Money Won’t Solve America’s Power Grid Problems

Despite tens of billions of U.S. dollars earmarked for grid modernization, the United States continues to face challenges in making sweeping investments in upgrading electricity systems and making them more resilient to extreme weather. As heat waves and winter storms continue to test the reliability of the U.S. power grid, the modernization actions and investments are constrained by the shared federal and state jurisdiction over the systems, regulatory issues, and politics.

By some estimates, America would need $360 billion invested in transmission through 2030 and $2.4 trillion by 2050 in a “high electrification” scenario. Yet, it’s not only a matter of money, many analysts and industry consultants say. That’s because the U.S. currently lacks a national strategy that clearly defines the roles of policymakers, states, federal agencies, grid operators, and utilities in preparing the transmission system on a national level to handle a surge in renewable power generation, demand from EV charging, and the “electrify everything” drive at home.

“Today, oversight of the grid is the responsibility of a patchwork of federal and state authorities. The 2005 Energy Policy Act designated the Department of Energy’s Federal Energy Regulatory Commission (FERC) as the primary authority over power generation and transmission across the United States. However, jurisdiction of local-level retail power distribution, which actually delivers that power to end users, remains in the hands of state and municipal governments,” James McBride and Anshu Siripurapu of the Council on Foreign Relations (CFR) wrote in an explainer on the U.S. power grid last month.

Therefore, the push from the federal government for a massive investment in grid modernization and a major boost of renewable energy sources could be met with resistance at a local level.

“Resistance from states and localities can delay projects for years or even kill them altogether,” CFR’s McBride and Anshu Siripurapu note.

Romany Webb, senior fellow at the Sabin Center for Climate Change Law at Columbia University, tells CNBC, “The fact that we have this split authority between the federal government and the states is one of the factors that contributes to the complexity of the sort of modernizing the grid and building out additional infrastructure.”

Moreover, in states where public utility commissioners are elected officials, there is often pushback from those officials against expensive investments that would raise electricity bills for the people electing the commissioners, Webb told CNBC.

The NC Clean Energy Technology Center based in North Carolina said in a report last month that 549 grid modernization actions were taken across America in the second quarter of 2022. However, regulators approved only $478.7 million out of the $12.86 billion in investment under consideration, according to the center’s data cited by CNBC.

The regulatory and political issues make investments in the grid more complicated, which could delay much-needed transmission infrastructure updates and thus, push further the timeline of the clean energy goals, analysts say.

The grid is in dire need of modernization, the industry and experts say.

According to the North American Electric Reliability Corp (NERC), extreme weather, inverter issues, and cyber threats pose unprecedented challenges to the grid.

“Severe weather challenged the grid, putting resilience into focus,” NERC said in its 2022 State of Reliability report last month.

Another key finding in the report was that “Large geographic areas have become dependent upon renewable resources to meet peak loads and multiple instances of the loss of solar in Texas and California in 2021 confirm that unaddressed inverter issues increased reliability risk.”

Extreme weather and supply issues have resulted in more power outages in recent years.

U.S. electricity customers experienced, on average, just over eight hours of electric power interruptions in 2020, the latest available statistics from the EIA showed. That’s the most since the administration began collecting electricity reliability data in 2013.

To solve the reliability and security issues, the U.S. needs not only trillions of dollars of investment but also improved federal-state-local community cooperation and dialogue on who should do what to strengthen the resilience of the power grid in challenging geopolitical times.

By Tsvetana Paraskova for Oilprice.com