Transmission costs and the value of wind generation for the CREZ project

Abstract

This paper analyzes the recent expansion of transmission lines in Texas, essentially completed in 2013 at a cost of approximately $7 billion. This project was intended to improve access to areas with high wind generation potential and the resulting increase in wind generation reduced fuel costs and emissions from the displaced fossil fuel generators. I find that the value of the resulting emissions reduction from additional wind generation is approximately twice that of the fuel savings. Additionally, when incorporating the value of reduced emissions, increased generation from already existing wind turbines alone could offset about half of the annualized cost of this transmission expansion while using only 2% of the new transmission capacity. Incorporating the value of emissions reductions could make extending transmission lines to access high quality wind resources more viable, especially if production from already-existing wind turbines in the area are being non-trivially curtailed, as was true in this case.