So why are we not seeing an explosion in ATT investment and deployment in the US? Because despite their potential to unlock 21st-century technology, the 20th-century structure of the nation’s electricity markets discourages adoption of these solutions.
For one thing, under the current regulatory system, utilities generally make money by passing the cost of big new developments along to customers (earning a fixed annual return on their investment). That comes in the form of higher electricity rates, which local public utility commissions often approve after power companies propose such projects.
That means utilities have financial incentives to make large and expensive investments, but not to save consumers money. When ATTs are installed in place of building new transmission capacity, the smaller capital costs mean that utilities make lower profits. For example, utilities might earn $600,000 per year after building a new mile of transmission, compared with about $4,500 per mile annually after installing the equipment and software necessary for line ratings. While these state regulatory agencies are tasked with ensuring that utilities act in the best interest of consumers, they often lack the necessary information to identify the best approach for doing so.
Overcoming these structural barriers will require action from both state and federal governments, and it should appeal to Democrats and Republicans alike. We’ve already seen some states, including Minnesota and Montana, move in this direction, but policy interventions to date remain insufficient. In a recent paper, we propose a new approach for unlocking the potential of these technologies.
First, we suggest requiring transmission providers to use ATTs in some “no regrets” contexts, where possible downsides are minor or nonexistent. The Federal Energy Regulatory Commission, for example, is already considering requiring dynamic line ratings on certain highly congested lines. Given the low cost of dynamic line ratings, and their clear benefit in cases of congestion, we believe that FERC should quickly move forward with, and strengthen, such a rule. Likewise, the Department of Energy or Congress should adopt an efficiency standard for the wires that carry electricity around the country. Every year, approximately 5% of electricity generated is lost in the transmission and distribution process. The use of high-performance conductors can reduce those losses by 30%.
In addition, federal agencies and state lawmakers should require transmission providers to evaluate the potential for using ATTs on their grid, or provide support to help them do so. FERC has recently taken steps in this direction, and it should continue to strengthen those actions.
Regulators should also provide financial incentives to transmission providers to encourage the installation of ATTs. The most promising approach is a “shared savings” incentive, such as that proposed in the recent Advancing GETS Act. This would allow utilities to earn a profit for saving money, not just spending it, and could save consumers billions on their electricity bills every year.
Finally, we should invest in building digital tools so transmission owners can identify opportunities for these technologies and so regulators can hold them accountable. Developing these systems will require transmission providers to share information about electricity supply and demand as well as grid infrastructure. Ideally, with such data in hand, researchers can develop a “digital twin” of the current transmission system to test different configurations of ATTs and help improve the performance and efficiency of our grids.
We are all too aware that the world often faces difficult policy trade-offs. But laws or regulations that facilitate the use of ATTs can quickly expand the grid and save consumers money. They should be an easy yes on both sides of the aisle.
Brian Deese is an innovation fellow at the Massachusetts Institute of Technology and served as director of the White House National Economic Council from 2021 to 2023. Rob Gramlich is founder and president of Grid Strategies and was economic advisor to the chairman of the Federal Energy Regulatory Commission during the George W. Bush administration.
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