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The Grid End Game

June 26, 2017
Annual electric load growth has trended downward, but in the past decade investment in the transmission system has been continuously increasing.

In recent years, there have been numerous pronouncements about the upcoming demise of the bulk power grid as consumers are projected to move toward decentralized green energy sources. In 2010, the Bloom Box was going to provide power from a refrigerator-sized box to the masses. In 2013, David Crane, then CEO of NRG Energy, told Bloomberg that the electric grid would be obsolete in a manner and timeframe comparable to that in which cell phones have replaced land lines. The consensus at DistribuTECH’s 2015 Smart Grid Conference was that by the end of the decade one-third of the electricity supply could come from distributed energy resources.

We do not believe the end of the electric grid is near. Decarbonization efforts will likely be accompanied by increasing transmission expansion. In the last decade, low load growth in the U.S. has been accompanied by continued transmission growth. Annual electric load growth has trended downward over our lifetimes. However, in the past decade, investment in the transmission system has been continuously increasing. What is driving this growth in transmission?

New Generation and Retirements

The replacement of coal and nuclear generating units with natural gas plants located in different areas will likely call for additional transmission improvements. The switch in generation locations will make some paths less loaded, but will cause other paths to be more highly loaded. Furthermore, if there are considerable variable intermittent resources, the system must be built so that it supports multiple dispatch scenarios. This will generally call for greater transmission infrastructure.

Enhanced System Needs

Greater demands are being placed on the transmission grid. In the past, it was sufficient to plan the grid to serve the expected dispatch based on planned resources under peak conditions. Such planning would not necessarily be sufficient to allow economic redispatch under other conditions. Building a flexible system that allows economic dispatch under a variety of operating conditions is becoming a strong priority.

Aging Facilities

Much of our transmission infrastructure is old and requires upgrading and replacement independently from growth drivers. This includes replacement in kind as well as uprates for increased functionality, system hardening and the ability to meet increasingly stringent compliance requirements.

Standards Compliance

The North American Electric Reliability Corporation now enforces reliability standards that define reliability requirements for planning and operating the bulk power system. Standards have been developed in each of the areas of measurable performance, risk mitigation strategies and entity capabilities. In many cases, compliance with the standards, including those for Critical Infrastructure Protection, requires increased transmission investment.

System Hardening

Elements of system hardening programs being developed at utilities across the U.S. include vegetation management; flood hardening, particularly for substations; preparing for heat waves and dry spells; upgrading poles and structures with stronger materials; undergrounding; shortening span lengths; changing out wires; and investing in smart grid sensors. All of these efforts require additional investment dollars.

What Impact Is Green Energy Having on the Grid?

We believe adopters for rooftop solar will be primarily affluent suburbanites. Thus, the majority of increased solar usage is projected to be utility-scale and community solar. These installations generally require associated transmission investments.

Wind farms are utility scale and by necessity and desire, located in sparsely populated states. In fact, one-third of the transmission being built today is to connect wind zones to the grid. The “greening” of the power supply, rather than limiting the importance of the grid, will enhance the need for increased transmission system investment.

While, individual consumers may express the desire to go off of the grid, interconnections to the transmission grid provide a low-cost backup source, allow for energy exchanges and capacity sharing and also serve to enhance overall reliability. Grid connections have the capability to enhance the convenience, security, flexibility, cost, environmental responsibility and performance of localized power systems. Therefore, changes around power supply options that include more renewables and non-conventional technologies will likely include a major role for and potential expansions of the bulk transmission grid.

Our Energy Future

Increased reliance on the grid will be part of any future that depends more heavily on distributed energy resources and renewable sources of generation. Distributed resources require a strong transmission system. Increases in green energy are accompanied by increased investment in transmission. Let’s get real. The more we expect from our power systems, the more central the grid will be critical to our energy future.

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