The Transmission Bottleneck in the Energy Transition
The challenges to and solutions for overcoming the transmission bottleneck
The Inflation Reduction Act (IRA) aims to decarbonize the power sector by 2035, but 80% of the IRA’s emissions reductions rely on the grid’s transmission capacity increasing by 60% by 2030. While global investment in renewable energy has increased significantly, investment in grid infrastructure has not. In order to leverage the advances and investments in renewable energy, we need a grid that can transmit this energy.
What is the transmission bottleneck?
The transmission bottleneck is the limited capacity of the grid to transport renewable energy to where electricity is needed.
Challenges
Challenges leading to the transmission bottleneck include aging infrastructure and inadequate regulation and technology.
Aging Infrastructure
Most of the power lines in the US were built between 1950-1980 and were designed for a 50-70 year lifespan. Because they are old, they are less reliable, more susceptible to extreme weather, and have higher maintenance costs. Also, instead of one grid, the US has many grids, which makes it harder to send electricity to a region different to the one it was produced in.
Furthermore, power grids were designed for centralized power plants, but wind farms, solar arrays, and geothermal plants are often dispersed and far from population centers. This mismatch leads to logistical and technical challenges.
Apart from power lines, the US relies on railroads and pipelines to transport fuel over long distances to centralized power plants, where it is turned into electricity and distributed over short distances to cities. This system does not work with renewable energy sources, which are intermittent and are typically far from population centers.
In order to meet its decarbonization goals, the US has to replace aging grid infrastructure and at least double its transmission capacity by 2035.
Technology
The existing system of dispatching power generators is based on supply and demand, which is incompatible with the needs of intermittent renewable energy sources. To address this mismatch, a new system has to factor in weather patters to predict renewable energy generation, energy storage to balance supply and demand, and long-distance transmission to transport energy from generation sites to population centers. This data-driven approach is essential to identifying and prioritizing new transmission lines.
Power lines also face several technical challenges that can be improved with innovation, including increasing transmission capacity, safety, reliability, efficiency, and mechanical performance as well as reducing thermal sag, electrical resistance, energy loss, and heat emissions.
Regulation
Renewable energy projects are placed on interconnection queues when they apply to connect to the grid. The approval process evaluates whether the grid has the capacity to add the project’s energy generation or storage. These interconnection queues can be 5-7 years long. Today, there are over 3,000GW of renewable energy projects globally that are waiting in interconnection queues. This massive backlog leads to curtailment, which is the deliberate reduction in renewable energy output, and results in higher green premiums on renewable energy.
Building new transmission infrastructure also faces several regulatory challenges. Since both federal and state governments have authority over permitting transmission lines, regulation is often inconsistent or overlaps. Also, finding suitable land to connect transmission routes can be challenging. On the local level, communities often resist power lines in their neighborhoods due to aesthetic, environmental, and property concerns. These challenges make the approval process long and complicated. For example, a transmission line between Wyoming and California took 17 years to get permitted, and in 2024, an Illinois appellate court reversed the approval of a 780-mile transmission line from Kansas to Indiana that had been in development for decades.
Solutions
To eliminate the transmission bottleneck, we need solutions in transmission technology and regulation.
Technology
Transmitting more electricity through existing power lines can increase electricity capacity without going through the permitting process for new transmission lines. High-voltage direct current lines, advanced conductors, high-temperature superconductors, and grid-enhancing technologies are four key technologies.
High-Voltage Direct Current Lines
Unlike traditional Alternating Current (AC) transmission lines, High-Voltage Direct Current (HVDC) lines are more efficient at transporting electricity across long distances, with lower energy losses, easier integration of renewable energy, and reduced land needs. Although HVDC lines typically have higher initial costs, integration issues with AC grids, and permitting delays, the US has to build more HVDC lines to transport electricity across long distances and connect different regions. A solution is to build a grid with a mix of HVDC for long-distance transmission and AC for local transmission.
Advanced Conductors
Advanced conductors increase transmission capacity, safety, reliability, efficiency, and mechanical performance by using materials that increase power flows and withstand high temperatures without excess thermal sag. Reconductoring, which upgrades existing transmission line wires with advanced conductors, costs ⅓ of new transmission line construction and can double transmission capacity.
High-Temperature Superconductors
High-temperature superconductors (HTS) are made of superconducting materials cooled to extremely low temperatures, typically using liquid nitrogen or helium. They are placed in thermally isolated vacuum-insulated pipes where they have zero electrical resistance, eliminating energy losses. HTS do not release heat, and they can transport five times the current of traditional cables of the same size.
Grid-Enhancing Technologies
Grid-enhancing technologies include tools like dynamic line ratings (DLR), power flow control, analytical tools, topology optimization, energy storage, and smart inverters.
DLR uses real-time data, including on temperature, wind speed, and line tension, to dynamically adjust and optimize transmission capacity. Power flow control enables grid operators to reroute power across the grid to balance congested transmission lines and transmission lines with available capacity. For topology optimization, grid operators open and close circuit breakers and adjust switches to optimize power flow, reduce congestion, and increase reliability.
Analytic tools, including sensors and monitoring systems, provide real-time data on grid performance and allow grid operators to predict changes and respond appropriately. Energy storage systems store excess energy generated during periods of high production and low demand and release it during times of low production or high demand. They increase flexibility and stabilize the grid. Smart inverters manage voltage and frequency of solar and wind by dynamically adjusting output based on real-time grid data.
Key Companies
Two startups innovating on transmission technology are VEIR and TS Conductor.
VEIR makes superconductors with a cooling system that cost-effectively delivers 5-10x the power of traditional transmission lines over long distances. VEIR is on track to deploy its first commercial project in 2026.
TS Conductor makes a light carbon fiber core encapsulated in thick aluminum that increases the ampacity, which is the maximum amount of current that a wire can transport, of transmission lines. Many of TS Conductor’s investors are also its customers, and it has installed thousands of miles of its technology.
Regulation
As well as innovation, the development of new transmission lines is essential for accessing renewable energy.
The three main regulatory steps for a new transmission line are planning, paying, and permitting. Streamlined and integrated regulation are key for improving and deploying new grid infrastructure.
Planning
For planning, governments need to develop the route, design, and cost estimate of transmission lines. This process includes analyzing geographical, environmental, and technical factors. Breakthrough Energy announced a new grid modeling project, an open-source platform that improves grid planning, forecasting, and integration of clean energy to increase load growth.
In the US, each state public utility commission has a mandate to only consider the needs of its state. Interstate and regional grid interconnectivity can improve grid resilience. One idea that is gaining traction is to ensure grids in different regions have a minimum level of transmission capacity to transfer electricity between regions. This system takes into account regions nearby and reduces bottlenecks and congestion due to extreme weather events.
Paying
For paying, governments have to incentivize investment in the new grid by ensuring the necessary infrastructure is built to support the transition evenly across regions. For new players in the transmission sector, governments have to help them over the “valley of death” and finance their early development to scale. Secure supply chains for grid technology, including cable manufacturers and clean energy companies, are key to attracting investing.
Under the Transmission Facilitation Program (TFP), the Department of Energy (DOE) can borrow up to $2.5B for purchasing 50% of planned transmission capacity for up to 40 years (with the option to sell the contract), for providing loans to projects, and for public-private partnerships within NIETCs (described below). The TFP increases investor confidence about investments in the grid.
Permitting
For permitting, there are several pieces of regulation that seek to streamline the permitting process, including the Federal Energy Regulatory Commission (FERC) recently passed Order No. 1920, which has three requirements for transmission providers. First, providers have to forecast energy needs 20 years out and update plans every five years. Second, utilities have to value reliability and cost savings to consumers in funding transmission lines. Third, providers have to consider a broad scope of solutions to upgrade the grid.
Another piece of regulation is the Federal Power Act, under which the Secretary of Energy can designate regions as National Interest Electric Transmission Corridors if they are harmed by lack of transmission and if new transmission development would improve reliability and lower consumer costs.
In April 2024, the Department of Energy announced the Coordinated Interagency Transmission Authorizations and Permits (CITAP) program, which aims to streamline the permitting process by having the Department of Energy lead the coordination of federal agencies and communities. It limits permitting reviews to two years, while continuing to adhere to the National Environmental Policy Act requirements.
A national-scale grid that is connected and reliable can smooth clean electricity demand and supply. For example, national peak demand is often in the evening, so the Midwest can power the East Coast’s peak demand with renewable energy sources like sun and wind.
Global Outlook
The transmission bottleneck is a global challenge. Regions including Europe, Asia-Pacific, China, and Sub-Saharan Africa face similar challenges and opportunities of addressing it.
Europe
With over 20 countries, it is harder to send electricity across long distances because of borders and regulation. In the EU, ⅓ of grids are over 40 years old, and their replacement is especially challenging in low- and middle-income countries. With the EU’s ambitious climate goals, they need to invest over €500B more per year and develop a more efficient permitting process.
In 2023, the European Commission announced the Action Plan to make Europe’s grids stronger, more interconnected and digitized, and cyber-resilient.
Asia-Pacific
Australia needs 10,000km of new transmission lines by 2050, Japan needs a less congested and more interoperable grid, and ASEAN countries like Singapore that have populations with high energy needs need more access to renewable energy.
The ASEAN Power Grid project is a framework for linking power grids of these countries and trading electricity with a focus on renewable energy to ensure connectivity and energy security. However, the project lacks the political support and funding since countries converge on the minimum level of commitment required.
China
Companies have built Ultra-High Voltage (UHV) transmission lines in China faster than anywhere else. China’s UHV lines have a capacity of up to 1,100 kV compared to the US’s 765 kV AC transmission lines regulated capacity limit.
Even in China, though, they face issues of making new direct current lines interoperable with regional AC grids, balancing supply and demand to prevent blackouts, and reducing electricity waste.
Sub-Saharan Africa
Half the population in Sub-Saharan Africa lacks electricity access. Lack of capital and governance limits the expansion of the grid. Microgrids are interim solutions to expand electricity access and develop large-scale grids.
We need to implement the technological and regulatory solutions to eliminate the transmission bottleneck and deploy reliable, cost-effective, safe, efficient, and connected grids around the world. As the saying goes, there is no green transition without transmission.
great piece