Grid Congestion Costs -in Context
Maryland Retreat on Reducing Congestion Costs
& Reviewing Renewable Portfolio Standards
December 14, 2015
David Meyer, Senior Advisor
DOE Office of Electricity Delivery
and Energy Reliability
Outline of Presentation
1.
Concepts and definitions re congestion
2.
Recent congestion trends
3.
Some implications
2
Concepts and Definitions

A “transmission constraint” is a physical or
operational limit on the ability of a line or piece of
equipment, set to limit power flows to a safe level.

“Transmission congestion” occurs when one or
more constraints reduce flows below levels
desired by market participants or government
policy (e.g., state renewable portfolio standards).

High usage alone does not = congestion.
Congestion occurs only when additional usage is
desired but cannot be accommodated and still
keep operations within reliability limits and safety
requirements.
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Aspects of Congestion
1.
Congestion patterns are changeable and volatile.
They change daily, seasonally, and over longer time periods.
They are determined by the existing electric system’s design
and how operators use or modify the system in response to
changes in the level of economic activity, electricity demand,
weather, generation mix, fuel prices, environmental
requirements, and outages of generation and transmission
equipment.
2. Congestion has costs.



It increases electricity supply costs, when wholesale
suppliers are forced to turn to higher-cost sources.
Meeting some public policy objectives (e.g., renewable
portfolio standards) may become more difficult or
expensive.
If left unchecked for longer periods, congestion may lead
4
to increased reliability risks.
Eastern
Summer
Peak LMP
maps,
2009-10-11
Source: National Electric
Transmission Congestion
Study, DOE, 2015; data source:
Ventyx.
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Aspects of Congestion, cont.
3. Three ways to reduce congestion costs.



4.
Build more transmission to enable wholesale buyers to
access lower-cost supply sources.
Build more lower-cost generation close to load centers.
Reduce loads or flatten load shapes through energy
efficiency and demand management programs.
It is not practical or economic to eliminate all
congestion.



Some congestion occurs only during a limited number of
hours per year.
All of the remedies require some investment. The
congestion-related benefits may not exceed the cost of
the investment.
The pattern of congestion may change and alter – perhaps
lower – the return on a given investment.
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Recent Congestion Trends, 2009-2013*


In 2009, congestion was sharply lower in most areas of the
nation, due to the slowdown in economic activity associated
with the “Great Recession.”
Since then, economic activity has rebounded but congestion
has generally not returned to its pre-2009 levels, for several
reasons:





Continued investment in energy efficiency, aided by new technologies.
Abundant supplies of low-priced natural gas as generation fuel.
Retirement of significant quantities of coal-fired generation capacity,
frequently replaced by gas-fired capacity closer to load centers.
Significant investments in additional transmission capacity.
Conclusions:


Congestion is a less significant problem today than it was some years
ago.
Because of congestion’s inherent volatility, it would be a mistake to
assume that the recent trends will continue indefinitely.
Source: National Electric Transmission Congestion Study (DOE, 2015)
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Some Implications
1.
2.
3.
4.
Well-designed policies or projects could reduce Maryland’s
congestion costs appreciably.
However, because congestion costs are only a small
portion of the total delivered cost of electricity, halving
congestion costs might not affect consumers’ bills much.
Rather than focus on congestion costs, consider focusing
on total benefits to consumers. Energy efficiency
investments, for example, could reduce consumer bills
directly, reduce emissions, and reduce congestion.
Higher renewable portfolio standards could have mixed
effects on congestion. Distributed renewables (e.g., rooftop PV) would tend to reduce congestion; utility-scale wind
projects could increase it, depending on their location.
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