Wiring America: The Short- and Long-Run Effects of Electricity Grid Expansion

This paper examines the impact of large-scale grid expansion on markups and emissions from fossil fuel generators in the short run and wind investment in the long run. I focus on the rollout of a grid expansion project that linked windy areas in West Texas to population centers in the east, costing $6.8 billion. Results indicate large benefits due to declines in markups, emissions, and higher wind investment with a short payback period of 7.6 years. These findings highlight the potential to unlock significant economic benefits from transmission expansion, a key factor in achieving decarbonization in the US.