What are the Benefits of Co-Optimizing Transmission and Generation Investment? Eastern Interconnection Case Study

Abstract

Transmission planning has traditionally followed a “generation first” or “reactive” logic, in which network reinforcements are planned to accommodate assumed generation build-outs. The emergence of renewables has revealed deficiencies in this approach, in that it ignores the interdependence of transmission and generation investments. For instance, grid investments can provide access to higher quality renewables and thus affect plant siting. Disregarding this complementarity increases costs. In theory, this can be corrected by “proactive” transmission planning, which anticipates how generation investment responds by co-optimizing transmission and generation investments. We evaluate the potential usefulness of co-optimization by applying a mixed-integer linear programming formulation to a 24-bus stakeholder-developed representation of the U.S. Eastern Interconnection. We estimate cost savings from co-optimization compared to both reactive planning and an approach that iterates between generation and transmission investment optimization. These savings turn out to be comparable in magnitude to the amount of incremental transmission investment. We also evaluate three congestion metrics as screens for reducing the number of candidate transmission investments. They each improve solution times, but the estimated potential benefit metric is much more effective in identifying cost-effective lines than the others.