This, the fifth briefing in a series about electricity restructuring, examines the need for investment in electricity transmission capacity. This briefing suggests possible ways of obtaining it, while exloring the challenges to doing so.
Document Highlight
The electricity transmission system in North America is a highly interconnected, complex continental network. It needs investment to replace or improve its aging infrastructure, to accommodate cross-border exchanges between Canada and the United States, and to ensure the reliability and security of electricity. However, investors face increased risks. And the sector lacks sufficient commercialization incentives and potential rewards to balance new risks. Challenges include lack of planning and financing, regulated rates of return, and regulatory uncertainty. This briefing looks at possible ways of overcoming the lack of investment, including raising rates of return for investors, integrated planning, Standard Market Design, Locational Marginal Pricing, allowing merchant transmission lines, and setting mandatory reliability standards for electricity grid operators. In addition, it considers the special challenges Canada faces, including the lack of interprovincial trade and the need for a strategic national plan that is part of a focused North American approach.
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