Report: Electric Grid Requires Modernization to Accommodate Energy Transitions, Cost of Inaction Poses Grim Consequences for American Families, the Economy
September 1, 2020
New economic study finds that if investments in electricity infrastructure are not made, each American household is projected to lose $5,800 in disposable income by 2039
WASHINGTON, D.C. - The United States electric grid is undergoing significant changes and to accommodate this shift, significant investments in the grid are needed, according to a new report released today by the American Society of Civil Engineers. The report,"
Electric Infrastructure Investment Gaps in a Rapidly Changing Environment,"
finds that the United States is underinvesting in the electricity grid, which is projected to cause each household to lose on average $5,800 between 2020 and 2039. The West, with its major land expanse and large population in California accounts for 33% of the total national gap, while the Northeast and Mid-Atlantic regions-with some of the oldest infrastructure in the U.S.-account for 43% of the gap.
"Reliable electricity service is essential for every family, now more than ever. Even a momentary disruption of service is no longer acceptable, said K.N. Gunalan, "Guna," Ph.D., P.E., President, American Society of Civil Engineers. "The electric sector is moving in a positive direction overall, however, significant investments must be made to keep our grids secure and resilient for the future."
The energy sector has transformed since 2011, the last time ASCE conducted this report. Today, the U.S. energy grid is transitioning from a fossil-fueled central generation model to a more diversified and decentralized generation portfolio. In 2019, total renewable generation exceeded coal-fueled generation for the first time, a trend that is expected to continue. Electric vehicles (EV) are continuing to penetrate the market: EV charging stations within the United States has grown from 6,900 workplace, public and DC fast chargers in 2012 to approximately 61,000 by the end of 2017 for all vehicles. With coal plants rapidly retiring and being replaced mainly by combined cycle natural-gas fuel units, wind and solar energy are increasingly contributing to the overall generation mix. Resilience concerns are also driving infrastructure investment in the sector. Weather has always been the number one reliability threat, but climate change has accelerated the number and intensity of disaster and associated costs. These transitions require significant updates to our existing energy infrastructure and transmission and distribution systems must accommodate this shift by making significant investments in the electricity grid, which protects the economy, public safety and the environment.
The report also notes positive trends in the electricity sector. Over the last 10 years, there has been a significant uptick of investments in transmission systems as transmission investments increased from $15.6 billion in 2012 to an average actual and planned annual average of $21.0 billion from 2013 through 2021. Edison Electric Institute's (EEI) survey of its member investor-owned utilities and stand-alone transmission companies found that the surge in investment was related to providing access to clean energy and increasing the grid's reliability, security and resiliency. Spending also reduced congestion, eased resource pricing and helped to better meet current and future customer needs. The report also notes that recent investment appears to be sufficient to serve the existing system.
However, even with these investments, the U.S. is facing a $338 billion shortfall by 2039 in what is needed to ensure a reliable energy system. If adequate investments to replace and upgrade our nation's electric generation, transmission and distribution systems do not occur, costs (in the form of higher costs for electric power, costs incurred because of power unreliability or costs associated with adopting more expensive industrial processes) will be borne by both households and businesses. Interruptions in the form of power outages have also continued. Among 638 events reported from 2014-2018, severe weather was cited as the cause of 50% of outages, systems operations were responsible for 18 %of outages, and transmission disruptions/interruption, or unexpected failures in transmission, were cited as the cause of 32% of primary outage event causes. In 2019, a much higher percentage of transmission outages-46%-were attributed to transmission disruption/interruption.
"The time is now to properly invest in America's energy infrastructure. Inaction has cascaded from generation to generation, but the risk and financial implications this neglect has on the economy and America's citizens is rapidly coming into focus," said Martin Powell, Siemens US Chief Sustainability Officer.
sponsored the release event. "As the report underscores, immediate investment in distributed energy will drive a cleaner, more reliable and resilient energy system that will generate green jobs and lessen the future financial burden on businesses and each American household."
Today, businesses and industry sectors are becoming more interconnected, increasingly relying upon data centers to perform day-to-day functions and plan for the future. Momentary fluctuations such as voltage drops or surges impact the industries in various ways, and the cost of a data center outage has increased in recent years. In 2016, the average cost of a data center outage was $8,851 per minute, compared to $5,617 in 2010. The average length of a disruption was 95 minutes-only slightly down from the 97 minutes in 2010. While the duration of these outages has decreased, the average cost of data center outages has increased from $505,000 in 2010 to $750,000 in 2016. Rising incidences of voltage surges, and blackouts, and brownouts that disrupt production will add costs to businesses that will make U.S. manufactured products less competitive in international markets.
This analysis finds that unless investment in generation, transmission and distribution increases, the following notable economic outcomes are expected:
- Almost $637 billion in cumulative business sales (gross output) will be lost from 2020 to 2029.
- By 2039, the total output lost will be nearly $3 trillion, as demand for electricity rises amid industries' continued navigation of brownouts and voltage surges.
- Our cumulative GDP will fall by $394 billion by 2029 and by more than $1.7 trillion by 2039. Reductions to GDP reflects lost income for workers and business owners.
- By 2029, 287,000 jobs are projected to be lost; by 2039 the total will rise to 540,000.
A research team comprised of EBP, Downstream Strategies and the Interindustry Forecasting Project at the University of Maryland (INFORUM) worked with ASCE to develop this analysis. The first report in the Failure to Act series
"The Economic Impacts of Water Infrastructure"
was released on August 26 and may be found here.
For more information on ASCE's
Failure to Act
series, go to
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visitwww.asce.org
or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.