1. Deploying DERs. A potential alternative to transmission build-out is local sources of zero-carbon electrons and reliability such as rooftop solar, behind-the-meter storage, and demand-side management. These solutions at least partially circumvent the need for further transmission build-out, which is particularly critical in congested areas. For example, a model by the National Renewable Energy Laboratory shows that meeting Los Angeles’s target of 100 percent renewable energy by 2035 would require three to four gigawatts of energy from rooftop solar by 2045, with development on up to a third of existing homes to bring energy supply closer to demand. 31 In addition, energy efficiency and demand response are low- cost levers to reduce transmission needs. A McKinsey analysis found that distributed- resource aggregation could unlock nearly 100 GW of new potential flexible capacity by 2030. 32 2. Optimize electric transmission with the existing gas network. Even though fossil fuel–based natural-gas consumption in buildings is expected to decline in the Achieved Commitments scenario, the gas system would likely still be needed to support a more orderly energy transition by alleviating some of the most significant demands for electric build-out. For example, while building electrification is likely to be a cost-effective decarbonization lever in many regions, it could drive extremely high electric-system needs in winter in colder climates. 33 By contrast, a system that uses electric heat in the shoulder seasons (spring and fall) and gas heat in winter was estimated to be half the cost in one colder-climate state, according to McKinsey analysis. 34
FERC’s Advance Notice of Proposed Rulemaking and ISO evolutions
The Federal Energy Regulatory Commission’s Advance Notice of Proposed Rulemaking puts forward a new cost-allocation model for new transmission commensurate with broad estimated benefits, including increased renewables integration and environmental benefits. This new method could expand the pool of transmission projects considered—and approved—for development. Similarly, the recent grid planning process by the Midcontinent Independent System Operator (MISO) quantified potential reliability and economic benefits (such as congestion and fuel savings, and avoidance of additional transmission investment). The independent system operator’s analysis showed that reusing existing rights-of-way for long-range transmission plan (LRTP) projects could offset the costs of age and condition replacement for existing facilities, and that transmission costs from a resource build-out are two times more efficient than a regional transmission build-out. 1 In 2022, MISO secured approval for $10.3 billion of LRTP projects to support reliability, which accelerated the construction of transmission lines.
1 Reliability imperative: Long range transmission planning , MISO Board of Directors, July 25, 2022.
KEY PRIORITIES While scaled build-out of transmission would lead to the most orderly transition, businesses and governments would be prudent to plan for alternatives if transmission gridlock isn’t resolved. There are three ways to diversify transmission: deploying distributed energy resources; co-optimizing electric transmission and gas; and transitioning to dispatchable zero- carbon resources.
3. Transition to dispatchable zero-carbon resources. In its most recent System & resource
31 LA100: The Los Angeles 100% renewable energy study , Los Angeles Department of Water & Power and National Renewable Energy Laboratory, March 2021. 32 Evan Polymeneas, Humayun Tai, and Amy Wagner, “Less carbon means more flexibility: Recognizing the rise of new resources in the electricity mix,” McKinsey, October 1, 2018. 33 Including capital, fuel, and operation and maintenance costs and savings. 34 To hit decarbonization targets, the carbon emissions associated with this heating system will need to be netted out. Local distribution companies are exploring zero-carbon fuels such as renewable natural gas and zero-carbon hydrogen. Or the emissions could be netted out from negative emissions in other parts of the economy—for example, via distributed air capture or bioenergy with carbon capture and storage. See “Decarbonizing US gas utilities: The potential role of a clean-fuels system in the energy transition,” McKinsey, March 2, 2022.
Accelerating the journey to net zero
30
Made with FlippingBook Online newsletter maker