For transmission owners, reliability remains the top priority, but the need for transmission is no longer driven just by local load forecasts and reliability issues. Renewable energy, system congestion and load-shape changes all make transmission planning increasingly complex.
Traditionally, transmission systems were planned to meet peak demand hours when the system would be the most stressed. The assumption was that if the system could meet the peak demand, it could meet demands for all other conditions. Evolving regional energy markets along with increased use of renewable energy sources have presented new demands and stresses during off-peak periods, resulting in new challenges.
Renewable generation that produces more in the off-peak hours, combined with generally increasing flows during these hours, means that transmission planners now need to analyze a host of system conditions in off-peak hours as well as peak demand requirements. These higher off‑peak flows, which make it difficult to schedule maintenance outages, may become more widespread and continue to increase with the advent of new technologies.
Another variable that adds complexity in transmission planning is the potential for generator retirements due to new air quality regulations. Our customers are completing detailed surveys on load forecasts, demand-side resources and generation resources, year by year, for the next decade to help the Midcontinent Independent System Operator assess the issue.
As regional planning efforts evolve and become more sophisticated, the economic benefits of transmission solutions are becoming more evident. In addition, the regional energy market has enabled transmission owners and operators to identify where congestion on the system is causing customers to pay higher prices because of a lack of transmission options.
By easing congestion on the system and providing access to lower-cost sources of generation, transmission investments help keep electric rates in check. When the Midwest wholesale energy market was established in 2005, the average locational marginal price within our service area was more than $10 higher per megawatt hour than the average in neighboring states. In 2012, the LMP was only 20 cents higher.
We also have determined that for projects installed over the past three years, including projects built solely for reliability, we estimate 99 percent of the cost will be offset by savings in energy prices over the life of the projects.
Our Pleasant Prairie-Zion Energy Center Project will help alleviate transmission congestion around the southern tip of Lake Michigan, allowing utility companies to buy and sell power when it is economically feasible. The transmission system between southeastern Wisconsin and northeastern Illinois was congested nearly one third of the year in the 2010 MISO day-ahead market. The project is expected to significantly reduce this level of congestion. It was designated by MISO as a Multi-Value Project in 2011 and approved by Wisconsin and Illinois regulators in 2012. We broke ground on the project in early 2013.
New technologies also have the potential to increase reliability and improve economic operation of the grid. A new high-voltage, direct current flow-control device is being built in St. Ignace, Mich., to better manage power flows between the Upper Peninsula and Lower Michigan. The facility will provide more stability to the system in the eastern U.P. Planning studies determined that the $130 million project would be a less-expensive and faster option than the portfolio of transmission lines studied as alternatives.
The 2013 Assessment covers the years 2013 to 2022 and indicates a need for $3 to $3.6 billion in transmission system improvements.
|Specific Network Projects||$1.0B||$1.0B||$1.0B||$1.9B||$1.2B|
|Regional Multi-Value Projects||$0.0B||$0.7B||$0.7B||$0.8B||$0.5B|
|Other Capital Categories||$0.8B||$1.0B||$1.1B/$1.7B||$0.1B/$1.0B||$0.2B/$0.8B|
|Total 10-Year Capital Cost||$2.5B||$3.4B||$3.8B/$4.4B||$3.9B/$4.8B||$3.0B/$3.6B|
The planning zone summaries included in this report detail specific projects identified to improve reliability, access to the market and renewable energy resources.
Vice President of Strategic Projects
Vice President of System Planning
Vice President of Asset Management