How a U.S. Interregional Transmission Overlay Could Modernize the Aging Grid and Cut Costs by 2050

Why the Current U.S. Grid Structure Is Failing

The U.S. transmission system faces unprecedented strain due to a convergence of factors, including:

• Coal-fired generation retirements: A rapid decline in coal plants is reducing baseload capacity.
• Aging infrastructure: Over half of the grid’s transmission lines have surpassed their 50-year lifespan.
• Surging demand: Data centers and manufacturing reshoring are driving exponential load growth.
• Renewable integration challenges: Intermittent renewable energy sources require more flexible and robust transmission networks.

How an Interregional Transmission Overlay (ITO) Could Work

The proposed ITO would deploy a high-capacity transmission network using:

• HVDC (High-Voltage Direct Current): Enables long-distance, low-loss power transfer between regions.
• 765 kV EHVAC (Extra-High-Voltage Alternating Current): Supports bulk power delivery within and across regions.

The overlay would:

• Bridge regional divides: Connect the Eastern, Western, and ERCOT interconnections to balance supply and demand.
• Integrate renewable energy: Transport clean energy from resource-rich regions (e.g., wind in the Midwest, solar in the Southwest) to high-demand centers.
• Reduce system costs: Potentially cut electric system costs by hundreds of billions of dollars through 2050 by optimizing resource allocation and reducing congestion.

The Five Major Challenges to Building an ITO

Despite its potential benefits, the ITO faces significant hurdles:

1. Cross-state planning coordination: Aligning transmission projects across multiple states with varying regulatory frameworks.
2. Investment barriers: Permitting delays, cost allocation disputes, and financing uncertainties.
3. Energy market harmonization: Integrating disparate regional markets to enable seamless energy trading.
4. Supply chain limitations: Securing specialized equipment (e.g., transformers, HVDC converters) amid global supply constraints.
5. Political and regulatory uncertainties: Navigating evolving policies at federal and state levels, including FERC and DOE regulations.

Actionable Steps to Launch the ITO Roadmap

Utilities and developers can take concrete steps to advance the ITO, including:

• Identify strategic corridors: Map high-potential transmission routes based on renewable resources and demand centers.
• Form multi-stakeholder oversight: Establish entities to coordinate planning, permitting, and cost allocation across regions.
• Coordinate regional studies: Conduct joint transmission planning studies to identify optimal project sequences.
• Secure state and federal support: Leverage FERC Order 1920 and DOE programs to streamline permitting and funding.
• Develop equitable cost allocation: Create frameworks to distribute costs fairly among beneficiaries, ensuring broad support for projects.

Key Takeaways

• The U.S. grid urgently needs modernization to address aging infrastructure, rising demand, and renewable integration.
• An Interregional Transmission Overlay (ITO) using HVDC and 765 kV EHVAC could enhance resilience and reduce costs by hundreds of billions through 2050.
• Overcoming challenges in planning, investment, and regulation is critical to realizing the ITO’s potential.

For more insights, download the full whitepaper.