Interregional transmission can increase reliability while reducing costs and emissions in the US

Uniform interregional electricity transfer capability requirements improve reliability of the US grid, but with lower cost and emissions reductions than a cost-optimized, region-specific approach. When designing interregional electricity transmission policy, the need for a reliable grid must be balanced alongside aspirations for a lowest-cost, lowest-emissions one.

Messages for policy

• Increasing electricity transmission through a uniform interregional transfer capability requirement improves grid reliability across the US and produces cost savings and emissions reductions.

• Increasing transmission through cost-optimized, region-specific transfer capability requirements provides greater cost and emissions reductions, but only improves reliability in regions where transmission is built.

• Policymakers can utilize region-specific transfer capability requirements to account for tradeoffs in reliability improvements, cost savings, and emissions reductions.

• Increased deployment of renewable energy, with its minimal operating costs, enables transmission expansion to unlock greater cost savings and emissions reductions.

based on: Senga, J. R. L. et al. Nat. Energy https://doi.org/10.1038/s41560-025-01921-7 (2025)

The policy problem

The US power system will need significant electricity transmission expansion to meet long-term demand growth, improve reliability during extreme events, and reduce household energy costs. The current practice of primarily building transmission projects within a single transmission planning region is inefficient at best, and more likely, insufficient for the future grid. Multiple interventions have been proposed in Congress to accelerate transmission expansion through uniform interregional transfer capability requirements or through targeted, region-specific transfer capability requirements. A uniform requirement offers simplicity and enforceability, whereas region-specific requirements risk unfair distribution of costs and benefits. The differences between these two approaches in the size and location of new transmission builds, as well as the resultant impacts on reliability, costs, and emissions, are unclear.

The findings

A uniform interregional transfer capability requirement of 30% among all regions results in new transmission builds spread across the US and facilitates better exchange of electricity between neighbouring regions, especially during extreme events, leading to a 39% average reducton in outages across all regions. This uniform requirement could reduce total system cost by US$480 million per year and carbon emissions by 43 million metric tons, respectively. Region-specific transfer capability requirements can be designed to reduce total system costs by US$2 billion per year and reduce carbon emissions by 71 million metric tons. A cost-optimized, region-specific approach results in new transmission being concentrated between regions with lower-cost energy generation, like the central US. In turn, this could lead to a large improvement in grid reliability in these regions, but may not improve reliability in other regions like the Northeast and Florida, while worsening reliability in California since there is lower generation capacity and no new transmission gets built in the region (Fig. 1). Both policies result in larger cost savings in a carbon-constrained scenario with higher shares of renewable energy.

Fig. 1: Regional changes in outages during a simulated extreme event under two interregional transfer capability (ITC) requirement policies.

Blue, orange, and grey histograms represent the 1,000 simulated random capacity outages in a region after implementation of a 30% uniform ITC, a cost-optimized region-specific ITC, or no transmission expansion (status quo), respectively. The y-axis represents the number of simulated outages while the x-axis represents the value of hourly non-served energy in GWh. The dashed lines connect the average outages under each policy with the average outages under the status quo, while the percentages indicate the relative change. Positive percentages reflect a reduction in outages (increased reliability), while negative percentages reflect an increase in outages (decreased reliability). Texas does not build transmission nor see any change in reliability since the region is not part of the proposed policies. Note the different x- and y-axis scales per region. Figure adapted from Senga, J. R. L. et al. Nat. Energy https://doi.org/10.1038/s41560-025-01921-7 (2025).

The study

We use an optimization model to analyse a 2035 continental US grid organized into 11 regions. The model decides which generators to retire or build, and where and how much transmission should be built to satisfy the given policy requirements at the lowest cost. We model the uniform transfer capability requirement across all regions, building only enough new transmission to satisfy the requirement. We then remove the uniform requirement and allow the model to determine the region-specific transfer capability requirements that result in the same total amount of new transmission built at the lowest system cost. We compare the transmission and generator builds, costs, emissions, and changes to reliability for both policies. To assess reliability, we simulate an extreme shock to each region, comparable to Winter Storm Uri that affected Texas in 2021, and observe the ability of the region to maintain power by importing from its neighbouring regions.