A new AC power transmission line costs $1.5/kW-km in capex, and must charge a spread of 1.5 c/kWh per 100km to achieve a 10% levered IRR. Today's model contains a granular cost breakdown and some observations.

Cost ranges are very broad, running from $100M to $2bn, over distances of 50-825km, and power ratings of 300-3,600MW. This is why we have built a granular model, going line by line, to stress-test all of the variances.

Higher-power lines are most economical, as raising voltage only inflates the costs of towers/structures, which are only c30% of total costs; and raising current only inflates the costs of conductors, which are c10% of costs.

Generosity? Our base case numbers are likely on the generous side, and capex costs can easily come in at $2-3/kW-km by flexing model inputs. Each $0.5/kW-km in capex impacts the cost of transmission by 0.2 c/kWh.

Timelines are a bigger challenge than capex, as the average project in our file took 8-years to plan then 3-years to construct. Hence it may take a long time to resolve grid bottlenecks or bring power in to new AI data-centers.

Resiliency. Power transmission is highly strategic infrastructure. Buried/trenched lines are even more resilient, but can cost 5-20x more than the overhead lines whose costs are tabulated in this model.

Thank you for reading our emails Chris. We are always happy to field questions via email, so message us any time.

Any Chron colleagues would be welcome on our distribution list. And in case we can formally help Chron, here is how we work with our clients.

Rob West, CFA, Analyst & CEO, Thunder Said Energy
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