Brattle Group Economists reiterate Value of Competitive Transmission processes to Stimulate Innovation and Reduce Costs
The Brattle Group “Response to Concentric Energy Advisors’ Report on Competitive Transmission,” comes as a follow-up to an April 2019 Brattle report, “Cost Savings Offered by Competition in Electric Transmission: Experience to Date and the Potential for Additional Customer Value,“ which summarized U.S. and international experience with competitive solicitations for the development of major transmission projects.
In the initial April 2019 report, the Brattle authors discussed that using competitive solicitations in transmission development is estimated to save 20% to 30% of project costs compared to the traditionally developed transmission projects. As a result, the authors recommended that policymakers and system planners consider expanding the scope of competitive solicitations for transmission projects, estimating that doing so could save $8 billion over the course of five years.
In this August 2019 follow-up, Brattle maintains that competitive processes offer multiple benefits by:
* Pressuring competing transmission developers to become more innovative in their project design, engineering, and other development procedures, which offers well-documented cost savings.
* Encouraging transmission developers to engage in advanced design, engineering, and project planning to capture their competitive advantages—and sometimes partnering with parties that are in the best position to bring forth the best project at the lowest costs.
* Providing incentives for finding the most competitive financing structure and costs.
* Creating incentives for planners (at the ISOs/RTOs) to be more accurate in specifying the needs and estimating the potential project costs.