By - Jim Vess

US faces a $177 billion funding gap in revamping aging power grid, engineering society says

Energize Weekly, December 6, 2017

The investments to overhaul an aging power grid, which is also under pressure to adapt to new technologies, are not keeping pace with the needs and face a $177 billion spending gap, according to the American Society of Civil Engineers (ASCE).

Transmission has become a priority item for utilities with expenditures up 16 percent between 2011 and 2016, according to an analysis by energy consultant ScottMadden, and investor-owned utilities have plans to invest $41 billion through 2019.

Still, ASCE in its Infrastructure Report Card calculates that between 2016 and 2025 the cumulative investment gap for the utility industry, including generation, transmission and distribution, is $177 billion.

“Without greater attention to aging equipment, capacity bottlenecks, and increased demand, as well as increasing storm and climate impacts, Americans will likely experience longer and more frequent power interruptions,” the report said.

The ASCE gives the nation’s energy infrastructure a D+ in its report card.

“Utilities face considerable pressure to cover maintenance and system upgrade costs through regulator-capped rate increases, and thus struggle to justify more reliable lines or make long-term investments,” the report said.

Most of the power grid was constructed in the 1950s and 1960s with a 50-year life span. In addition, the sector is moving away from the large centralized coal-fired and nuclear plants around which the grid was built.

The report noted that 40 percent of the new power generation in 2015 came from natural gas and renewable sources, saying it is “a trend that continues.”

“Reduced electric demand, changing delivery costs, and new regulations, including those focused on reducing environmental impact, have prompted transformations across the sector in recent years, with growth in natural gas, solar, and wind generation,” the report said.

The 640,000 miles of high voltage lines in the lower 48 states are at full capacity, across three interconnected transmission grids—the Eastern Interconnection, the Western Interconnection and the Texas Interconnection. Many lines are operating beyond their design, the report said.

“The resulting congestion raises concerns with distribution, reliability, and cost of service, producing constraints for delivering power from remote generation sites, specifically from renewable sources, to consumers,” the report said.

The report card also looked at the nation’s 2.6 million-mile network of oil and gas pipelines where there has been continued investment in infrastructure.

“Consumption of natural gas has increased by over 24 percent between 2005 and 2015 and continues to rise. Since 2013, oil and natural gas pipeline construction has continued at a fairly brisk pace to address new sources, with 2016 to 2019 construction expected to modestly increase over the previous five-year period,” the ASCE reported.

Nevertheless, a large percentage of high pressure natural gas transmission lines were put into operation before 1980, and there has been little investment in oil refineries, which have been operating at an average 90 percent capacity since 1985.

“Due to private ownership, national security concerns, and costs of service, there is limited public visibility into infrastructure investment levels and need across electricity, oil and gas, and alternative energy sources,” the report said. “Increased investment in alternative sources of energy for power generation, heating and cooling, transportation, and process industries is needed for a sustainable future, but investment in this area lags, principally due to a lack of federal energy policy.”

A survey of utility industry executives by the engineering firm Black & Veatch found that 60 percent of the respondents cited reliability and aging infrastructure as the major drivers of transmission investments.

The key challenges in making those investments are environmental and permitting issues, regulatory and policy uncertainty, and acquisition of land and rights of way.

Among the recommendations the ASCE makes are:

  • Adopting a federal energy policy that carefully assesses needed changes, including alternative energy sources, such as renewables and distributed generation, to provide clear direction for meeting current and future demands.
  • Streamlining permitting processes to facilitate prompt construction of critical new transmission lines and natural gas pipelines.
  • Developing a national “storm hardening” plan that considers investment in transmission and distribution lines, refinery and generation systems that withstand storms or that enable rapid restoration of energy supply after storm events.
  • Increasing new and rebuilt distribution lines’ minimum design loads for ice, wind and temperature to improve reliability and public safety, and reduce inconveniences associated with power outages.
  • Promote usage of remote sensing and inspection technologies to lower the cost of energy system monitoring; focus operation and maintenance spending on highest risk system components.
  • Implement performance-based regulations that mandate verification of pipeline integrity and increased investment in early corrective action for inadequate pipelines.

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