ANALYSIS SUMMARY: IMPACT OF GRAIN BELT EXPRESS ON KANSAS AND MISSOURI RATEPAYERS
ABOUT GRAIN BELT EXPRESS Grain Belt Express is an approximately 800-mile, overhead, multi-terminal +600 kilovolt (kV), 4,000 MW HVDC transmission line that is designed to deliver low-cost renewable energy from exceptionally strong wind resources in Sunflower Electric Power Corporation’s service territory in western Kansas to customers in eastern Kansas, Missouri, and other states in the region.
PA CONSULTING SAVINGS ANALYSIS Using a modeling process widely deployed by electric utilities, power market regulators, independent system operators, and other market consultants, PA Consulting conducted a market analysis assuming 2,500 MW of the total 4,000 MW capacity of the Grain Belt Express project is utilized by Kansas and Missouri utilities (2,500 MW is equivalent to the energy usage of approximately 2.4 million residents).
PA estimated the cost savings for ratepayers under two cases: with Grain Belt Express (projected to enter service in 2024) and without Grain Belt Express.
The transmission line and associated wind generation (collectively referred to as “Grain Belt Express” or “Grain Belt”) are projected to create significant cost savings for electricity ratepayers in Kansas and Missouri.
PA Consulting’s analysis finds that Grain Belt Express is projected to reduce Kansans’ and Missourians’ electricity rates by approximately $7 billion between 2024 and 2045, saving the average residential customer approximately $50 per year. This 20-year savings figure accounts for the cost of the Grain Belt Express project. With an expected operating life well beyond 20 years, Grain Belt’s potential to deliver additional savings would be projected to continue beyond 2045.
Grain Belt Express Delivery to Kansas and Missouri
2,500 MEGAWATTS Delivered
$7 BILLION 20-year savings
2.4 MILLION KS & MO residents
$50 PER YEAR Avg. household savings
PA Consulting’s analysis finds that Grain Belt Express is projected to reduce Kansans’ and Missourians’ electricity rates by approximately $7 billion between 2024 and 2045, saving the average residential customer approximately $50 per year. This figure accounts for the cost of the Grain Belt Express project.
ADVANTAGES OF GRAIN BELT IN THE REGION’S ENERGY RESOURCE MIX PA Consulting Group (PA) conducted a forward-looking, long-term analysis that assessed (i) the wholesale market impacts of the addition of Grain Belt Express and (ii) how the addition of Grain Belt Express would impact the revenue requirement1 (i.e. costs) for Kansas and Missouri ratepayers. The Grain Belt Express transmission project’s primary advantages are:
• The strong wind resource in western Kansas, especially compared to the wind resource further east in Kansas and Missouri;
• The use of HVDC technology to transmit power; HVDC lines are considerably more efficient in transporting energy over long distances and can be controlled by system operators to improve system stability; and
• The controllability of the HVDC line allows the operator access to low-cost energy in western SPP to serve Kansas and Missouri customers.
GRAIN BELT’S IMPACT ON KANSAS AND MISSOURI ELECTRIC UTILITY CUSTOMERS
PA performed a Partial Revenue Requirement assessment that aggregates the combined impact on Kansas and Missouri ratepayers. Over the long-term, the Partial Revenue Requirement paid by Kansas and Missouri ratepayers would be substantially lower with inclusion of Grain Belt Express, utility investment in the project would create significant long-term savings for customers. The collective Partial Revenue Requirement would be approximately $7 billion lower in total from 2024 to 2045 with the inclusion of Grain Belt Express. This translates to average electricity rate savings of approximately 0.40 cents/kWh over this period, which would lower an average residential customer’s electricity costs by approximately $50 per year.2
1 Revenue requirements are the amount that utilities must collect from their customers in order to cover their expenses and achieve a reasonable return on their invested capital. Therefore, a change in the revenue requirement directly impacts the amount that these utilities’ customers would pay in electricity rates. For this analysis, PA considered service territories of two utilities across Kansas and Missouri (one utility that spans the SPP region of Missouri and Kansas and a second within Missouri). 2 The average residential customer in Kansas and Missouri consumes between 12,000 and 13,000 kWh of electricity annually.
STRONGER WIND PRODUCTION THAT HELPS MEET PEAK DEMAND
The wind energy generation associated with the Grain Belt Express project is expected to have a relatively high capacity factor and flat production profile. The wind power production profile associated with Grain Belt is significantly stronger than average wind production patterns in eastern Kansas or western Missouri. The wind also produces at its highest during the evening peak and middle of the night, and evening peak wind production matches high evening load. Grain Belt Express thus provides clean, low-cost energy to utilities in Kansas and Missouri when electric demand is nearly at its highest, making it a unique clean energy resource when compared with regional wind alternatives.
Grain Belt Express Will Unlock One of America’s Strongest Wind Energy Resources
PA found that the addition of Grain Belt Express would lower power prices in the SPP and MISO regions of Kansas and Missouri, driving wholesale electric cost savings for customers. With Grain Belt Express, wholesale around-the-clock (ATC) power prices in Western Kansas are, on average, lower than power prices in the SPP region spanning Kansas and Missouri, and lower than prices in the MISO region of Missouri from 2024-2039. The price spread indicates that there is a consistent opportunity for arbitrage between the territories that will benefit citizens of Kansas and Missouri.
Wind resources normally are most productive during off-peak hours. Before the addition of Grain Belt Express, this drives a wider price spread between Grain Belt’s western Kansas node and both eastern Kansas and Missouri territories. Prices in Western Kansas are 38% lower than the SPP region spanning Kansas and Missouri, and 45% lower than the MISO region of Missouri on an average annual basis during off-peak hours. These pre-Grain Belt price differences translate to average annual price spreads of $16.81/MWh for the SPP region spanning Kansas and Missouri, and $22.21/MWh for the MISO region of Missouri.
The methodology, analysis, and findings expressed in this report are current as of August 2020 and, where applicable, incorporate underlying market data as of November 26, 2019. They were prepared by PA Consulting Group, Inc. (“PA”) at the request of Invenergy Transmission LLC. PA is not responsible for any loss or damage to any third party as a result of their use or reliance (direct or otherwise) on PA’s analysis and this report.
