February 6, 2011

Financing a National Transmission Grid: What Are the Issues?

by Gilbert E. Metcalf

- This paper makes three points. First, the historical pace of transmission investments will not be adequate to enhance grid reliability or to allow largescale penetration of renewable generating capacity. Second, the replacement of a vertically integrated electric utility industry in many parts of the country by a more disaggregated one composed of merchant generators has added to the challenge of transmission planning and investment. Third, the focus on federal funding for grid improvements is misplaced. There is no evidence that the private sector is incapable of raising the funds needed for critical investment, provided a rationalized regulatory structure is put into place.

Metcalf, G.E. (2010). "Financing a National Transmission Grid: What Are the Issues?" MIT CEEPR Working Papers No. WP-2010-015, Oct 2010.