The ISO posts an updated 20-Year Transmission Outlook
With its commitment to a carbon-free electric grid by 2045, California has been adding historic amounts of clean energy to the bulk power system over the past few years, something it will likely need to continue every year for the next two decades. With so much capacity coming online, it goes without saying that we must also ensure there is sufficient transmission to cost-effectively deliver all that electricity from where it is generated to where it is consumed.
To help meet that goal – and while taking into account the long lead time to plan, site, permit, finance and build new transmission projects – the California ISO and our energy partners in state government have for the last several years been assessing our future transmission requirements over a 20-year timeframe.
The ISO continues to update its annual transmission plans that look out over a decade, but by expanding our planning horizon to a 20-year timeframe we can make more informed decisions today and in the future about where, when and how to provide the transmission infrastructure California needs.
When the ISO released its first 20-Year Transmission Outlook in 2022, we were not recommending specific projects which would ultimately go to the ISO Board of Governors for approval as part of our annual transmission planning process. Our goal in the Outlook, which was developed in close coordination with state agencies and incorporated input from stakeholders in the energy industry and local regulatory authorities, was to provide a macro analysis of the broad architecture of California’s future transmission network. The 20-Year Outlook also was designed to clarify the magnitude of the challenge in building major pieces of infrastructure – inside and outside the state – needed to create a more sustainable grid for California and for the region.
Today, two years after that first Outlook was published, we have posted on the ISO website an updated 2024 20-Year Transmission Outlook that now extends our planning horizon to 2045. The update enabled our transmission infrastructure planning team to incorporate specific transmission projects approved over the last two years and to assess at a high level how changes in load and resource forecasts since the first Outlook would affect the required transmission enhancements for 2045.
One area of the update that shows the most significant change since the original Outlook was published is the increase in transmission needs to serve offshore wind being developed off the North Coast. The transmission needs identified in the 2024 20-Year Transmission Outlook align with the California Energy Commission’s Offshore Wind Energy Strategic Plan approved in July. The plan lays out a vision for how the state can achieve its planning goal of up to 25,000 megawatts (MW) of offshore wind off the state’s North and Central Coast by 2045.
In the North Coast area, the CEC’s plan more than triples the forecast capacity from 4,000 MW to 14,700 MW. And because the North Coast has virtually no infrastructure to deliver offshore wind to load centers today, the expected generation is driving substantial increases in transmission requirements compared to the initial Outlook.
The ISO continues to update its annual transmission plans that look out over a decade, but by expanding our planning horizon to a 20-year timeframe we can make more informed decisions today and in the future about where, when and how to provide the transmission infrastructure California needs.
In that first 20-Year Outlook, the ISO estimated that the cost for additional high-voltage transmission capacity would be about $30 billion over 20 years, a long-term investment that would eventually support development of more than 120 gigawatts (GW) of new generating resources.
In the state’s 2045 projected energy portfolio established by the California Public Utilities Commission, resources were identified to meet forecasted load growth as well as a projected reduction of 15,000 MW of natural gas-fired generation from plants being retired. The portfolio also provides an effective trajectory to achieving 2045 state greenhouse gas reduction objectives.
To meet future demand, the 2045 portfolio called for a total of 165.1 GW of new resources, including 48,813 MW of battery energy storage, 4,000 MW of long-duration storage, 5,000 MW of generic clean firm or long-duration storage, 69,640 MW of utility scale solar, 2,332 MW of geothermal, and more than 35,000 MW of wind generation – the latter split between out-of-state and in-state onshore, and in-state offshore resources. The bulk of the in-state resources consist of offshore wind. The 2045 portfolio also provided specific locations for the new resources, except for some portion of the out-of-state and offshore wind.
Now, by anticipating load growth to 2045 and with the expectation of major offshore wind generation over the same timeframe, the ISO’s 2024 20-Year Transmission Outlook anticipates transmission costs between $45.8 billion to $63.2 billion over the next two decades, with offshore wind development the primary driver of these higher projected costs. The range for future project cost estimates over this timeframe varies significantly due to detailed design requirements and uncertainty in permitting timelines, routing decisions, and equipment and labor costs. Also, the high-level analysis to determine feasible transmission alternatives included a bulk system power flow assessment for a range of load and resource scenarios.
Under all scenarios, costs would be amortized over the physical life of the projects and we are continuously working to contain those costs. The ISO will continue to evaluate cost-effectiveness aligned with resource planning from the state’s principal energy agencies and other local regulatory authorities. And we will also assess reliability, economic, and policy needs before considering transmission projects for approval in our annual transmission planning process.
While final numbers and cost allocation details will be refined over time, it is important to keep in mind that this level of investment will continue to help provide the foundation for California’s nearly $3.9 trillion annual economy by meeting the energy needs of the state’s many industries and businesses. Building the required transmission infrastructure will also strengthen connections with our market partners across the West to safely deliver enough, reliable and clean energy to meet demand and future growth for the 5th largest economy in the world while further enhancing the value of the Western Energy Imbalance Market and the Extended Day-Ahead Market.
The ISO will continue to evaluate cost-effectiveness aligned with resource planning from the state’s principal energy agencies and other local regulatory authorities.
Additionally, these preliminary cost estimates are subject to refinement depending on what ultimately gets built and the associated cost allocation methodologies. For inter-regional transmission lines, for example, some of the costs may be shared by all beneficiaries of the projects and not be borne entirely by California ratepayers.
The ISO recognizes that resource planning and procurement decisions may differ in the years ahead from some of the assumptions used to establish the baseline for long-term planning in the 2024 Outlook. Those changes will be managed by adapting future plans around the baseline architecture in subsequent updates, and in the ISO’s transmission planning processes that initiate and approve specific projects annually.
In addition, the ISO is preparing for compliance with the Federal Energy Regulatory Commission’s Order No. 1920: Building for the Future Through Electric Regional Transmission Planning and Cost Allocation. The order requires the nation’s transmission providers to plan for transmission we know will be needed in the future. The principles in the order largely align with current ISO processes and the ISO is looking at this order to determine how to continue to improve our practices around long-term transmission planning and be in alignment with the order’s specific requirements.
Over the remainder of 2024, we will solicit additional stakeholder input about next steps for the 2024-2025 Transmission Plan, the long-term architecture set out in the updated 20-Year Outlook, and compliance with FERC Order No. 1920. Working with stakeholders and with our partners in state and local government, we believe the longer-term planning horizon provided in the ISO’s 2024 20-Year Transmission Outlook will inform important decisions on transmission infrastructure now and over the next two decades as we continue transitioning to a carbon-free grid.
