Study: The Potential Impact of Inadequate Electric Transmission in Texas

Executive Summary

• The dynamic Texas economy and its growing population require increases in electric generation and transmission capacity well beyond what was expected even a few years ago.

  • If not addressed, general unreliability in the Texas electric grid and the resulting inadequate power supplies could constrain economic growth. The risk of inadequate power could become a barrier to entry and expansion for companies looking to establish a presence in the state, and existing businesses cannot function optimally with insufficient electricity.

  • The Perryman Group (TPG) assessed the potential economic impact of inadequate electric transmission in Texas through consideration of plausible scenarios that could occur under conditions that have been put forward by the US Department of Energy.

  • The scenarios reflect varying degrees of shortage severity; the levels of investment needed to avoid these supply inadequacies were also estimated.

• The initial scenario results in an underinvestment in electric transmission of $3.65 billion relative to currently anticipated levels and would lead to substantial losses by 2040.

  • The Perryman Group estimates that the total decrease in business activity during 2040 under these conditions would include $9.7 billion in gross product and approximately 40,500 jobs.

  • Cumulatively over the 2024-2040 period, the total losses include a projected $36.8 billion in gross product and almost 157,000 job-years (including multiplier effects).

• Underinvestment in electric transmission of $10.41 billion would occur under the second scenario.

  • The projected total decrease in business activity in 2040 in these circumstances includes an estimated $22.3 billion in gross product and approximately 92,900 jobs.

  • Cumulatively over the 2024-2040 period, the total losses include a projected $113.0 billion in gross product and almost 487,100 job-years (including multiplier effects).

• The consequences associated with an underinvestment in electric transmission of $12.66 billion as determined under this scenario would result in even greater losses in business activity.

  • The estimated losses in 2040 (including related multiplier effects) total a projected $25.5 billion in gross product and approximately 106,100 jobs.

  • Cumulatively over the 2024-2040 period, the total losses include a projected $159.8 billion in gross product and almost 696,500 job-years (including multiplier effects).

• Business activity generates tax receipts. The reduction in economic growth due to inadequate investment in transmission negatively affects receipts to the State and local taxing entities. The projected fiscal losses associated with inadequate electric transmission infrastructure in 2040 range from $146.4 million to $383.4 million to the State and $283.1 million to $741.4 million to local government entities depending on the severity of the resulting shortages. Cumulatively through 2040, losses total a projected $553.5 million-$2.4 billion to the State and almost $1.1 billion-$4.6 billion to local government entities.

• Falling short in meeting the demand for transmission and, therefore, the availability of electric power generates losses in business activity that are far in excess of the investments needed to sustain expansion.

• Texas is seeing ongoing population expansion and has enormous growth potential in both traditional industries and emerging sectors that require significant and reliable electricity supplies. This potential can only be achieved if the necessary supporting resources are available. Transmission capacity is crucial to ongoing prosperity.