One Big Beautiful Unintended Consequence: OBBB’s Impact on Grid Operations

The recent passage of the federal budget, or the OBBB, increases the urgency to deploy real-time situational awareness capabilities to the electric grid. While headlines have largely focused on impacts to renewable generation, changes in renewable development patterns will likely impact grid planning, and potentially grid operations as well.

More concerning, OBBB targets funding for transmission upgrades needed to enable grid modernization and flexibility. Together, these moves create persistent challenges for utilities that trickle down to ratepayers in the form of higher rates and lower reliability.

As funding for grid upgrades and repairs dries up, the grid will become more fragile and prone to outages, making real-time grid monitoring more important than ever. Deploying the right monitoring capabilities will help grid operators mitigate risk and improve outcomes for ratepayers and communities.

Shifting Renewable Development Patterns

On July 7, President Trump signed legislation that presents a significant challenge to renewable energy development and the ability for American utilities to produce low-cost, reliable power. The bill phases out investment and production tax credits, meaning wind and solar projects not placed in service by the end of 2027 will no longer qualify, unless they begin construction before July 4, 2026.

Senior officials have vowed to stiffen rules that constitute when construction starts, putting more pressure on developers to complete projects by 2027. The Investment Tax Credit (ITC) phaseout includes both the temporary 30% tax credit and the permanent 10% tax credit. New rules will deny tax credit eligibility to projects that use too many resources from Foreign Entities of Concern (FEOC), which is especially problematic given China’s outsized role in manufacturing solar and wind components.

These changes will force the industry to operate on an accelerated timeline and place as many projects as possible in service over the next two and a half years. Utilities, already under pressure to increase transmission capacity due to AI-driven demand, must expedite the interconnection queue to provision as much cheap power as possible before the tax credit window closes. With gas turbine backlogs extending 5+ years, utilities have no near-or medium-term options to meet projected demand growth other than maximizing wind and solar developments while costs remain low. This will likely lead to higher throughput on aging wires, causing grid components to wear out faster.

Reduced Transmission Investment

The U.S. already faced significant transmission funding shortages prior to passage of the OBBB. Forecasts show that transmission development needs to triple to adequately meet demand. Yet OBBB clawed back unspent funding from the Infrastructure Facilitation Program that had been established by the IRA to support large-scale transmission upgrades.

The law also defunds the $3 billion Electric Transmission Facilitation Program, a DOE financing initiative meant to accelerate new transmission construction. OBBB additionally repurposes DOE loan guarantee authority from decarbonization to a broader, “all-of-the-above” energy strategy, increasing competition for urgent grid upgrades.

Finally, the bill redirects hundreds of millions in EPA and DOE grants previously allocated to climate, resilience, and environmental review. This funding had supported new transmission planning and permitting, the most time-intensive phase of transmission development, often taking more than a decade to complete.

These changes shift higher cost burdens to utilities and ratepayers while creating uncertainty about which transmission projects are likely to receive approval. Energy investment could drop by as much as half a trillion by 2035, increase wholesale costs by 74%, and decrease grid reliability.

State-of-the-Art Grid Monitoring

As renewable developers race against a 2.5-year deadline and transmission funding is eliminated, utilities face an urgent need to extract maximum value from existing transmission assets while new construction stalls. The combination of accelerated renewable timelines and reduced infrastructure investment creates immediate operational pressures, challenging utilities to maintain reliability while keeping rates low. These constraints require cost-effective solutions deployable within months, not years.

Dynamic Line Rating (DLR) capabilities will be useful to maximize available production resources. As power grids operate closer to their operational limits and carry more load, wildfire risk increases while making every line fault more impactful; line-fault data can help mitigate that risk. The ability to detect grid-induced wildfires or nearby fires will also be essential for helping operators respond to mounting problems in a timely manner.

Modern fiber optic based monitoring systems provide these capabilities using existing infrastructure without requiring installation, power, calibration, or maintenance of third-party sensors. Using the existing optical fiber network strung across the grid, these systems can detect faults at the speed of light and locate them down to a power tower location. Creating more capacity on existing lines by calculating safe line rating, monitoring every power line span. The ability to quickly deploy and scale will help utilities act fast as they align with that 2.5-year deadline created by OBBB.

Utilities face mounting pressure from rising energy demand and policy uncertainty. Proven, cost-effective monitoring solutions can mitigate the worst effects, but deployment windows are narrowing. The time to act is now.