Connecting the power grids of 11 western states into a single Regional Transmission Organization (RTO) could create hundreds of thousands of jobs, spur economic growth and save customers $2 billion a year on utility bills. ‘electricity, a new analysis shows. But that’s just the start of the benefits: it would also encourage a lot more clean energy in the region.
RTOs are independent organizations that manage wholesale electricity markets, thereby ensuring economic competitiveness and reliability. Currently, only a portion of the western US electrical system is managed by an RTO, the California ISO (CAISO). Ten western states – Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming – are not part of an RTO and do not enjoy many of the benefits offered.
According to the new report commissioned by Advanced Energy Economy, the entire western region and every western state (including California) could expect significant economic benefits from creating an RTO at scale. from West. Benefits through 2030 would include up to:
- 657,000 well-paid permanent jobs
- $79.2 billion in additional gross regional product per year for the 11-state area
- $2.4 billion in tax assessments per year
- $2 billion in annual energy savings
- 13,700 temporary construction jobs resulting from the development of new clean energy resources
These benefits would be driven by lower electricity prices (compared to a no-RTO case) for households and businesses, new and expanding businesses in the West, and additional clean energy development in the region.
These economic impacts are achieved through the operational efficiencies and reduced peak capacity requirements that an RTO provides. And that’s just a conservative estimate of the economic impact of a western-wide RTO. RTOs offer additional benefits not reflected in the study, including improved reliability, transmission scheduling, and increased integration of renewables.
The structural changes that an RTO would bring to the region would also lead to increased investment in clean electricity generation compared to maintaining the status quo in Western electricity markets. The western United States is home to some of the best wind resources in the country, as well as high quality solar resources. A western RTO would allow distant sources to be more likely to be developed, as wind projects in states like Wyoming would have a ready market in the population centers of places like San Francisco. Between 2025 and 2035, the high-end estimate of clean energy development would total 9,409 megawatts, which represents 22% of total corporate clean energy transactions in the United States. This is sufficient capacity for power approximately 2.4 million homes and businesses.
This level of building clean electricity sources in the West would be a big step towards decarbonizing the entire economy. It is more important than ever that the United States move quickly to a carbon-free electricity system; therefore, the sooner the development of RTOs occurs, the sooner the entire Western region can reap these economic and decarbonization benefits.