiana, North Dakota, and parts of Missouri, Montana, South Dakota, and Kentucky) faces increasingly urgent transmission challenges that require near-term investments. 

The implementation of MISO’s long-range transmission plan is broken into four “Tranches.” Tranches 1 and 2, the first stages, focus on the Midwest. Faced with a changing set of resources and increased extreme weather patterns, the addition of new transmission infrastructure in these states will help strengthen the grid and protect against variability in electricity supply. Tranche 3 involves building out transmission in southern states and is followed by Tranche 4, which seeks to strengthen the connections between the Midwest and its neighbors to the south. Strengthening these connections will allow low-cost electricity to be transferred to where it is needed most and will increase the reliability and robustness of the grid.

Costs and Benefits of Tranche 1

Tranche 1 is a major expansion of the existing transmission system that will require significant investment from utilities and their customers. As detailed in the map below, the project involves constructing 18 transmission lines across the Midwest, which are collectively estimated to cost around $10.3 billion. These costs are substantial, but only represent one side of the scale; to understand whether the projects are in the public interest, it is also important to consider the benefits that will result from a more robust transmission system. As part of its evaluation of Tranche 1, MISO determined that expanding the transmission grid would produce approximately $37 billion in benefits over the next 20 years, vastly outweighing the costs of the project. Many of these benefits will directly help to lower customers’ utility bills and increase the reliability and resilience of the electric grid.

Source: Midcontinent Independent System Operator, Reliability Imperative: Long Range Transmission Planning (July 25, 2022).

1. The transmission expansion will allow lower-cost wind and solar energy resources to be added to the grid where they will be most productive: where the sun shines and the wind blows. MISO estimates that optimizing the use of these resources could provide utility customers with up to $17.5 billion in reduced generation costs, as compared to a wholly local buildout of resources.
2. Tranche 1 can help address the high levels of transmission congestion that prevents these low-cost energy resources from being added to the grid. Imagine, for example, if cars were backed up for miles on a crowded highway during peak rush hour. Drivers attempting to enter from on-ramps would be prevented from doing so. The same is true for transmission congestion. If there is not enough room on the transmission highway to transfer low-cost energy from far away, then higher-cost energy—that is geographically closer to customers—will take its place. Congestion costs in MISO topped $2.8 billion in 2021, but the Tranche 1 benefits are expected to yield congestion and fuel cost savings of around $13 - $20 billion over the next 20 to 40 years.
3. Investing in transmission now will help avoid future costs related to infrastructure aging and resource needs. In other words, not building transmission lines will entail additional and different costs than those associated with expanding the grid. Just like replacing a car with a newer model can reduce repair and upkeep costs, investing in transmission can alleviate the cost burdens associated with reliability upgrades and aging facilities. Approximately $1.3 to $1.9 billion in avoided cost savings are expected from Tranche 1 investments over the next 20 to 40 years.
4. The integration of more renewable and low-carbon resources will reduce pollution and energy emissions. Minnesota has set a goal of achieving a carbon-free energy sector by 2040, as well as a net zero emissions economy by 2050. Other states, tribal nations, and local governments in our region have their own renewable energy and greenhouse gas reduction goals. Investing in transmission upgrades is necessary to achieve these objectives and will provide between $3.5 and $17.4 billion in expected decarbonization benefits.
5. In addition to the approximately $37 billion in estimated transmission system benefits expected over the next twenty years, Tranche 1 is expected to have enormous economic and workforce development impacts over the next 20 years. Clean Grid Alliance estimates that up to 120,000 people will be employed to work on transmission construction. Once built, these transmission lines will open the grid to an estimated 53 gigawatts of new renewable energy and battery projects, or enough to power 12 million homes. Building these energy generation resources will create an additional 213,000 construction jobs. These projects will also bring tax benefits to the communities where they are located. The Center for Rural Affairs reports that in Minnesota, transmission revenues are often passed through to households and businesses by lowering property taxes.

As you can see, the transmission projects currently underway in Minnesota aren’t just a strategy to modernize our aging energy grid. These projects will help forge our clean energy future, provide cheaper energy to households across the state, and stimulate the growth of our economy. CUB will continue to advocate for transmission investments that will benefit energy consumers, contribute to a carbon free economy, and cement Minnesota’s role as a clean energy leader.