Power Delayed: The Hidden Costs of Postponing Power Projects, with McKenna Peplinski

Notable Quotes

• Complex, time-consuming approval processes delay new infrastructure on the electric grid: “Connecting to the grid is a really extensive process. It requires a lot of back and forth between the developer and the transmission authority, and it requires a series of studies on grid impacts. In the past, we had large, decentralized fossil fuel plants that were going through this process. But now that there are a lot of small, decentralized renewable plants, there are more challenges associated with this permitting. So, it’s leading to longer approval times.” (4:25)
• Delays in building new infrastructure come at high societal costs: “When we consider the economic, environmental, and health costs, as well as some of those savings that I mentioned, the net cost [of these delays] ends up being $24 billion for transmission and $23 billion for generation.” (19:45)
• The costs of these delays are disproportionately borne by certain demographic groups: “Black-headed and Hispanic-headed households have higher net costs than white-headed households … They’re not benefiting as much from the tax reductions, they don’t have as much ownership in some of these companies, and they’re also more likely to be exposed to pollution. As a percentage of income, we found that Black-headed households are seeing costs that are five times greater than those of white-headed households.” (24:05)

Top of the Stack

• Power Delayed: Economic Effects of Electricity Transmission and Generation Development Delays by Daniel Shawhan, McKenna Peplinski, Sally Robson, Ethan Russell, Ethan Ziegler, and Karen Palmer
• Clean Power Delayed: Effects of Infrastructure Delays on Health, Environment, and US Households by Daniel Shawhan, McKenna Peplinski, Sally Robson, Ethan Russell, Ethan Ziegler, and Karen Palmer
• Decarbonize Your Life from Heatmap News

The Full Transcript

Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future (RFF). I'm your host, Daniel Raimi. Today, we talk with McKenna Peplinski, a senior research associate here at RFF.

Along with a group of RFF colleagues, McKenna recently released a pair of working papers on the effects of delays in building power plants and electricity transmission lines. As it turns out, slowdowns in the construction of this critical infrastructure have major implications for society in terms of energy costs, climate change, and public health. In today's episode, McKenna will walk us through the study, how they modeled different scenarios, how they calculated results, and what they found. The results are pretty stark, so stay with us.

McKenna Peplinski from Resources for the Future, welcome to Resources Radio.

McKenna Peplinski: Hi, Daniel. Thanks for having me.

Daniel Raimi: It's great to have you, and it's great to have you at RFF. This is your first time on the show. And you've been with us for how long? Six months, or something like that?

McKenna Peplinski: A little bit longer than that. I started in September.

Daniel Raimi: Okay, nice. So, closer to nine months. Great.

Well, as you know, we always ask our guests how they got interested in working on environmental topics—whether they had early life inspiration or came to this topic later in life. So, what inspired you to work on these types of issues?

McKenna Peplinski: For me, a lot of it started when I was getting my undergraduate degree in mechanical engineering. I was kind of looking and thinking about career paths, and I wasn't really excited about a lot of the positions that I was seeing. I wasn't really interested in being a manufacturing engineer working on the research and development side.

The university that I went to, which is a liberal arts university in Minnesota called the University of St. Thomas, had what's called a peace engineering minor. It combines some of the social analysis that you learn in the justice and peace studies program with your technical engineering skills, so that as an engineer, you can develop solutions for social, environmental, and economic justice issues.

As part of that minor, I took an environmental engineering course in Costa Rica. It was an introduction to food, energy, and water-waste systems in Costa Rica, and covered both conventional practices and some more sustainable techniques. We had a lot of field experiences. We went to a landfill that sat right at the edge of a community, talked with community members, and studied some of the negative consequences of that landfill. We also went to local coffee farms that had varying ranges of sustainable practices. We also visited a hydropower plant.

Really notably, Costa Rica has an electricity grid that is met by almost 100 percent clean electricity. But they're really thinking about how they're going to continue to have that electricity makeup in a future where they’ll have population growth and increasing consumption. There's challenges associated with that. We were studying that. I really, really enjoyed this course and I really enjoyed the time that I had in Costa Rica. So, after that, I knew that I was going to continue doing something that focused on the environment. And I particularly focused on the study of electricity systems and decarbonizing our electricity systems.I went on to complete a graduate degree in environmental engineering, and then when I graduated last year, I joined RFF.

Daniel Raimi: That's awesome. It's so interesting that your formative experience was about electricity demand growth, because that's exactly what we're going to talk about today.

As listeners to the show know, it's often difficult to build new electricity generation and transmission infrastructure in the United States. We're not going to go into a lot of depth as to why that is the case, but can you start us off with a little bit of background? In a nutshell, why is it hard to build power infrastructure in the US?

McKenna Peplinski: One of the things that's going on is that we have a really long interconnection queue. The interconnection queue is the generators that have put in a bid to connect to the grid, but they're still waiting to get online. There's more capacity in that interconnection queue than there is on the US grid right now.

There is such a backlog because connecting to the grid is a really extensive process. It requires a lot of back and forth between the developer and the transmission authority, and it requires a series of studies on grid impacts. In the past, we had large, decentralized fossil fuel plants that were going through this process. But now that there are a lot of small, decentralized renewable plants, there are more challenges associated with this permitting. So, it's leading to longer approval times.

I will also note that there's a lot of uncertainty in this process. Sometimes these developers put a generator in and after years of being in the interconnection queue, it doesn't even pan out. So, developers might throw in multiple applications in the hopes that one of these sticks.

We also have wind and solar resources that are in the center of the country. In order to transport the supply to the population centers where the demand is, we need these long-distance, high-voltage transmission lines. Those are trickier to build than local transmission lines, because every single state that they cross through has to give the approval, and there isn't really a streamlined process for coordinating this approval process.

On top of that, there are supply chain constraints and worker shortages. With all of this, the time that it now takes for a generator to get onto the grid has really grown.

I also want to note that in the past couple of years, demand has been relatively flat. But we are expecting that there'll be some demand growth associated with data centers and electrification trends. So, the delays that we're seeing in generator and transmission line build out are really likely going to complicate the challenge of meeting this growth in demand if we don't figure out a way to speed it up.

Daniel Raimi: Yes, for sure. It's a big challenge. We’ve done a couple of previous episodes on this topic. We did one with Will Gorman, specifically on the interconnection queue. We recently did one with Catherine Hausman on the delays to building out transmission, particularly across states, as you mentioned.

With this background in place, you and your coauthors recently published a pair of papers that look at the economic and public health effects of the delays in building out this type of generation and transmission infrastructure. We're going to talk about the results in just a second, but can you give us a thumbnail sketch of the methods you use to estimate how these delays translate into economic costs and health impacts and the like?

McKenna Peplinski: We looked at both transmission delays and generator delays, and we looked at those separately. To do that, we used the Engineering, Economic, and Environmental Electricity Simulation Tool (E4ST), which is one of RFF's power-sector models that we use to project the effects of policies and infrastructure and demand changes on the US and Canadian power grid. E4ST has really high spatial detail and realistic power-flow representation. Because of this, it's really well-suited to ask this question about transmission and generation delays where you might want some more detailed representation of the grid.

In general, analyzing the effects of delays is difficult, and it's pretty tricky with a power-sector model. Part of the reason for that is that a power-sector model doesn't really have a concept of the timeline that's associated with developing one of these projects. You simulate the power sector under a set of demand and growth assumptions and constraints. Then, in response, the model optimizes for the lease cost and brings different generators into the model. So, again, there's no timeline associated here, at least the way we have it set up in E4ST.

In order to think about what delays mean or how we can model delays, we have two different configurations of the grid and compare what the outcomes are under those two different configurations. I'll talk about the transmission delays first.

We have a no-delays scenario, where we have a transmission grid that is more expanded. We model that in the year 2032. Then we have a delays scenario, where we have a transmission grid that's less expanded, and we model that in the year 2032. I say more or less expanded because this modeling is being done in the year 2032. So, in both scenarios, the grid is still bigger than the grid that we're currently working with. But these expansions are a set of real anticipated transmission expansions that grid operators are expecting to see. The larger transmission grid, which is the one that is representing a transmission grid without delays, is 6 percent larger than the smaller transmission grid, which is representing a grid with delays. That 6 percent difference represents about four years of transmission growth, if we're looking at the average rate from 2010 to 2020. That definitely varies. We've seen years with higher rates and lower rates, but it’s about four years.

Separately, we also looked at generator delays. So, again, we have that no-delays scenario, which has the more expanded grid. The model runs and optimizes to meet demand and builds out generators that lead to the lowest cost. But then we do a second constrained run, where we limit the amount of build out that can occur. For each major type of generator, we reduce it by 20 percent and then run the grid under those constrained scenarios. That's the generator-delays scenario.

Like I said, each major generator type is constrained by 20 percent, as in the amount that was going to get built is reduced by 20 percent. But since most of the generation capacity that was coming online was wind and solar, it means that most of the prevented build out is renewables.

Daniel Raimi: Great. That makes sense. So, you're looking at wind and solar, and natural gas is also part of the story. As our listeners know, and I'm sure everybody's thinking about this, the federal policy environment, when it comes to electricity generation, is really uncertain. We're recording this on June 3, 2025. So, by the time you listen to this, things might've changed already. But can you tell us, McKenna, about what the key policy assumptions are that you and your coauthors make in your sort of central analysis?

McKenna Peplinski: Yes. We thought about this a lot, because we started our analysis prior to the election and finished our analysis after the election. We finished it in the months following the November election. So, we were trying to nail down what we thought an accurate policy representation would be, which, as you can imagine, was difficult to do at the time. It's still difficult to do. But we decided to include the Inflation Reduction Act’s technology-neutral tax credits for non-emitting generators, which includes the investment tax credit and the production tax credit for a variety of generators. We also included a tax incentive for carbon capture and storage and nuclear plants.

We decided to omit the US Environmental Protection Agency’s 11 greenhouse gas rules for coal natural gas, as well as the Good Neighbor Plan for nitrogen oxide emissions, because we thought it was likely that those could get repealed, and that is looking to be the case. If you're following the legislative texts that are coming out about the Inflation Reduction Act, it seems very likely that it will be fully repealed as well.

We did do a sensitivity analysis, where we looked at keeping all three of these policies or repealing all three of these policies. As things move along, it's possible that removing all three of these policies is what the outcome ends up being. But I'll focus on the results from the central case, because that's in line with what's in the body of our report.

Daniel Raimi: That makes sense. Of course, listeners can go check out the reports to see the effects of a world where those tax credits go away, or a world where all of the policies stay in place.

With that in mind, let's jump to the results. There are tons of results in this paper, so I'm asking you to do a lot of triaging here. Can you start off by giving us some highlights on the economic effects of a delay in building up generation or transmission?

McKenna Peplinski: Yes. Before I get into the economic effects, I'll set the background for why those economic effects occur.

In the case of transmission delays, the physical and economic viability of adding new generators to the grid is reduced. There might not be enough capacity to add a new generator, or a generator may become unprofitable because of the congestion on the grid, and so it doesn't get added. Because of that, we see that the amount of new wind, solar, and natural gas are all reduced by somewhere between 24 and 29 percent, compared to the amount that came online in the no-delays scenario. Again, because most of that would've been wind and solar, most of this reduction in build out is the renewables, similar to what we see in the generator-delay case, when we reduce the capacity by 20 percent across the board.

In both of these situations—in the transmission-delays and the generation-delays scenarios—because we've reduced the amount of capacity that can come online, the model offsets that in other ways, which includes increasing generation from existing capacity and keeping generators online longer than they previously would have been on for. A lot of the generators that don't retire end up being fossil power plants. In the case of increased generation, most of this happens from coal and natural gas power plants—roughly 75 percent in both the transmission- and generation-delays scenarios.

Daniel Raimi: Can I ask you about that? For the increase in coal and natural gas, it's not that there are a lot of new coal and natural gas plants getting built, right? It's that they're staying online longer and they're operating more often. Is that right?

McKenna Peplinski: Yes, that's the basic idea. They stay online longer and they operate at higher capacity factors. You can't really see that same level of increase in renewable capacity factor, so it ends up being the fossil fuel power plants that run more often.

Daniel Raimi: Right, because renewables are not dispatchable, right? They operate when the sun's out or when the wind's blowing. And when it's not, then they're not generating.

McKenna Peplinski: Yes, exactly.

Daniel Raimi: Okay, I interrupted you. Keep going, please.

McKenna Peplinski: This translates to some economic impacts. You're not able to build and use your lowest-cost resources. And in the case of transmission delays, you can't share the generation across regions, which can really be influential in lowering the price of electricity.

For the transmission delays, the electricity bills for customers increase by about 3 percent. We also have a natural gas market incorporated in E4ST. So, because there is higher demand for natural gas in the electricity market, we also see that the natural gas sector outside of the electricity market experiences an increase in price because of the general higher demand. So, the natural gas costs for customers also increase by 3 percent.

There are some savings associated with not building these transmission lines. But these costs that we evaluate end up being about 4.4 times greater than the savings of not building out the transmission lines.

For generation delays, we find that both electricity bills and natural gas bills increased by about 4 percent, and the cost for customers of these increased bills are roughly 5.6 times the savings of not building the generators. There are some positive effects for certain stakeholders. Electricity and natural gas suppliers see roughly $19 billion in higher profits in the case of a transmission delay, and $22 billion in the case of a generation delay. The government revenue ends up increasing by $10 billion in the case of the transmission delay and $7 billion in the case of the generation delay. That can be explained by the fact that wind and solar isn't getting built, and so now the government isn't paying out those tax credits that I mentioned in our policy assumptions.

Another aspect that we didn't fully consider in the economic costs is that these delays are increasing system congestion. While that does increase the cost that we're measuring, system congestion also can reduce the reliability of the grid. It can also lead to blackouts. It's kind of difficult to translate the system congestion that we're seeing to an increased number of blackouts, but I think it's important to note that there are costs associated with having reduced reliability on your grid that we're not capturing here.

Daniel Raimi: That's great. There’s one other number to throw into this mix of numbers that stuck with me. When you look at the cost of transmission delays, it's about $55 per person in the United States. And the cost of generation delays is around $70 per person. If you think about that across the entire population, those are really, really big numbers.

McKenna Peplinski: Yes, it adds up to a really large number. One last thing that I'll comment on is … I had mentioned that we looked at other sensitivities. I do want to note that they're pretty similar, in terms of how it impacted generation and costs. One of the main differences for the scenario where we also omit the IRA tax credits is that there is less of an impact on wind and solar build out. That's because in that no-delays case, less wind and solar is getting built out because it's not incentivized. And because the investment tax credit and the production tax credit don't exist, government savings also aren’t as high.

Daniel Raimi: Right. That all makes sense.

Okay, so you've just run through a whole slate of results and given us a really nice picture of what things look like on the economic side of things. But, of course, you also look closely at the environmental and health consequences of potential delays. So, let's discuss the emissions side of things, and then I'll ask you, in a minute, about the health impacts of those emissions.

How do delays affect emissions, both of carbon dioxide and other air pollutants that affect people's health?

McKenna Peplinski: As you can imagine, increased generation from fossil fuel power plants and reduced capacity of wind and solar is going to have negative consequences for power-sector emissions. In the case of transmission delays, we see that greenhouse gas emissions from the power sector increased by 9 percent. For comparison, in the past couple decades, greenhouse gas emissions from the power sector have actually been decreasing by about 3 percent on average. So, this is a really notable increase in the amount of emissions from the power sector.

Daniel Raimi: 3 percent per year, right? Over the last 15 years or so?

McKenna Peplinski: Yes, 3 percent per year.

For the conventional air pollutants, we look at nitrogen oxide, sulfur dioxide, and PM2.5, and we see about an 8 to 10 percent increase in emissions, depending on the pollutant.

For generation delays, we found that greenhouse gas emissions would increase by 7 percent, and that emissions of nitrogen oxide, sulfur dioxide, and PM2.5 would increase by between 6 to 7 percent. In the paper, we translate these emissions costs, as well as some of the health impacts, which we'll get into, into damages, so that we can come up with a net cost. So, when we consider the economic, environmental, and health costs, as well as some of those savings that I mentioned, the net cost ends up being $24 billion for transmission and $23 billion for generation.

Daniel Raimi: That’s really Interesting.

We were throwing around some acronyms there, so I’ll just mention a couple of them, in case people aren't following all the details. NOx is nitrogen oxide, I believe, SO2 is sulfur dioxide, and PM2.5 is particulate matter that's 2.5 micrometers in diameter or smaller. That's the stuff that can get into your body and cause all sorts of damage.

One of the lines that really stuck with me in your analysis on the health impacts of delays was this term that is used, which is “hyper-regressive.” This is how you and your coauthors describe the way that these health impacts are distributed across the population. Can you say more about that hyper-regressivity and what it means for people on the ground?

McKenna Peplinski: Yes. We take those power-sector emissions and then we come up with an estimate of what that means for the mortality rate. For transmission delays, we find that deaths from increased PM2.5 and ground-level ozone will rise by approximately 350 and 370 deaths, respectively, in the year 2032. For generation delays, PM2.5- and ozone-related deaths increased by about 290 and 250 deaths, respectively, in 2032.

But these impacts aren't distributed equally across the populations. There's been a lot of research in the past that has shown that certain groups are experiencing higher levels of pollution and are more sensitive to higher levels of pollution. We found that here as well.

We used the Intervention Model for Air Pollution, or InMAP, which has really high spatial resolution, and came up with an idea of how this general impact is distributed to different demographics. InMAP translates the power-sector emissions that we calculated into PM2.5 concentrations and to changes in mortality at really high spatial resolutions across the United States. We then match that with local census demographics to come up with an idea of how those deaths are attributed.

We look at what this means for Black individuals, Hispanic individuals, and white individuals. We find that Hispanic individuals and white individuals in this study have a similar mortality rate. Some of that could be attributed to the fact that Hispanic individuals are more likely to live in the western part of the United States, where people aren't often living as close to power plants due to the population density. We found that Black individuals would experience 40 percent of these deaths from PM2.5, and Black individuals only make up 14 percent of the population. This is because they have higher exposure to the pollution, as well as higher sensitivity to the pollution. So, that's just a really striking outcome of what you talked about—finding that these health impacts aren't distributed equally across the populations that we're looking at.

We also look at how the total net costs are distributed across households using RFF's Social Welfare Incidence Model. Again, here we're using the net costs, which includes economic, health, and environmental damages, and we look at both racial groups and income quintiles. We found that people in the lowest income quintile face higher costs than those in the middle and the highest quintiles, both in terms of their absolute costs and as a percentage of income. This is, in part, because they're more exposed to the pollution, they have less ownership in the production companies, and they don't benefit as much from the tax reductions. Actually, the highest income quintile sees a benefit of about $80 per capita in the case of transmission delays, while the lowest income quintile sees a cost of $52 per capita in the case of the transmission delays.

We call that hyper-aggressive because the highest-income quintile is really benefiting at the expense of the lowest-income quintile.

Daniel Raimi: Right. And those benefits and costs you're talking about, those are monetary benefits and costs, but they also include the health impacts you're describing, is that right?

McKenna Peplinski: Yes, they're considering health impacts, as well.

We also, as I mentioned, looked at how these costs are distributed across white-, Hispanic-, and Black-headed households and found that Black-headed and Hispanic-headed households have higher net costs than white-headed households. Again, some of this is due to the same reason that people in the lowest quintile are experiencing higher costs. They're not benefiting as much from the tax reductions, they don't have as much ownership in some of these companies, and they're also more likely to be exposed to pollution. So, as a percentage of income, we found that Black-headed households are seeing costs that are five times greater than those of white-headed households.

Daniel Raimi: That’s really interesting. Can you talk a little bit more about the geographic distribution of these damages? You mentioned the western United States, where there's a larger proportion of Hispanic individuals. If I'm thinking about a map, where I could see the impacts of particulate matter on people's health … Is it just the physical reality that more African-Americans live downwind from coal-fired power plants? Is that what's driving a lot of this?

McKenna Peplinski: I wouldn't say that we went into a lot of depth about that. I think that's something that has been emphasized in the literature on this topic. Certain people of color are more likely to live in areas where they're downwind of power plant pollution. At the same time, some of those groups are also more sensitive to the pollution that they experience.

Daniel Raimi: Right. It's that differential insensitivity that's really important too. Great, McKenna.

I want to ask you one more question before we go to our Top of the Stack segment, and it's about, again, the distribution of benefits and burdens that you're finding.

There are a couple of really arresting figures in one of the papers. Figure 5 and Figure 6 show the impact to consumer energy bills right next to the benefits that electricity and natural gas providers receive from these delays. Can you talk a little bit more about the benefits that energy producers receive and how it might create some sort of perverse incentives here?

McKenna Peplinski: Yes. As I mentioned earlier, this congestion that we're seeing in both of these cases leads to higher electricity prices, and sometimes there are higher generation costs because the generator that's on the margin is more expensive than it otherwise would have been if these renewable generators were able to come online. But the increase in electricity costs may not directly correspond one-to-one with changes in the cost of supplying that electricity. And so, in those cases, you can imagine that these electricity suppliers are experiencing higher profits.

For example, in a system where there's constrained transmission, the amount of power that can be shared across regions is limited. That leads to local scarcity, which leads to higher local electricity prices. But that didn't necessarily change the cost of supplying the electricity for the electricity supplier.

In another scenario, when there's fewer plants, that means that there are generators that are running more often at high capacity factors. That, again, leads to higher revenues for these electricity suppliers. But if the fixed costs are already paid off, now they're also experiencing higher profits. So, you might be able to imagine that these electricity suppliers actually have some level of incentive to not get more generators online, or to make sure that more transmission gets in the ground, because they're still getting the profits that they would like to get. They might even be getting higher profits.

Daniel Raimi: Right. It's counterintuitive that an electricity generator might actually want to build less electricity generation to increase their profits, but it's a pretty compelling argument.

Well, McKenna, this has been a fascinating conversation. Of course, there's so much here under the surface that we're not getting into, so I'd encourage folks to check out both of the full working papers, which, of course, we'll link to in the show notes. The papers are also up on the RFF website now.

I'd love to ask you now, McKenna, about something that you think is really great that you'd recommend to our audience. It could be a book, an article, a podcast, a show, or anything, really. What's at the top of your literal or your metaphorical reading stack?

McKenna Peplinski: Yeah, this came out somewhat recently, I always enjoy what Heatmap News puts out, both their podcasts and their articles. In the fall, they put out a special report called Decarbonize Your Life, which is about making decisions that are better for the climate. I know that might sound a little bit like measuring your carbon footprint and trying to reduce it. I think there's some important nuance here, because the authors are aware and point out that it's pretty impossible to get to a net-zero life. And even if you were to do that as an individual, you won’t solve climate change. But at the same time, you might be interested in what actions you can do that would exert the most leverage on the economic system. So, instead of reducing your marginal emissions, how can you make choices that might drive changes in the energy system?

I really like this framing of it because I do feel like making individual choices both makes me feel more empowered in this overwhelming scenario we're in. And I do think that some changes can be driven by the individual actions that people take if enough of us take them. But if you're going to do that, then I think the next question is, "Well, what would be the most influential step that I can take?" And that's really what the point of this report is about. They've created a guide of actions that you can take, ranked by how impactful they are. And then they give advice on making those changes—actions like switching to an EV or electrifying your home. They also provide the methodology that got them to this list of actions. I think it's a really good resource. And if anybody has friends or family that sometimes ask them what things that they can do in their life, I also think it's a resource that you can point your friends and family to.

Daniel Raimi: That's great. I'm just looking at it now. I hadn't seen this before, but yeah, you pointed out the top two, right? Get an EV if you need a new car. Try to go zero carbon at your home. Give your home an energy efficiency makeover. Electrify your appliances. Drive less, bike more. These are great ideas, and your point is really well taken about the complexity of individual-level action, when policy-wide and society-wide action is really needed in the long term.

One more time. McKenna Peplinski from Resources for the Future, thanks so much for coming onto the show and sharing this fascinating work with us.

McKenna Peplinski: Thank you.

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