According to the most recent report in ASCE’s Failure to Act series, if the United States does not invest at least $11 billion a year in electricity infrastructure between now and 2020, businesses will lose a total of $126 billion and households $71 billion, not to mention the occasional blackouts and brownouts that unreliable infrastructure will cause.
People want the lights to go on when they flick the switch, and Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure
, the third report in the Failure to Act series, addresses a key question: what will happen if the United States does not change its investment practices in the area of energy infrastructure? The report estimates that the United States spends between $44 billion and $101 billion a year in energy infrastructure, and it predicts that if current trends continue the country will face a $107-billion electricity investment gap by 2020 and a gap of $731 billion by 2040. To avoid such dire consequences, the report recommends additional investment of $11 billion a year in electricity infrastructure.
Bluntly stated, the report says the $11 billion investment will protect 529,000 jobs, $656 billion in personal income, $496 billion in gross domestic product, and $10 billion in U.S. exports.
“Electricity,” says ASCE’s president, Andrew W. Herrmann, P.E., SECB, F.ASCE, “is the basis for a competitive U.S. economy and contributes to the success or failure of American businesses. Our quality of life also depends on access to affordable and reliable energy. We need to close the [electricity] investment gap to improve reliability, reduce congestion, and build a foundation for economic growth. Unless the investment gap is filled, electricity interruptions will rise, increasing costs for households and businesses. Interruptions will occur in the form of equipment failures, intermittent voltage surges, and power quality irregularities due to equipment inefficiency or blackouts or brownouts as the demands exceed capacities for periods of time. The periods of time [for blackouts or brownouts] can be unpredictable in frequency and length. Like our interstate highway system, failing to maintain adequate investment in this national asset has created congestion and the inability for power to flow efficiently from point A to point B.”
The report notes that in view of the extensive use of information technology, computers, and sophisticated electronics in the U.S. economy, the need for reliable electricity will become even greater. For the nation’s electrical system to function and keep up with load demand, facilities for power generation and for the transmission and distribution of electricity will have to be kept in good repair and modernized to meet the needs of homes and businesses.
The report warns that if investment is not increased to upgrade our nation’s generation, transmission, and distribution systems, the economy will suffer through the higher costs for electric power that businesses and consumers will face as a result of unreliability or the need to develop secondary or backup sources of power. To illustrate the point, the report notes that power interruptions could cost an industrial firm between $2,000 and $5,000 and a commercial business between $700 and $1,300.
“Let me complement ASCE for doing this report,” says James J. Hoecker, the senior counsel and an energy specialist for Husch Blackwell LLP and a principal of Hoecker Energy Law & Policy PLLC, of Washington, D.C. “I think this [report] is a public service and ASCE has shown in the past [with its 2009 Report Card on America’s Infrastructure
] a willingness to take a deep dive into infrastructure issues, which is difficult. This [publication] is a very important report for the public, and there is one very important message out of this: if we keep investing [in energy] as we are today, we’re headed for some serious financial and economic difficulties.”
Hoecker, who chaired of the Federal Energy Regulatory Commission from 1997 to 2001, notes that the supply of power in this country relies on an interconnected system with three main components: generation facilities, which include approximately 5,800 power plants; high-voltage transmission lines, which connect the generation facilities to distribution systems; and local distribution systems, which bring electricity to businesses and homes. “A lot of the transformers, lines, and towers that support the high-voltage network are as much as fifty to sixty years old, and we will need to upgrade them. Plus, the system is or has been fundamentally electromechanical and it needs digital updating,” says Hoecker. “I think the investment gap that we are facing is scary, and as a matter of fact [it] is a little more scary than the report indicates. We’ve got a congested system that keeps electricity costs artificially high and that translates into higher rates for consumers.”
Otto J. Lynch, P.E., M.ASCE, the vice president of Power Line Systems, Inc., of Madison, Wisconsin, says that there are three key factors that affect the reliability of electricity infrastructure: its age, its capacity, and its location in relation to the generation and consumption of power. Fifty to sixty years ago, he argues, people could go on with their day-to-day lives in the face of short-term power outages. Today, with information technology and the Internet, power outages exact a much higher toll on individuals and businesses. Furthermore, he notes, the existing transmission line system is being asked to provide capacity that goes beyond its original design.
“As an engineer, I would like to think of our [electrical] grid much like a water system, and basically all of our pipes are at full pressure right now,” says Lynch. “And if one of our pipes bursts for some reason, we have to shut off that line; that [in turn] just increases the pressure in the remaining pipes. And then another pipe is susceptible to bursting, and when that one crashes we have to turn that one off, and that increases the pressure even more [elsewhere in the system]. The next thing you know, we are in a catastrophic situation and we have to shut the whole water system down and that is a blackout. So what do we need to do? We need to put in new pipes or, in this case, new transmission lines and relieve that pressure not only to support the additional demand but [also] the growth [in power usage] that is coming. Also if [a transmission] line gets too hot [or] we have a transformer that fails, with these upgrades, the system can still work together.”
The report concludes that, without the $11 billion in additional investment each year, the United States will experience a combination of aging electrical equipment and capacity bottlenecks, raising the possibility of frequent power interruptions. It predicts that beyond 2020 Florida, the western part of the country, and the Middle Atlantic states will see the largest increases in electric power usage.
“The investment gap is not insurmountable to prevent these losses,” says Herrmann. “If we invest an additional eleven billion dollars per year from now until 2020, you can prevent these losses to households and businesses.”
The report was prepared for ASCE by the Economic Development Research Group, Inc., of Boston. This summer ASCE plans to release its final report in the series, which will deal with airports and marine ports. The first report, Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation Infrastructure
, dealt with highways, bridges, railroads, and mass transit. The second report, Failure to Act: The Economic Impact of Current Investment Trends in Water and Wastewater Treatment Infrastructure
, addressed the delivery of potable water and wastewater treatment. Click here
to find all three reports.