Wrong Place, Right Line: Interregional Transmission as a Hedge Against Uncertain Large Loads

The above chart compares two estimates for national load projection in 2030: the AEO report from the U.S. EIA, in orange, and the aggregation of regional load projections from the Long-Term Reliability Assessment from NERC, in blue.

After 2023, NERC estimates surpass those of the AEO, at roughly the same time that large loads become a consideration in bulk system planning. This may be due to several reasons:

• Large-load developers may be submitting the same project to multiple regions;
• the AEO’s macroeconomic and demographically driven models are less sensitive to individual large loads; or
• the NERC’s regional predictions measure forecasts based on forward intent, using interconnection queue data and other contract-anchored signals.

The disparity reflects the possibility of regional projections overcompensating for, or double-counting, large-load expectations, presenting a cross-regional risk of misallocating energy resources. Grid planning must account for this uncertainty, and interregional transmission has the potential to retain value regardless of where large loads land or how much was invested in local infrastructure.

The Role of Interregional Transmission

As outlined in Table 1, interregional transmission has the capacity to retain value across a number of potential large-load scenarios. Interregional transmission lets resources committed under one forecast serve demand that suddenly emerges under another. At the same time, it is important to evaluate the constraints and risks of interregional transmission, as outlined in the final two columns of the table. The specific questions are designed for regional grid planning entities to keep in mind as they explore the additional value interregional transmission can offer.

Recommendations to the DOE

The following is a summary of CSIS’s comments to the DOE for the National Transmission Needs Study 2026.

1. Commission a study to distinguish and quantify regional demand uncertainty. The authors of the public comment response recommend that the DOE commission a study to build load growth scenarios by region, considering large-load-specific characteristics such as magnitude, location, and timeline of large-load realization. This study should also model the cost of forecasting error, or the cost a region incurs if it builds local infrastructure against a load that does not arrive, against costly stopgaps and congestion when a load appears and the region is not prepared.

   The output is a set of regional load growth scenarios paired with realization probabilities quantifying the misallocation exposed when actual load diverges from forecast.

2. Define and estimate the hedging value of interregional transmission. The authors recommend that the DOE define a hedging value that evaluates how interregional transmission performs in a region against the large load scenarios in Table 1. The hedging value should reflect the interregional transmission line’s average benefit and evaluate how much a region stands to lose in the scenarios where loads do not arrive as forecast against how much interregional transmission reduces that loss.
3. Identify region pairs with the highest potential hedging value. From Recommendation 2, the identified regions facing the largest risk exposure, or where the hedging values are the greatest, are the regions that must explore interregional transmission planning in greater detail. The authors recommend that the DOE develop an evaluation framework to compare hedging values across potential region pairs. Key considerations include whether region pairs with complementary risk profiles can further offset costs.

Guidance from the DOE should support regions in conducting collaborative interregional transmission planning studies across links and seams where the potential hedging value is greatest. If interregional transmission planning is properly understood and appropriately valued, it can durably address the distinct challenges that large-load growth presents.

Abhinav Subramaniam is a research associate in the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Chelsey Gilchrist is a research intern with the Energy Security and Climate Change Program at CSIS. Joseph Majkut is director of the Energy Security and Climate Change Program at CSIS.