The United States economy is sprinting, adding 353,000 jobs in January — a 3.7% unemployment rate. The CHIPSHIPS +0.8% Act, Infrastructure Investment and Jobs Act, and the Inflation Reduction Act are spurring investment nationwide, leading to new green enterprises. Can the transmission and distribution network handle the increased traffic?
The electricity network is the American economy’s nerve center — the largely unnoticed vital organ that keeps commerce and everyday life healthy. The utilities or system operators running it must modernize and expand the grid to guarantee reliability and affordability. A growing economy will test the limits. But so will decarbonization, climate change, and adverse weather.
“We cannot take reliability for granted. We need to allow our utilities and transmission owners to make the investments necessary to modernize our grid,” says Gene Rodrigues, assistant secretary at the Office of Electricity at the U.S. Department of Energy, during a virtual web event hosted by the United States Energy Association in which I was a panelist.
The Energy Department’s mission is not to pick winners and losers. It’s to “buy down risk,” he adds. To that end, the department wants to know the economic obstacles to creating cost-effective technologies. If it can pare those hurdles down, it lets “the genius of the marketplace chase that through prices, direct funding, or collaboration.”
What makes up the bulk power system? Roughly 10,000 power plants, 170,000 miles of high-voltage transmission lines, and nearly 6 million miles of low-voltage distribution lines. It also has more than 15,000 substations. The White House says that for this country to reach its economic promise and hit its net-zero goals, the electric network must expand by 60% by 2030.
The Brattle Group says $2 trillion is needed by 2030 to modernize the lines.
For example, extreme cold weather — negative 40 degrees Fahrenheit in some areas — and wildfires have taken a toll on Portland General ElectricPOR -0.1%, which serves 2 million people. PGE uses artificial intelligence tools and 360-degree cameras to harden the grid to withstand freak weather events — investments with a short payback period.
Power Hungry Consumers
The region is also attracting both public and private investments. The federal government awarded the Confederated Tribes of the Warm Springs a $250 million grant to upgrade its constrained transmission line. Similarly, the federal government granted $50 million to a PGE-led consortium with Utilidata, and NVIDIANVDA +4%DIA +0.3%to improve reliability and grid management. The aim is to handle greater electricity demand and protect against cold snaps and wildfires.
“We expect rooftop solar across our region to explode due to the tax deduction in the Inflation Reduction Act,” says Maria Pope, chief executive of PGE. Ditto for battery storage and electric vehicles. “We’re seeing extensive new energy use,” pointing to semiconductor manufacturing. But new grid technologies will ensure reliability, adding that extreme weather events no longer appear every 20 years; they happen every two or three years.
The eastern United States must adjust to the same climate, energy, and economic transformation. The PJM Interconnection, which serves about 13 states in the East, said the electricity growth rate will continue through 2030. At the same time, it says the thermal generation — mainly coal — will continue to retire, and that will outpace the growth of alternative generation.
It adds that 40 gigawatts are at risk of retirement by 2030. It will get replaced by renewables at 94% and natural gas at 6% — if it gets built at all, given supply chain and regulatory issues. Meanwhile, PJM’s long-term load forecast shows demand growth of 1.4% annually over 10 years.
It is, therefore, working closely with policymakers so that utilities can bring on new electric generation before older and dirtier units are retired. Such coordination is not just critical to meet future demand. It’s valuable to prepare for winter storms or summer heat waves.
“If there’s any scheduled generation maintenance, we make sure to have all resources available to meet those peak demands,” says David Souder, Executive Director of System Operations at PJM. In January, he said the system operator sent 12,000 megawatts to neighboring states in the Southwest that were hitting “all-time peaks.” Expect more of that “as we move into these new extremes.”
The Best Grid Technologies?
So, what new grid technologies can ease congestion and facilitate more green energy use? Consider: Commercial and industrial energy customers announced clean energy deals worth nearly 17 gigawatts in 2022. That is record-breaking — 148 deals, said the Clean Energy Buyers Association. Some of the companies leading the renewable energy charge are Verizon, Ford MotorF +0.1% Company, and General MotorsGM 0.0%.
No doubt, the network must expand to meet that growth. However, upgrades may be the path of least resistance. That’s because they will be cheaper and faster to install. To that end, “reconductoring” is a solution — installing new conductor wires on the existing system so that it can carry more electrons.
Furthermore, commercially available software can efficiently order and dispatch renewable resources. The California ISO uses it, which analyzes the grid every five minutes to determine the lowest-cost generation to meet demand at the right time across state lines.
“The number one job is reliability,” says Jean Ryall, former Texas ERCOT board member. “At some point, affordability starts bumping into reliability and being able to take on these new technologies.” Grid congestion costs more than upgrades, so Texas’ Public Utility Commission has fast-tracked transmission projects.
The American economy is on a roll — growth that will continue and impact energy-hungry manufacturing and technology businesses. But such an expansion is not a given, and deviant weather patterns add to the risk: We must modernize, harden, and grow the electricity grid to ensure that newfound prosperity is possible.
Why A Smarter And Bigger Grid Guarantees Green Energy Growth (forbes.com)