Massive Investments in the Midwest Grid are Worth Celebrating

The Midwest is about to get a major power boost-generating jobs, economic growth, and enabling a cleaner energy future at the same time.

Meeting our clean energy ambitions in the face of growing power demand, extreme weather risks, and simply keeping the lights on with an aging system are putting a significant strain on the bulk transmission system that delivers electricity from power plants to consumers. Grid operators, UCS, utilities, the Federal Energy Regulatory Commission (FERC), and legislatures at the state and federal levels are all raising alarm bells about the need to make significant investments in the transmission system and build the 21^st century grid that can reliably and sustainably power our 21^st century economy. But the Midcontinent Independent System Operator (MISO)-the grid operator responsible for reliably operating and maintaining the transmission system across all or parts of fifteen Midwestern and Southern states-is actually doing it.

MISO's Long-Range Transmission Planning (LRTP) process hit a huge milestone on Thursday, December 12^th when MISO's Board of Directors approved LRTP "Tranche 2.1", representing nearly $22 billion in new transmission system investments designed to enable the clean energy ambitions of its Midwestern states and utilities while maintaining reliability and delivering significant net benefits to the region's consumers. Tranche 2.1 builds on MISO's approval of Tranche 1 in July of 2022, which states throughout the Midwest are now in the process of permitting. Thursday's decision further cements MISO's position as a national leader in proactive transmission system planning and will help ensure that the region's transition to clean energy-driven by state policies, corporate commitments, and utilities' recognition of renewables economically outcompeting aging coal and gas plants-can continue.

MISO staff and leadership deserve a lot of credit for working with stakeholders and leading the extensive study processes necessary to make sure what's being proposed is capable of meeting future power demands and ultimately benefiting consumers in the region. In doing, it has positioned itself as a national leader in forward-looking, holistic transmission planning.

This has been a long time coming

It's been nearly a decade since UCS and other stakeholders started raising concerns that MISO's typical near-term transmission planning process wasn't adequate to meet future system needs. Renewable energy was coming online fast in response to falling prices and state policies. Aging fossil-fuel-powered generators were retiring. And the economy was changing in ways that drive increasing demand for electricity, whether that be electrification of things like transportation and heating, the return of domestic manufacturing, or new demands from industries such as cryptocurrency and data centers.

After a few fits and starts, the LRTP was underway. Since then, we've been working with MISO and 200-plus stakeholders including states, utilities, industrial energy users, consumer advocates, and others to find consensus on what future we're building for and how to ensure what ultimately gets proposed benefit consumers.

It hasn't always been pretty. Some people might have raised their voices once or twice, but in the end what MISO approved on Thursday will long way towards a cleaner, more reliable and resilient energy future for the Midwest.

A historic investment in the nation's energy infrastructure

Tranche 2.1consists of 24 projects totaling $21.8 billion in investments spread across MISO's Midwest region, stretching from Michigan and Indiana westward to the Dakotas. These projects are designed to create a high-voltage backbone system that can move large amounts of power-mostly from renewable energy resources-across the system from where it's generated to where it's needed to keep the lights on. The Tranche is named as such because MISO is considering another portfolio of projects-"Tranche 2.2"-in the Midwest before moving on to Tranche 3, that will focus on MISO's southern region.

MISO's Tranche 2.1 Portfolio

A map of MISO's investments in 24 transmission projects, representing more than 3,500 miles of new high-voltage transmission capacity Source: MISO

The future MISO is planning for when it developed this portfolio of projects includes state and utility clean energy/decarbonization commitments, as well as the incentives included in the Inflation Reduction Act and Infrastructure and Jobs Act, that are driving growth in the nation's renewable energy resources. Ultimately, the LRTP process seeks to support a transmission buildout that improves the system's ability to transition to clean energy while ensuring a sufficient supply of electricity to meet demand during all hours of the year.

In this future scenario, the MISO system achieves carbon emission reductions of 96% by 2042. To get there, the system adds about 300,000 megawatts (MW) of new renewable energy and storage resources while retiring the region's outdated coal fleet. This portfolio of projects prepares us for the first 100,000 MW of those clean energy resources on the way to achieving this future. While this future doesn't fully rid the system of fossil fuels-about 65,000 MW of natural gas resources would remain-they would account for only 1% of MISO's annual energy needs in 2042 (essentially just helping balance the system during periods of high demand or low output from wind and solar resources). And, as battery storage technologies continue to be added to the system, even this level of reliance on fossil fuels is expected to decrease over the coming years.

In addition to maintaining a reliable electricity supply as states and utilities transition to clean energy, MISO did a benefit-cost analysis to determine whether these projects would provide more benefits to consumers than the costs.

A nation-leading approach to understanding the benefits of new transmission

To complete its benefit-cost calculations, MISO used a robust set of "benefit metrics", each one representing a recognized benefit to consumers from a more robust transmission system, including cost savings from being able to share resources across a diverse footprint, the avoided costs of outages during extreme weather, and the benefits of avoided carbon emissions, among others. While these benefits have long been acknowledged, at least in theory, actually figuring out how to quantify them in a way that would fit into the benefit-cost calculations took many months of meeting and lots of back and forth with stakeholders.

This was an industry first and while nothing about predicting the future is perfect, we should feel confident that MISO and stakeholders have done the due diligence necessary to feel confident in the conclusion that the benefits of these investments outweigh the costs to consumers. Through this process, MISO estimates that the benefits to consumers of LRTP Tranche 2.1 will exceed the costs by a ratio of 1.8 to 3.5, meaning for every dollar spent consumers should see benefits in the range of $1.80 to $3.50. In addition, MISO's analysis shows that these benefits are spread widely across the region, ensuring no state or region is overpaying for their share of the benefits.

LRTP Tranche 2.1 Benefits Estimates

MISO's comprehensive approach to its benefits/cost analysis, capturing widely recognized benefits like reduced risks from extreme weather and decarbonization. Source: MISO

Notably, while MISO calculates the value of these investments over the next twenty years, these projects are actually expected to serve consumers for fifty years or more, meaning the estimated benefits shown above likely understate the overall value to consumers. Another important thing worth noting is that MISO does not include the public health benefits of the avoided air pollution that results from our shift away from fossil fuels. Put these two together and the benefits to consumers from these investments is likely significantly higher than what MISO estimates.

Building these projects is also projected to create tens of thousands of high-paying jobs and create billions in local economic output during construction. This doesn't include the hundreds of thousands of jobs and billions in investment we can expect from renewable energy and battery storage projects that these transmission system investments enable. (For a more in-depth look at the benefits coming to Midwest states, read my colleague James Gignac's analysis here.)

In summary, this is a remarkable and much-needed investment in a reliable, clean, and resilient energy future-one that will provide significant benefits to consumers and drive economic development throughout the region.

Looking Forward

Now that MISO's Board of Directors has approved Tranche 2.1, the process moves to the states for specific project approvals including finalizing the siting, making sure they fit into state and utility long-term plans, and working to address any local or community concerns.

One priority for us as these projects head to the states for approval is to make sure those processes are inclusive and transparent, and that they provide an opportunity for all communities to have a say in their energy future. While MISO has done a lot over the years to engage stakeholders, it's still imperative that communities and state-level decisionmakers have a chance to weigh in and provide input on final project design. There will be more discussions, more adjustments, and more debate-but getting over this critical milestone is worth celebrating.

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