Overview

NORTH AMERICAN TRANSMISSION BUSINESS: NEW OPPORTUNITIES, NEW ENTRANTS

The uptick in transmission investment along with federal incentives for independent transmission ownership is attracting new entrants into a sector that has hitherto changed very little with the onset of deregulation.

*These new entrants are opportunistic developers of individual transmission projects rather than derivatives of incumbent network owners.

*The new entrants have used a range of cost recovery mechanisms-ranging from regulated models relying on captive rate payers to pure merchant models relying on auction of capacity rights-to ensure a rate of return on their investment.

*Most of the projects being developed by these entities use direct current (DC) technology. The ability to control flows on DC lines makes these projects more like pipelines than typical network transmission projects.

*There are a few players involved in multiple projects, suggesting comparative advantage in project identification and development skills which are critical to the success of these new entrants.

These new entrants are getting a solid foothold in the sector, introducing new business models and poised to really change the transmission sector in the long run.