Electric transmission value and its drivers in United States power markets

Electric transmission infrastructure plays a vital role during extreme weather and supply disruptions and can enable low-cost electricity systems. This paper contributes to a more complete understanding of the value and cost-effectiveness of transmission, as well as barriers to its development. By studying wholesale energy market prices in the United States between 2012 and 2022, we find that additional transfer capacity between regions would have been especially valuable, with a median value of $116 million per GW per year. This capacity would often have provided balanced benefits to each region. The market value of transmission was highly influenced by a small fraction of time: 5% of hours typically captured at least 45% of the total value. These peak periods were primarily driven by unforeseen changes in conditions within one day of operations. Annualized transmission infrastructure cost estimates were lower than the average market value for most locations, including all links crossing regional seams, where the value-to-cost ratio was often greater than 4. This suggests that there are barriers to developing valuable grid infrastructure. These results complement forward-looking modeling studies and support efforts to improve modeling practices.