The REZ Transmission 

Planning Process

The renewable energy zone (REZ) transmission planning process is an approach to 

connect areas with concentrated renewable 

energy resources to the power grid. The 

process helps to plan, approve, and build 

transmission infrastructure to access areas with 

high-quality resources, suitable topography 

and land-use designations, and demonstrated 

developer interest—supporting reliable and 

economic integration of renewable energy.

Hours of Transmission Congestion

<500

500–1,000

1,000–2,500

2,500–5,000

>5,000

Transmission planning studies provide the information power system planners need to select transmission enhancements that will help reliably and 

economically connect renewable energy zones (REZs) to load. For example, the map above of potential transmission options in the southern United 

States for the year 2050 shows the hours per year of congestion that transmission lines may experience based on future demand and generation 

forecasts [1]. Transmission congestion occurs when the lines that connect two areas reach their power-flow capacity. Such congestion can impact the 

reliability and economics of the power system. By examining transmission expansion options, planners can provide for future load, maintain reliability, and 

avoid congestion that can lead to curtailment of renewables and operation of expensive generation. This document provides an overview of the analyses 

planners use to study transmission upgrade and expansion options as well as the associated modeling considerations—including data requirements—for 

Step 4 of the REZ process, which addresses the development of transmission options.

Step 1. Process Design

 & Vision Statement

Step 2. Renewable Energy

 Resource Assessment

Step 3. Candidate Zones Selection

Step 4. Transmission Options

 Development

Step 5. Final Transmission

 Plan Designation

Step 6. Transmission System

 Upgrade

HOW CAN WE SUPPLY LOAD 

WITH RENEWABLE ENERGY? 

Transmission planning studies help power 

system planners determine how they can 

best supply load with renewable energy.

The early steps of the REZ process result 

in the identification of multiple candidate 

REZs. Many potentially feasible transmission expansion and upgrade options may 

exist to deliver the electricity from these 

zones to load. Knowledge of the location 

and target installed capacity of each candidate REZ allows power system planners to 

conduct transmission planning studies that 

identify the costs, benefits, and reliability 

impacts associated with various transmission line additions, equipment upgrades, 

and new substations and transformers. 

Furthermore, such studies help identify 

the lowest-cost, preferred transmission 

enhancement (upgrade and/or expansion) 

option that meets reliability and other 

system requirements.

The transmission enhancement options may 

bundle different combinations of candidate 

REZs and, as a result, each option could 

transfer a different total amount of power 

(megawatts) from new renewable energy 

generators to the grid. For example, one 

option may connect all candidate zones to 

load while a second option may connect 

only a few candidate REZs with less attractive renewable energy potential. Options 

may also represent different approaches to 

connecting zones to the existing system, 

including alternative network topologies 

(e.g., hub-and-spoke circuits in zones or 

loop circuits around zones), modifications 

of line voltage levels (e.g., refurbishing 

lines), or combinations of high voltage 

direct-current (HVDC) or alternating-current (AC) lines, among other approaches. 

Transmission system operators, utilities, 

and regulatory authorities commonly 

have power system-specific requirements 

and processes in place for these planning 

studies. The general approach presented in 

the following sections is broadly based on 

the Texas Competitive Renewable Energy 

Zones (CREZ) initiative [3].

DO TRANSMISSION 

EXPANSION OPTIONS MEET 

ECONOMIC, RELIABILITY, 

OR OTHER OBJECTIVES?

Transmission planning studies—which 

often consist of the three types of analyses 

shown in Figure 1—help system planners 

identify transmission expansion options that 

meet their objectives.

RENEWABLE ENERGY ZONES (REZ) TOOLKIT

nrel.gov/usaid-partnership | greeningthegrid.org

Transmission Planning Studies for the Renewable 

Energy Zone (REZ) Process

The Renewable Energy Zone (REZ) Transmission Planning Process: A Guidebook for 

Practitioners details each step of the REZ 

process from setting a vision through to 

final transmission system upgrades [2].
Production cost analyses help planners 

understand the operational cost and 

performance of transmission expansion 

options and prioritize project options. 

And, load-flow and stability analyses 

help planners ensure the feasibility and 

reliability of the transmission system and 

refine cost estimates. Such studies only 

address operational costs, and they do not 

capture the often-significant capital costs of 

transmission expansion. The overall aim of 

such studies, which are outlined in Table 1

and further described in the next sections, 

is to identify solutions that can be used to 

address any deficiencies before proceeding 

to a cost-benefit analysis of the acceptable 

options that considers capital and operational costs.

The three specific main goals to conducting 

each analysis are:

1. Assess whether an option is technically 

feasible from a reliability perspective

2. Identify necessary refinements to meet 

reliability goals

3. Understand how these refinements

may influence the production costs.

Each analysis is iterative, with any potential limitations or improvements driving 

revisions to the options, which are then 

reanalyzed. Options may begin as coarse 

depictions of potentially feasible solutions, 

with clarity added as they are revised and 

advanced through the analyses. The final 

output is a refined set of feasible options 

that include the location and design parameters of new transmission lines and other 

improvements such as new substations, 

transformers, or other devices. Options

that were initially unattractive may

become prominent after these analyses,

as some options may be found to have 

significant limitations. 

Operational Costs and Impacts

Production cost analysis is the principal 

approach used to quantify operational cost 

changes related to transmission expansion 

options, not accounting for capital cost. 

Production cost analysis simulates bulk 

power system scheduling, which is generally performed by solving a unit commitment and economic dispatch problem, 

subject to constraints. Solving this problem 

determines the least-cost combination of 

online units (unit commitment) and their 

exact power output (economic dispatch) 

scheduled to meet total demand, subject 

to system physical constraints (e.g., load 

balance, power flow laws, and generator 

capabilities) and security constraints

(e.g., transmission limitations, contingency 

reserves, and single or multiple element 

failure contingencies). Modern production 

cost modeling tools can co-optimize energy 

as well as operating reserve products such 

as contingency, regulating, and/or flexibility 

reserves for the power system. 

Production cost simulations typically 

consider a one-year planning horizon with 

chronological hourly or subhourly temporal 

resolution. Simulation along this horizon 

provides a clear understanding of system 

operation under potentially significant 

seasonal variations in both renewable 

energy resource availability and load. 

Simulating all probable operating conditions 

for multiple years is impractical because of 

the computing power and time needed. 

The key outputs of a production cost 

modeling simulation are the detailed time 

series and annual, aggregated results for 

power generation from generating units and 

the associated costs of system operation. 

Additional outputs include transmission 

system congestion, renewable energy 

curtailment, congestion costs, reserve 

holding and shortage, unserved energy, and 

locational marginal prices of electricity. 

Production cost models approximate AC 

flow for simplification and computational 

feasibility; therefore, additional modeling 

is needed to evaluate the reliability of 

the options. For more information on 

production cost models and associated data 

requirements see [4,5].

Figure 1. Example Transmission Planning 

Study analyses

Options

Production

Cost

Analysis 

Load Flow

Analysis 

Stability

Analysis 

Meets all

Requirements?

Cost-Benefit

Analysis 

Final 

Option

GLOSSARY

Adequacy: The ability of the electric system 

to meet demand and energy requirements at 

all times, taking into account scheduled and 

reasonably expected unscheduled outages 

of system elements.

Congestion: Occurs when transmission 

system constraints reduce transmission flows 

and the lowest-cost electricity cannot be 

delivered to demand requiring the system to 

rely on higher-cost generation sources;

in addition to impacting costs, congestion 

can cause reliability issues if constraints limit 

access to reserves. 

Contingency: The unexpected failure or 

outage of a system component, such as a 

generator, transmission line, circuit breaker, 

switch, or other electrical element.

Cost-benefit analysis: Compares the 

capital costs and expected benefits of a plan 

and is typically evaluated as a ratio with the 

total benefits as the numerator and the total 

costs of the plan (in net present value) as the 

denominator.

Curtailment: A reduction in the output

of a variable renewable energy generator 

from what could be produced given available 

resources.

Economic dispatch: The allocation of 

demand to individual online generating

units to affect the most economical production of electricity.

Load: Aggregated customers that receive 

power from the electric system or the total 

demand (MW) of these customers.

Load flow (power flow) analysis: Examines 

the steady-state (after dynamic behavior of the 

system settles) operation of the transmission 

system at an instant in time to ensure operational feasibility and adequacy to meet load

and accounts for scheduled and reasonably 

expected, unscheduled generator outages.

Locational marginal price: The marketclearing price for electricity at the location the 

energy is delivered or received.

Production cost analysis: A tool to optimize the scheduling of load and generation 

resources to meet expected demand over 

various timeframes with consideration of 

cost and constraints (e.g., system, physical, 

operational); production cost analysis is 

the leading tool to evaluate the impacts of 

variable renewable power on the operational 

costs of a system.

Reserves: Generators that are available

to a system operator to provide for regulation 

(i.e., response to random movements during 

normal conditions), load forecasting error, 

forced and scheduled equipment outages, 

and local area protection; reserves include 

contingency (deployed in response to 

generator failures), regulating (secondary 

frequency response via automatic generation 

control), or flexibility (reserves to address 

variability and uncertainty on timescales 

longer than regulating reserves).

TRANSMISSION PLANNING STUDIES FOR THE RENEWABLE ENERGY ZONE (REZ) PROCESS 2
Reliability During Critical Periods

Load flow (also referred to as power flow) 

analysis provides a snapshot of the transmission system that allows planners to identify 

the limitations of and/or needs for system 

reliability and test potential solutions to 

ensure voltage levels and other characteristics remain within acceptable system conditions. Load flow analysis simulates steadystate AC power flow of the transmission 

system, including voltage levels and phase 

angles at substation buses, active and reactive power flows in transmission branches, 

and system losses. This type of modeling 

helps ensure operational feasibility of the 

system at nominal conditions and adequacy 

of the system to meet load, accounting for 

scheduled outages and reasonably expected 

unscheduled outages [6]. 

A load flow analysis is conducted for select 

periods (i.e., seconds to minutes), as a 

simulation of all possible operating points 

throughout a year is not computationally 

feasible. The load flow analysis can use the 

commitment and dispatch outputs of the 

production cost analysis to identify critical 

periods of the year that may affect system 

reliability. Select periods depend on study 

requirements but typically focus on periods 

when power systems may experience 

extremes such as peak load, minimum load, 

maximum power transfer across transmission interfaces, or periods of low or high 

renewable energy generation. A load flow 

analysis helps planners ensure the system 

can maintain reliability through these critical periods.

Stability and Recovery 

from Contingencies

Transient and dynamic-stability analyses

simulate the dynamic performance of the 

power system, which depict the system’s 

ability to withstand an unexpected disturbance and recover back to stable, steadystate operation. A depiction of the dynamic 

performance of the system helps ensure it is 

sufficiently planned to recover to a steady 

state after an outage or other disturbance 

without causing additional disturbances or 

requiring significant modifications outside 

nominal operating capacity of the system 

[3]. This information helps planners further 

understand the reliability limitations and 

contingency needs of transmission expansion options. 

Stability analyses may use the outputs 

and knowledge obtained from production cost and load flow analyses to set 

initial, steady-state conditions. These 

simulations then examine various stability 

concerns, including the voltage and transient stability after a transmission fault, 

frequency stability following sudden loss 

of generation or load shedding, and ability 

to maintain synchronization after smallsignal disturbances. They look at whether 

a system can recover and avoid a partial 

system collapse. The complexity of these 

analyses rises quickly with increases in the 

number of elements on the system, contingency events, or scenarios considered. To 

limit complexity, the events are constrained 

to the most common and severe events that 

a system may realistically face, and the 

analysis is typically conducted for short 

periods—on the order of subseconds to 

minutes [7]. 

WHAT SOFTWARE 

TOOLS ARE NEEDED? 

Power systems are an assembly of familiar 

interconnected elements (e.g., load, 

generators, transmission lines, and transformers); however, the interconnection of 

these elements and each of their individual 

characteristics results in a complex system. 

Power system analyses employ models that 

simplify these complex systems, examine 

performance on different time scales, and 

rely on imperfect knowledge of the future—

including fuel prices, regulations, generation expansion, and demand increases. For 

this reason, no single modeling activity can 

capture and solve an entire transmission 

expansion problem. Instead, several distinct 

modeling exercises are conducted to understand system behavior, model limitations, 

and the effects of these limitations. The 

benefits of these exercises come from 

comparing several options—not a single 

solution—and exploring sensitivities and 

trends. Finally, it is helpful to assess all 

these results collectively and with broader 

contextual knowledge [8]. 

The tools used for transmission planning 

studies require expert users and good data 

to ensure well-informed decision-making. 

The best data and the perfect model are 

often not available, and planners may have 

to advance with the what is available to 

obtain initial results and identify priority 

data needs to improve models. Several tools 

are available for production cost, steadystate, and dynamic stability analyses from 

private vendors, and the unique needs and 

context of the user will determine which is 

the appropriate tool for each application.

GLOSSARY

Scheduling: The practice of ensuring

a generator is committed and available 

when needed.

Stability analysis: Simulation of the grid 

under a range of dynamic events to evaluate: frequency stability after a generation 

and load imbalance; voltage stability after 

a disturbance; transient stability to maintain 

generator synchronism after a disturbance; 

and small-signal stability to maintain steadystate conditions of voltage, current, and 

power magnitudes after a small disturbance.

Substation buses: An electrical junction 

point where two or more transmission 

elements are connected. 

Unit commitment: Scheduling of the online 

and offline status of generators, considering 

the processes required for generators to 

start up and shut down.

WHICH TRANSMISSION 

EXPANSION OPTION IS 

MOST ATTRACTIVE?

Transmission planning studies help decision makers narrow the list of attractive 

transmission enhancement options that 

connect REZs to load. Planners can use 

the results of these studies to assess the 

value of proposed transmission system 

enhancements, once initial capital costs 

are considered. A cost-benefit analysis 

is a common approach to comparing the 

expected costs to the benefits that can 

be attributed to a project. The costs and 

benefits are expressed in monetary units, 

and the results are presented as a benefitto-cost ratio, which has a value greater than 

one (1) where the expected benefits exceed 

costs. Costs may include capital costs of 

assets, cost of rights-of-way, construction 

costs, and the cost of financing. A broad 

set of benefits can be considered, and they 

commonly include production cost savings, 

reliability benefits, generation capacity cost 

savings, and local and global environmental 

impact reductions. Additional criteria such 

as legislative intent to develop clean energy, 

future expansion capability, or other social, 

environmental, or economic criteria can 

also be considered [9]. 

Designation of a final transmission plan 

may also hinge on additional reliability and 

ancillary-cost analyses to ensure all relevant 

regulatory authority requirements for 

issuing a final transmission order are met.

TRANSMISSION PLANNING STUDIES FOR THE RENEWABLE ENERGY ZONE (REZ) PROCESS 3
Table 1. Overview of Transmission Planning Study Analyses

Production Cost Analysis Load Flow Analysis Stability Analysis

Purpose Estimate operational cost and

performance impacts on the power 

system that result from transmission 

expansion options

Identify limitations of system operational 

feasibility and reliability given scheduled 

and reasonably expected, unscheduled 

outages; refine cost estimates

Identify reliability limitations and contingency needs of the transmission system 

to withstand unexpected disturbances and 

recover to steady state; refine cost estimates

Inputs Detailed data on:

• Generator parameters

• Storage parameters

• Load (profile and forecast)

• Transmission parameters

• Substation bus parameters

• Electricity market details

• Energy or fuel resources

• Time-synchronous generation and

load data

Detailed data on:

• Generator and storage commitment and 

dispatch for periods of interest

• Contingency events

• Load

• Transmission parameters

• Substation bus parameters

Detailed data on:

• Generator dynamic models

• Inverter control models

• Contingency event list

• Load 

• Transmission parameters

• Substation bus parameters

Outputs Detailed data on:

• Generation

• Operational costs

• Electricity prices

• Transmission system congestion

• Expected renewable energy curtailment

• Reserve holding

• Lost load probability

• Emissions

Detailed data on:

• Voltage levels and phase angles at 

buses

• Active and reactive power flows in 

transmission lines

• System losses

Detailed data on the dynamic performance 

of the system in the seconds after simulated 

faults:

• Rotor angle stability

• Frequency stability

• Voltage stability

Key institutions 

that may 

perform or 

contribute to 

the analysis 

• Ministries of energy

• Regulators

• System operators or planners

• Utilities

• Research institutes or consultants

• Regulators

• System operators or planners

• Utilities

• Research institutes or consultants

• Regulators

• System operators or planners

• Utilities

• Research institutes or consultants

REFERENCES

[1] Mai, Treui, Ryan Wiser, Debbie Sandor, Greg 

Brinkman, Garvin Heath, Paul Denholm, Donna 

J. Hostick, et al., Exploration of High-Penetration 

Renewable Electricity Futures: Vol. 1 of Renewable 

Electricity Futures Study (Golden, CO: National 

Renewable Energy Laboratory, 2012), NREL/

TP-6A20-52409-1. https://doi.org/10.7799/1255077. 

[2] Lee, Nathan, Francisco Flores-Espino, and David 

Hurlbut, Renewable Energy Zone (REZ) Transmission 

Planning Process: A Guidebook for Practitioners

(Golden, CO: National Renewable Energy Laboratory, 

2017), NREL/TP-7A40-69043. www.nrel.gov/docs/

fy17osti/69043.pdf. 

[3] ERCOT, Competitive Renewable Energy Zones 

(CREZ) Transmission Optimization Study: Attachment 

A (Austin, TZ: Electric Reliability Council of Texas, 

2008). http://www.ercot.com/content/news/presentations/2008/ERCOT_Website_Posting.zip.

[4] Katz, Jessica, Grid Integration Studies: Data 

Requirements, Greening the Grid (Golden, CO: 

National Renewable Energy Laboratory, 2015), 

NREL/FS-6A20-63043. http://www.nrel.gov/docs/

fy15osti/63043.pdf. 

[5] Katz, Jessica, and Ilya Chernyakhovskiy, Grid 

Integration Studies: Advancing Clean Energy 

Planning and Deployment. Greening the Grid

(Golden, CO: National Renewable Energy Laboratory, 

2016), NREL/TP-6A20-66504. https://www.nrel.gov/

docs/fy16osti/66504.pdf. 

[6] Arillaga, Jos, and Bruce Smith, Power and Energy: 

AC-DC Power System Analysis (Stevenage, England: 

IET, 1997).

[7] Milligan, Michael, Erik Ela, Jeff Hein, Thomas 

Schneider, Gregory Brinkman, and Paul Denholm, 

Renewable Electricity Futures Study. Volume 4: Bulk 

Electric Power Systems: Operations and Transmission 

Planning (Golden, CO: National Renewable Energy 

Laboratory, 2012), NREL/TP-6A20-52409-4. https://

www.nrel.gov/docs/fy12osti/52409-4.pdf. 

[8] Donohoo, Pearl, and Michael Milligan, Capricious 

Cables: Understanding the Key Concepts in 

Transmission Expansion Planning and Its Models

(Golden, CO: National Renewable Energy Laboratory, 

2014), NREL/TP-5D00-61680. https://www.nrel.gov/

docs/fy14osti/61680.pdf. 

[9] O’Neill, Barbara, David Hurlbut, Ivonne Pena, 

Douglas Gagne, Cook Jeff, and Ricardo Bracho, 

Mexico’s Regulatory Engagement in Bulk Electric 

Power System Planning:An Overview of U.S. 

Practices and Tools (Golden, CO: National Renewable 

Energy Laboratory, 2016), NREL/TP-5D00-66103. 

https://www.nrel.gov/docs/fy16osti/66103.pdf. 

Written by Nathan Lee and Clayton Barrows, National Renewable Energy Laboratory

The REZ Toolkit is a collection of resources to help power system planners, developers, key decision

makers, and stakeholders understand and use the REZ transmission planning process to integrate 

transmission expansion planning and renewable energy generation planning. For more information:

Jennifer E. Leisch, Ph.D. Nathan Lee, Ph.D. 

USAID-NREL Partnership Manager National Renewable Energy Laboratory

U.S. Agency for International Development Tel: +1-303-384-7241

Tel: +1-303-913-0103 Email: nathan.lee@nrel.gov

Email: jleisch@usaid.gov

The REZ Toolkit is part of the Greening the Grid technical platform, which addresses the

technical challenges around grid modernization and state-of-the-art practices in bringing 

advanced energy technologies into the power sector. Greening the Grid is supported by

the U.S. Agency for International Development.

greeningthegrid.org

nrel.gov/usaid-partnership

This work was authored, in part, by the National Renewable 

Energy Laboratory, operated by Alliance for Sustainable 

Energy, LLC, for the U.S. Department of Energy (DOE) under 

Contract No. DE-AC36-08GO28308. Funding provided by the 

United States Agency for International Development (USAID) 

under Contract No. IAG-17-2050. The views expressed in 

this publication do not necessarily represent the views of the 

DOE or the U.S. Government including USAID.

Learn more about designating the final transmission plan, cost-benefit analyses, and additional REZ process steps with the REZ Toolkit online at greeningthegrid.org.

NREL/TP-7A40-71005 • August 2018

TRANSMISSION PLANNING STUDIES FOR THE RENEWABLE ENERGY ZONE (REZ) PROCESS 4