Delaying Grid Buildout Could Cost Americans Billions, Endanger Health
Two new reports estimate that preventing delays in new transmission and generation infrastructure could save energy customers tens of billions of dollars per year, considerably increase grid reliability, and prevent premature deaths by reducing air pollution.
💡 What’s the story?
As electricity demand rises, the United States is in a race to add more power lines and electricity generators to its aging grid. However, these upgrades are taking much longer than they used to.
Two new reports estimate that preventing such delays in new transmission and generation infrastructure could save energy customers tens of billions of dollars per year, considerably increase grid reliability, and prevent premature deaths by reducing air pollution. The benefits would be especially large for low-income, Black, and Hispanic individuals.
Expert Perspective
“Despite widespread political support, numerous obstacles are stalling urgently needed upgrades to the US electric grid. Slow permitting processes, unstable investment conditions, local pushback, and other factors have contributed to long development timelines that complicate the challenge of meeting demand growth.”
—McKenna Peplinski, RFF Senior Research Associate
📈 What are the key findings?
The researchers came to several conclusions about the effects of delaying the buildout of new power lines and electric generation facilities:
- Longer development timelines for transmission and generation projects are likely costing US and Canadian energy users tens of billions of dollars per year in higher electricity and natural gas prices. Energy producers are retaining more than half of this money in the form of higher profits.
- Transmission and generation delays cause some coal and natural gas power plants to stay online longer than they otherwise would, worsening air pollution.
- US residents aren’t equally affected. Black individuals are more than four times as likely to die prematurely because of increased particulate matter pollution caused by transmission or generation development delays as white individuals.
- The estimated net costs of the modeled electricity transmission and generation delays are tens of billions of dollars larger than the estimated benefits. The estimated costs such as higher energy bills, deaths from pollution, and other damage from emissions are much larger than the estimated benefits, which include higher profits for energy producers and corporate tax revenues for governments.
- Transmission and generation delays increase system congestion, meaning transmission lines operate at their limits more frequently. Transmission line congestion can reduce the efficiency, reliability, and resilience of the power system and lead to higher electricity costs.
🏙️ Who is most affected?
Electricity bill hikes and air pollution caused by the delays in transmission and generation buildout disproportionately harm low-income, Black, and Hispanic communities. On average, low-income, Black, and Hispanic individuals feel the energy cost increases more acutely than white individuals, because these costs are a larger percentage of their income. Black-headed households and low-income households also face the highest risk of death from increased particulate matter pollution resulting from transmission and generation delays.
In contrast, electricity and natural gas producers see higher profits from both types of investment delays due to higher energy prices and delayed investment costs. High-income households are more likely to have ownership stakes in energy-producing companies. As a result, they benefit from the delays, often at the expense of other households. The substantial profit increases for energy producers suggest that they have a strong financial interest in impeding transmission and generation expansion.
⚡ How do we know?
To see how delays are likely to affect the economy and human health, the team simulated the US and Canadian power system under two scenarios for transmission development and two scenarios for generation development.
In each pair of simulations, the grid with less development represents a system in which delays cause a set of projects that would be completed by 2032 to instead be completed after 2032. The set of delayed transmission projects equal approximately 6 percent of the grid’s transmission capacity, and the set of delayed generation projects are approximately 4 percent of the total generation capacity. Using these scenarios, the researchers analyzed how delayed transmission and generation infrastructure development are likely to affect energy bills, pollution, and more.
Expert Perspective
“Our modeling indicates that long development times for new transmission and generation facilities cause tens of billions of dollars of harm per year, through higher energy bills and more pollution. These costs are not borne equally. They hurt low-income, Black, and Hispanic people the most, while increasing the profits of energy companies. Ways to reduce development times include permitting reforms—such as reducing the scope for judicial challenges—and faster processing of connection requests from generation developers.”
—Daniel Shawhan, RFF Fellow
📚Where can I learn more?
To dive deeper, you can read the papers here:
- Economic Effects of Electricity Transmission and Generation Development Delays
- Effects of Infrastructure Delays on Health, Environment, and US Households
The authors are Daniel Shawhan, McKenna Peplinski, Sally Robson, Ethan Russell, Ethan Ziegler, Karen Palmer, and Maya Domeshek.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
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