How to keep electricity costs down amid uncertain federal policy

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Keeping the lights on nationwide is a feat of engineering that depends on millions of miles of power lines and thousands of power-generation plants.

A new Stanford-led study aims to support informed decision-making and durable solutions for the grid amid federal policy uncertainty and growing power demand from AI data centers, electric vehicles and other uses.

The analysis, published Oct. 13 in Environmental Research Letters, reveals what investments are most likely to keep costs down, clean energy flowing and lights on regardless of the policy landscape.

"Our team is driven by enabling the country, and in particular policymakers, to make better decisions that can help with affordability while reducing environmental impacts and continuing to leverage the best part of our R&D and innovation for new energy technologies," said study senior author Inês Azevedo, the Perry L. McCarty director of the Stanford Woods Institute for the Environment.

Important grid investment decisions must be made in an environment of shifting priorities in federal policies, such as the Biden administration's Inflation Reduction Act and the Trump administration's One Big Beautiful Bill Act. A range of regional market and policy environments, some with ambitious emissions-reduction goals, adds to the complexity. On top of this, power plants and transmission lines are particularly difficult to site and permit, and they often face backlash from local communities.

The study's modeling found that across a wide range of scenarios, including different policies supportive of different energy sources, some investments consistently bring benefits, such as reduced greenhouse gas emissions and lower operating costs. Specifically, building more transmission and wind power infrastructure could reduce the costs of producing and providing electricity by several billion dollars per year, which could potentially lower electricity rates for consumers.

"Regardless of federal policy, we can move toward decarbonization by focusing on long-lived investments like transmission," said study lead author Kamran Tehranchi, a Ph.D. student in civil and environmental engineering at the Stanford Doerr School of Sustainability and the Stanford School of Engineering. "Expanding interregional transmission lowers costs and improves access to renewables even without federal tax policy support for renewables."

Across the policy scenarios modeled, building more transmission infrastructure lowers total costs, according to the study. Doubling today's transmission capacity would reduce total annual system costs by 0.2% to 3.4% in 2035 and 1.3% to 7.3% in 2050, depending on the scenario.

"Transmission is a relatively small line item on your electricity bills compared to generation and distribution costs, but it can play a powerful role in making the generation portion of your bill cheaper," Azevedo said.

In the study's results, transmission is roughly 10% of annual costs to build and operate power plants and transmission lines, but each dollar spent on it saves more than a dollar in generation and storage because it lets the system reach the cheapest wind and share capacity across regions. In the zero-emissions scenarios for 2050, roughly $20 billion a year of additional transmission spending avoids about $34 billion a year in other costs.

The cost benefit of expanding transmission is largest for the stand-alone grid run by the Electric Reliability Council of Texas (ERCOT), which serves about 90% of the state's electricity demand. When the model allows the national grid to expand by 20%, ERCOT costs fall 4% to 9% in scenarios with tax credits or zero-emissions goals, not counting the cost of the credits. Those scenarios allow ERCOT to sell more of its power to other grids.

"Texas has a very small, almost negligible, amount of power transfer capacity to the rest of the country," said Tehranchi. "When Texas could benefit from the cheap wind in the Midwest, or when Texas could export its cheap electricity, there isn't sufficient transmission to bring those resources to the demand. Sharing resources reduces costs for everyone."

Building additional transmission leads to building more renewable energy generation capacity, according to the model, because it allows more access to regions with high-quality resources, such as Texas' plentiful wind. In turn, wind capacity lowers generation costs in all four policy scenarios.

"Certain investments de-risk the next 25 years no matter what the policy landscape is and should provide ground for strong bipartisan support," said Tehranchi. "We should be paying close attention to them."

The researchers are using the same modeling approach to explore other grid questions, such as where to site data centers, how to sustainably power these centers and how new technologies such as enhanced geothermal, small modular nuclear reactors or offshore wind may play a role in providing low-emissions electricity.

Publication details

Kamran Tehranchi et al., Costs and benefits of transmission investments in the United States under different policy scenarios, Environmental Research Letters (2026). DOI: 10.1088/1748-9326/aea586

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Citation: How to keep electricity costs down amid uncertain federal policy (2026, October 29) retrieved 29 October 2026 from https://phys.org/news/2026-10-electricity-uncertain-federal-policy.html

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