What can best ease transmission bottlenecks? More transfer capacity, DOE says.

Interregional transmission and links between grid operators have the highest potential for easing transmission congestion and improving resource adequacy, according to a draft transmission report the U.S. Department of Energy released Thursday.
Total U.S. congestion costs increased to $12 billion in 2024 from $11 billion in 2023, but were down from $21 billion in 2022, a year that was affected by high gas prices and severe weather, the DOE said in its draft National Transmission Needs Study. The department expects congestion costs will continue to increase.
Locational marginal prices, or LMPs, indicate that more transmission links between the Electric Reliability Council of Texas and its neighbors and between the Eastern and Western interconnections could have significant value, DOE said, citing analysis from Lawrence Berkeley National Laboratory.
Also, additional transmission capacity between NorthernGrid and WestConnect in the West and between ISO New England and the New York Independent System Operator in the Northeast could produce significant congestion cost savings, according to the draft report.
New analysis indicates that the Southeast, which lacks an organized wholesale power market or publicly available LMP data, would benefit from increased transmission capacity with its neighbors by about $10/MWh on average, according to the report.
The three areas in the Southeast with the highest potential transmission congestion value in 2022 and 2023 were interregional links between Southern Co. and Florida, Duke Energy and the PJM Interconnection, and the Tennessee Valley Authority and the Midcontinent Independent System Operator’s southern region, according to the report.
The Southeast is the only U.S. region that has failed to address at least one of the key “transmission needs” the DOE assessed in its report. The four categories of transmission needs are improved reliability and resilience; reduced grid congestion within regions; improved transfer capacity limits between neighbors; and resource adequacy through interregional transfer capacity.
The National Transmission Needs Study — developed every three years — is designed to support regional and interregional transmission planning.
For 2016 through 2024, DOE found that:
- 150 miles of interregional transmission was built annually;
- Incumbent utilities developed 98% of all transmission;
- ERCOT built the most transmission at 2,400 circuit miles;
- PJM’s eastern region spent the most on transmission at $3.5 billion a year; and,
- ISO-NE had the highest load-weighted cost for transmission investment at $9/MWh.
DOE is taking comments on the draft report until Sept 7.

Facts Only

* Total U.S. congestion costs reached $12 billion in 2024, up from $11 billion in 2023 and down from $21 billion in 2022.
* Locational marginal prices indicate significant value in transmission links between the Electric Reliability Council of Texas and its neighbors, and between Eastern and Western interconnections.
* Additional transmission capacity between NorthernGrid and WestConnect in the West and between ISO New England and the New York Independent System Operator in the Northeast could produce congestion cost savings.
* The Southeast region would benefit from increased transmission capacity with its neighbors by about $10/MWh on average.
* The Southeast experienced the highest potential transmission congestion value in 2022 and 2023 across interregional links involving Southern Co. and Florida, Duke Energy and the PJM Interconnection, and the Tennessee Valley Authority and the Midcontinent Independent System Operator’s southern region.
* The Southeast is the only U.S. region that has failed to address at least one of the key transmission needs assessed by the DOE.
* DOE found that 150 miles of interregional transmission were built annually from 2016 through 2024.
* Incumbent utilities developed 98% of all transmission.
* ERCOT built the most transmission at 2,400 circuit miles.
* PJM’s eastern region spent $3.5 billion annually on transmission.
* ISO-NE had the highest load-weighted cost for transmission investment at $9/MWh.

Executive Summary

Interregional transmission and links between grid operators present the greatest potential for reducing transmission congestion and improving resource adequacy, according to a draft report from the U.S. Department of Energy. Congestion costs in the U.S. increased to $12 billion in 2024, up from $11 billion in 2023, though this was lower than the $21 billion recorded in 2022, a year impacted by high gas prices and severe weather events. The analysis suggests that enhancing transmission links between entities like the Electric Reliability Council of Texas and its neighbors, and between the Eastern and Western interconnections, could yield significant value based on locational marginal prices. Furthermore, increasing capacity between NorthernGrid and WestConnect in the West, and between ISO New England and the New York Independent System Operator in the Northeast, is expected to generate congestion cost savings. The Southeast region benefits from increased transmission capacity with its neighbors by an estimated $10/MWh on average, despite lacking an organized wholesale power market or publicly available LMP data.

Full Take

The findings establish a clear divergence between realized transmission infrastructure and assessed needs, particularly within the Southeast, which is highlighted as lagging in addressing essential transmission requirements like resilience, congestion reduction, and interregional transfer capacity. The focus on interregional links suggests that market mechanisms for transmission are underdeveloped; LMPs suggest latent value exists where physical ties are missing, pointing toward a structural gap between physical infrastructure placement and economic valuation. The potential savings identified across specific regional links indicate that the current system structure imposes unnecessary costs due to suboptimal physical connectivity. The pattern emerges that systemic improvements—like those outlined in the National Transmission Needs Study—require coordinated investment across traditional operational boundaries. The failure of the Southeast to meet these needs underscores a pattern where market development and infrastructure build-out do not automatically resolve grid adequacy or regional economic efficiency; external, prioritized planning is required. This implies that achieving resource adequacy necessitates moving beyond optimizing existing flow within isolated zones toward proactively structuring interregional linkages. What assumptions about centralized planning versus decentralized market response are being implicitly reinforced by the persistence of these regional transmission deficits? What structural incentives are missing to prioritize the geographically constrained needs of regions like the Southeast over established operational boundaries?