Guest Editorial | Transmission System Operators Must Drive the Economy—With or Without Government Regulation

Transmission network operators do not only transport the electricity that lights people’s homes and streets. They drive the growth of the entire economy. After all, economic growth always comes down to energy, and the transmission network is the backbone of any modern economy.

Building a new city? You need a network. Powering electric vehicles? You need a network. Deploying data centers or AI to create new efficiencies? You need a network. The list goes on.

Those of us in the industry know that bill payers and continued economic growth face looming challenges as power grids across the United States struggle to keep up with rising demand. The massive electrification of the economy, combined with extreme weather events, are pushing power grids to their limits. And the challenges are only going to get bigger: Global electricity demand is expected to increase by about one-third to three-quarters by 2050, according to a report by the U.S. Energy Information Administration (EIA).

To solve this problem, we need to build many more transmission lines: but this cannot be the only solution. Transmission lines cost billions of dollars and take 10 years or more to complete. If we are to keep rates within acceptable limits while meeting current load growth, we must optimize the use of the existing network, using technologies that increase network capacity.

According to DOE’s Liftoff report, grid efficiency technologies like Dynamic Line Rating (DLR) could reduce congestion costs by 25-50%, saving U.S. ratepayers $5-10 billion annually. New technology that combines software and sensors could unlock 30-40% of the unused capacity on existing transmission networks. Historically, this unused capacity has gone unused, but now the U.S. government is stepping in to ensure that utilities start using some of that capacity by mandating Ambient Adjusted Ratings (AAR) on all transmission lines.

But we need to do more and fully exploit the potential of DLR because consumers and the economy cannot wait for more capacity – and they don’t have to.

Better use of existing infrastructure

To fully understand the landscape, we need to understand what technologies are available to utilities to unlock capacity. These technologies typically provide AAR or DLR, taking the form of software or physical sensors. Their goal is to measure safe levels of electricity that can be transmitted over power lines.

Safe transmission, however, depends on several factors that have not historically been measured. Instead, network operators have operated their networks largely through seasonal or static line rates. These rigid estimates typically account for consistent weather, wind, and other conditions for a block of time—usually an entire quarter or season. In other words, they don’t account for the real-world conditions that affect throughput from minute to minute, day to day, or even week to week. Instead, they provide security by relying on a highly conservative common denominator that results in a whole lot of untapped potential for increased transmission.

Needless to say, they also do not take into account the variability that occurs at different points on the line, such as lines covering different elevations, passing through wind farms, or spanning different microclimates. AAR and DLR differ from these conservative line estimates because they take into account more environmental variables at a much higher frequency.

AARs are often adjusted daily or hourly by assessing ambient temperature, usually assigned by software. DLRs, by comparison, come from sensors that collect real-time data on every single factor that affects transmission throughput at multiple points on a given line, including hyperlocal weather conditions, air temperature, wind speed, current, voltage, line angle, sag, and more.

Both of these more advanced assessments naturally provide a more complete picture of what is happening on and/or around the line, allowing operators to assess actual throughput with greater accuracy than before. It is no wonder that when their assessments are based on actual conditions rather than estimates that prioritize safety over inaccuracy, they find that their transmission throughput is usually much higher than they thought.

While both DLR and AAR are vast improvements over static ratings, the differences between them are clear. DLRs offer a much more holistic and precise picture of line conditions than AARs, but upcoming government regulations are not yet set to make DLR the standard.

Government regulations and incentives do not reflect the real potential for increasing capacity

Recent regulations have demonstrated governments’ willingness to intervene by requiring transmission operators to adopt technologies that will enable AAR by at least July 2025. However, current efforts, such as FERC Order (881) in the United States, do not require operators to realize their full potential because they only require them to implement AAR, not DLR.

While FERC’s regulations are a step in the right direction, there are solutions on the market that far outweigh the potential gains from AAR.

Members of Congress are already seeing regulators need to step in more to ensure grid operators are doing enough to cushion the coming demand, calling for incentives in the form of “shared savings.” That encourages new infrastructure but again pushes grid operators away from realizing their current potential.

Utilities can drive the economy and keep costs down with better technology

DLR technology is readily available now and can go beyond what regulations like the upcoming FERC rule allow, and we should prepare and encourage grid operators to adopt it immediately for the sake of economic growth. There is no time to waste, and focusing solely on building new power lines or focusing solely on AAR technology will not get us to where we need to be.

Real-world case studies have shown that DLR sensors can increase power line capacity by more than 40%, while AAR software is limited to increases of between 4% and 10%. For example, Minnesota-based Great River Energy recently conducted a pilot program with DLR sensors and observed an average potential increase of more than 40% on the line in question. Different geographic areas with different elevations, temperature fluctuations, and high winds can have an even greater impact on the increase that can be achieved.

While installing sensors across the grid may seem like a high upfront cost, it would be a drop in the ocean for grid operators, especially when compared to the costs they would have to incur if they built entirely new lines. There is an even greater opportunity cost of not installing these new technologies and improving grid performance, given the economic growth that physically cannot happen without them.

Looking to the future

Grid operators will come under increasing scrutiny as time goes on. The U.S. economy will be strained at the seams, potentially held back only by how quickly we can move more electricity. As economies find new markets, infrastructure costs will continue to skyrocket, but utilities can’t be the ones holding back progress.

Now is the time to prepare for the huge spikes in energy demand we know are coming, and we can’t waste the opportunity to grow where we can. Governments are in a unique position to identify this essential technology to encourage widespread adoption. In the meantime, utilities need to explore the full suite of solutions available to them to ensure they don’t get left behind.