American customers paid three times more than they did on average for 2016-2020.
A new report from Grid Strategies shows that transmission congestion grew drastically across U.S. electricity markets in 2022. By extrapolating data from Independent Market Monitor reports to include regions that do not transparently report congestion costs, Grid Strategies estimates that total transmission congestion costs reached $20.8 billion nationwide last year.
On average transmission congestion cost $7.1 billion between 2016-2022, but 2021 began a striking growth trend to $13.1 billion which continued in 2022. The key driver of increasing congestion costs is the failure of transmission expansion to keep up with the growth of low-cost renewable energy. Rising fuel costs increase congestion values when thermal generators are dispatched in place of curtailed renewables.
“While there are multiple drivers for increasing congestion costs, the fundamental constraint is transmission capacity. Because the grid often cannot deliver the cheapest available electricity, customers pay billions more for power. Grid Enhancing Technologies can be deployed to reduce congestion in the near term and supplement future traditional transmission infrastructure development, which can take a decade or longer to move from planning to operations. The congestion cost increases over the last two years show that it is time to act with urgency to increase transmission capacity.”
Richard Doying, Vice President – Grid Strategies
This macro trend was exacerbated by transmission outages, extreme weather, and increasing electricity demand. Grid Enhancing Technologies (GETs) unlock additional capacity on the existing grid, and could reduce congestion by 40% per research by the Brattle Group. In 2022, GETs could have saved U.S. customers $8.3 billion.
“Today, utilities are not rewarded or required to manage congestion or make more efficient use of grid assets. I hope that the Federal Energy Regulatory Commissioners and state utility commissioners have a productive discussion about how to address this ballooning cost.”
ulia Selker, Executive Director – The WATT Coalition
On July 16, the Joint Federal State Task Force on Electric Transmission will meet to discuss GETs in Austin, Texas at 2:30 pm.
