Infrastructure bill offers a $30 billion down payment on upgrading the nation’s grid

Energize Weekly, November 17, 2021

The federal infrastructure bill signed by President Joe Biden this week, includes a nearly $30 billion down payment in grants and loan authorities to upgrade the nation’s aging and challenged electric grid.

There are about $17 billion in programs with direct funding and $12 billion in loan authorizations covering issues such as building new transmission lines, improving grid resiliency, upgrading cyber protection and adding new technologies.

“I view it as a good start and a decent down payment on what is going to be needed,” Larry Gasteiger, the executive director of the Wires Group, which advocates for transmission development, said to E&E News.

“It is going to require a moonshot effort for this to be successful. We’re moving in that direction,” Gasteiger said. “But we’re nowhere near where it needs to be.”

The Princeton University Net-Zero America Project has put the price tag for the transition to a clean grid at $360 billion over the next 10 years.

The challenge is twofold: rehabilitation and transformation of the grid, according to a report by the National Conference of State Legislatures (NCSL).

“Much of the nation’s network of electricity generation, transmission and distribution resources is aging,” the NCSL said. “Major upgrades will be needed to reliably incorporate new technologies and systems, changing market dynamics and shifting consumer preferences. Technological change is outpacing both infrastructure capabilities and policy development.”

The infrastructure bill takes aim at a range of these problems and in addition to the dollar values, sets out some new powers and roles for federal agencies – primarily the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) – to streamline grid development.

Among the bill’s major initiatives, which will run from 2022 to 2026, are:

• • A $5 billion grant program, run by the DOE, to support activities aimed at reducing adverse impacts on the grid from extreme weather, wildfire and other natural disasters. These programs can include weatherization, undergrounding lines, installing microgrids and vegetation management. Large utilities must match the grants dollar for dollar, smaller ones have a 33 percent match

• • A $5 billion DOE fund to upgrade the grid and ensuring reliability and resiliency, including innovative approaches to transmission, storage and distribution, as well as hardening infrastructure

• • A $1 billion DOE fund to aid rural and remote areas with reliability and resiliency issues, including the development of microgrids and upgrading transmission, as well as reducing greenhouse gas emissions

• • A $2.5 billion revolving loan fund in which the DOE will serve as an “anchor tenant,” entering into capacity contracts for new or upgraded transmission lines. The DOE will be able to sell its contracts once the line is deemed financially viable. The bill also appropriates $10 million a year to administer the program

• • A $3.5 billion smart-grid investment matching program for the deployment of technologies that provide flexibility in responding to natural disasters, rebalance electrical system, facilitate the aggregation or integration of distributed generation, such as rooftop solar, and support renewable generation

• • A $500 million program to provide technical assistance to state energy programs focusing on energy security, energy efficiency and state-led energy initiatives. Another provision requires state regulators to consider establishing rate mechanisms to allow utilities to recover the cost of promoting demand-response programs

The infrastructure act will also increase the borrowing authority of the Bonneville Power Administration by $10 billion for the construction, acquisition and replacement of the Federal Columbia Power System.

The bill also gives the federal government a greater hand in the planning and development of the electrical grid.

The FERC was given the power to issue permits for the construction or modification of some interstate transmission lines if a state withholds or denies approvals for the project, after entering into “good faith” consultations with the state and relevant non-federal entities.

The DOE was also directed to study capacity constraints and congestion when designating National Interest Electric Transmission Corridors, and the DOE was directed that in developing a framework to assess the grid’s resilience, it should collaborate with the Department of Homeland Security, FERC and the North American Electric Reliability Corp., which sets reliability standards for utilities.

The DOE will also create a demonstration project for “second-life” applications of electric vehicle batteries as aggregate storage installations providing services to the grid.