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RTOs and Potential Implications for the Future of Energy

2 men in hardhats looking at an interconnection machine
March 28, 2024

The landscape of energy generation, distribution and consumption is undergoing a significant transformation, catalyzed by the emergence of new, and evolution of existing, Regional Transmission Operators (RTOs). Ulteigā€™s Studies team brings a myriad of experience working with RTOā€™s. Specifically, in processes such as transmission planning, completing interconnect studies and all the work related to getting a project into an RTOā€™s interconnection queue. These entities are pivotal in the current and future state of electricity markets in the United States, and they wield substantial influence over the integration of renewable energy, the stability of the power grid and the economics of electricity.

Understanding RTOs and the Key Role They Play

Managing the transmission grid across large swaths of territory, RTOs serve as the backbone of the wholesale electricity market and are crucial for the security, reliability and efficiency of the power system. They enable regional planning and cooperation among a diverse group of stakeholders, including utilities, generators, regulators and consumers.

The importance of RTOs stems from their ability to facilitate the seamless integration of renewable energy sources and demand response programs. This is becoming increasingly vital as the grid modernizes and shifts towards sustainable energy. The Federal Energy Regulatory Commission (FERC) has championed RTOs since the 1990s, promoting competition and innovation in the electricity sector.

The Momentum for New RTOs in the West and Southeast

Despite the absence of a federal mandate for RTOs, about two-thirds of the U.S. electricity demand is covered by these entities. However, regions like the west and southeast have traditionally operated without RTOs, relying instead on bilateral contracts and informal agreements. The tides are changing, driven by several factors:

  • The rise of renewable energy sources, demanding more grid coordination.
  • The necessity for expanded transmission infrastructure to support clean energy delivery.
  • The push for market transparency and the opportunity for increased competition.
  • Policy pressures, such as those from the Clean Power Plan and the Regional Greenhouse Gas Initiative, aimed at reducing emissions.
  • The recognized benefits of regional cooperation in improving reliability and reducing consumer costs and environmental impact.

Challenges and Opportunities Ahead

The creation of RTOs in the previously uncharted territories of the west and southeast is fraught with challenges. These include the vast diversity of the regions, stakeholder skepticism, regulatory hurdles and the unpredictability of technological and environmental changes.

However, these challenges are counterbalanced by significant opportunities:

  • The development of a broader market can boost the sector’s efficiency and competitiveness.
  • Economies of scale could lead to reduced operational costs and a more coordinated approach to grid maintenance and investment.
  • New RTOs can be hotbeds for innovation, propelling the adoption of cutting-edge technologies and power engineering services.
  • Advancing the clean energy transition is perhaps the most compelling opportunity, aligning with national objectives to mitigate climate change impact.

Shore Up Grid Resilience with Ulteig

The future is bright for new RTOs, with the potential to reshape the energy sector profoundly. The creation of such entities could herald a new era of energy efficiency, reliability and sustainability. As RTOs break ground in the west and southeast, they could become influential forces in steering the national energy agenda toward a more resilient and eco-friendly future.

Ulteig supports key projects across the Power and Renewables Lifeline Sectors through comprehensive engineering, consulting and project management services.

Contact Ulteig today to learn how we can support your RTO or grid infrastructure project.

  • Energy, Infrastructure, Transmission Planning


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