An Update on the Potential Impacts of Subsidizing Transmission in the U.S.

How much value can transmission investment tax credits deliver as electricity demand grows?

This research brief updates earlier MIT Climate Policy Center analysis of transmission investment tax credits (ITCs), using the GenX model to evaluate their systemwide effects on a modeled 2035 U.S. grid. The authors compare a high-load-growth scenario driven by significant data center demand with a lower-growth scenario closer to historical trends, examining where transmission is built and how ITCs affect system costs and emissions.

Key findings

1. Under high load growth, a 30% transmission ITC drives substantially more new transmission, concentrated around the capacity-constrained Mid-Atlantic.
2. Transmission ITCs reduce annual system costs by $660 million to $1.17 billion under high load growth, compared with $40 million to $50 million under low growth.
3. Emissions effects depend strongly on load growth. Under high growth, ITCs can reduce annual emissions by up to 12.7 million metric tons; under low growth, they can increase emissions by up to 6.4 million metric tons.