Transmission bottlenecks are driving up prices and curtailing renewable generation in key markets like CAISO and PJM.
As we accelerate the deployment of wind and solar resources, we are running into a physical reality: the grid was not built for this. In electricity markets, this physical constraint manifests as financial pain—specifically, negative pricing and high congestion rents.
The Locational Marginal Pricing (LMP) Problem
In organized wholesale markets, the price of electricity varies by location. When a transmission line gets clogged (thermally constrained), the operator cannot dispatch the cheapest generation. Instead, they must run more expensive local peaker plants to meet demand without overloading the line.
This creates a split: prices plummet where the cheap renewables are trapped (sometimes going negative), while prices skyrocket in the load centers where power is needed.
Curtailment is Rising
The immediate consequence is curtailment. In CAISO, we regularly see gigawatts of solar power turned off simply because there is no path to move that energy to consumers. This isn't just a waste of clean energy; it damages the economics of renewable projects.
What’s the Solution?
Building new transmission lines is the obvious answer, but it’s slow and politically difficult. In the interim, we are seeing a push for Grid Enhancing Technologies (GETs) like dynamic line ratings and topology optimization. These software-based solutions can squeeze 10-30% more capacity out of existing wires.
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