A research paper from the Ford School's Catherine Hausman for the National Bureau of Economic Research looked at the gains and losses of the existing transmission constraints in the U.S. Utility Dive recently highlighted the paper.
The paper by Hausman found that the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) lost at least $2.2 billion in 2022 to transmission inefficiencies. These transmission constraints boosted Entergy Arkansas and Entergy Louisiana operating profits by about $930 million in 2022. Hausman argues that current transmission planning processes are "problematic" given that the financial losses will be large and unfavorable for some incumbents.
Findings suggest that transmission limitations imposed on MISO and SPP dump money into the pockets of fossil fuel power plant owners. This is because MISO and SPP are not operating efficiently enough for low-cost wind generation to put competitive business pressures on Entergy.
Analyzing how these economic implications impact energy transmission, Hausman claims that many companies have "huge incentives" for blocking new transmission lines and they are increasing as new renewables enter the market. “Integrating the market implies that those low-cost renewables can be exported to other regions, which can both displace fossil generation and also lower market prices for the remaining fossil generation,” she said.
Hausman's paper also noted that increasing transmission capacity would likely allow for more wind farms to be built, increasing availability of the cheap renewable source. "With reduced constraints, wind generations would have access to higher-priced power markets and would see reduced curtailments," said Hausman.
