Modeling the value of integrated U.S. and Canadian power sector expansion

Abstract

The U.S.-Canadian power system has evolved into a highly integrated grid. Cross-border transmission and coordination of system operations create an interconnected power system with combined imports and exports of electricity of greater than 77 TWh per year. Currently, more than 5 GW of new international transmission lines are in various stages of permitting and development. These transmission lines may enable even greater integration and coordination of the U.S. and Canadian systems, which can in turn increase the reliability and flexibility of North America’s electricity grid and help address challenges associated with integrating high levels of variable renewables. Using a version of the National Renewable Energy Laboratory’s Regional Energy Deployment System (ReEDS) model that incorporates Canada, this analysis quantifies the differences in the evolution of the power system under scenarios in which cross-border transmission capacity is restricted to today’s levels, and scenarios in which new transmission is less restricted. These impacts are analyzed under a “business-as-usual” reference scenario and a scenario in which deep cuts in power sector carbon dioxide emissions levels are achieved. A set of key impact metrics is analyzed, including 1) the composition of generating capacity by technology, 2) system costs, 3) wholesale electricity prices, 4) international electricity exports and imports, 5) transmission capacity, and 6) carbon dioxide emission levels. When new cross-border transmission is not allowed, the United States needs additional capacity (primarily natural gas and renewable energy) to meet domestic needs, while total Canadian capacity is lower because less capacity is needed to export to the United States. This effect is amplified under the carbon cap scenario. Impacts vary on a regional basis, largely due to the different relative sizes of the generation portfolio between countries and regions and the relative impact from cross-border electricity trade. The total impact from restricting cross-border trade on carbon emissions and average wholesale electricity prices is limited, due to the relative size of the domestic power systems and the cross-border trade volume. Cross-border transmission capacity is projected to more than double under the unrestricted transmission capacity scenarios, which exceeds the rate of projected domestic transmission capacity additions in each country.