Identifying and Measuring the Life-Cycle Benefits of Infrastructure Investment
Prepared by the London Economics International, Inc.
WIRES commissioned London Economics International LLC (“LEI”) to prepare a study demonstrating the benefits of transmission investment. The benefits of transmission are frequently seen as uncertain by many policymakers and regulators; system planners have also found it a challenge to comprehensively measure benefits and identify beneficiaries. This study shows that a variety of benefits can be quantified robustly through forward-looking, simulation based analysis. Moreover, these benefits are substantial, widespread, and long-lasting – putting dollars in the pockets of households, businesses, and governments.
The modeling approach LEI uses to estimate the benefits of transmission utilizes two hypothetical transmission investment projects. LEI presents the projected benefits of each transmission project by category and by beneficiary, showing as well where and over what time frame these various benefits arise during the lifetime of a typical transmission investment. Although the hypothetical projects analyzed in this study are created to highlight the benefits of two specific types of inter-regional transmission investments in two diverse market settings, the methodology for estimating benefits and the overall magnitude of the benefits are indicative of all transmission investments – reliability projects, economically-motivated projects, and policy-driven initiatives. Therefore, the analytical approach illustrated in this study applies not just to inter-regional transmission projects but also to various other types of well-conceived transmission investments.