Direct Energy Business
Market Data For Your Home Contact Us

What's at stake with America's declining infrastructure?

read | Share:

America’s infrastructure earned a D+ grade from the American Society of Civil Engineers in 2018. We came up short almost across the board, from public transit (D-) to drinking water (D) to our handling of hazardous waste (D+). 

When it came to energy infrastructure, the ASCE gave us a D+ grade, citing:

  • Aging transmission and distribution systems

  • Complicated repair and maintenance procedures

  • A general lack of preparedness for severe weather

Our energy grid needs a major overhaul. But what would it cost to get our grade up? And what could happen if we continue to ignore the problem?

What’s it going to take?

The simple answer is: funding. The ASCE estimates that U.S. federal and state governments will spend about $76 billion a year on energy infrastructure through 2025. That sounds like a lot, but it’s actually an estimated $18 billion or so short of our annual needs. That means we are short by roughly 20 percent of what’s required for our energy infrastructure to be in good shape.

So what does the $76 billion per year go towards? Federal funds (as well as private investment) are used for many kinds of energy infrastructure projects across the U.S. Here are some of the most common ones:

Generation Facilities

These are your bread-and-butter power plants: fossil fuel power stations, hydroelectric dams, and solar or wind farms (to name just a few). At these facilities, pressurized steam or other forces spin a turbine to generate electricity.

Building new generation facilities is key to a successful, sustainable future. As plants go offline or are no longer profitable, they need to be replaced. Energy technologies are constantly evolving – and becoming more affordable and sustainable. But future-proof strategies can be elusive when we don’t know what our tech will look like in 10 years (let alone 40 -- the average lifespan of an electricity generation facility in the U.S.). 

Which leaves us with the question, what’s the right investment for tomorrow to replace the retiring power plants of today? 

Although the U.S. is building new generation facilities (with an increased emphasis on wind and solar power in recent years), our older plants must continue to generate electricity in the meantime. If the overall demand for electricity is not met, or older plants go offline too often, we could experience more frequent and longer-lasting blackouts during high-demand periods (more later on how much that could cost American businesses).

Transmission Lines & Distribution Systems

There are 640,000 miles of high-voltage transmission lines that cross the continental U.S., connecting the Eastern, Western, and Texas Interconnection grids. Transmission lines are the tall towers which run alongside highways and support many cables over long distances. They transmit electricity from generation facilities to substations located nearer to population areas, where the electricity is then circulated to homes and businesses via a distribution system of smaller power lines (which can be either overhead or underground).

Although the ASCE notes that “funding is generally not an issue for building new T&D lines”, they also make the case that, for utilities, long-term investments are often only feasible through rate increases. Because rate increases are unpopular with energy consumers, utilities are left with a difficult choice -- either upgrade the grid and pass the cost on to consumers, or roll the dice with a less-reliable grid and hope that electricity demand and severe weather don’t cause widespread service interruptions. 

The long-term view, however, indicates that increased investment in our transmission & distribution systems is a must.

Pipelines

Pipelines transport oil and natural gas across the country, often covering vast distances. Altogether, the United States is home to about 2.7 million miles of pipelines, including gathering, transmission and distribution systems.

  • Gathering pipeline systems transport raw natural gas from production wells.

  • Transmission pipeline systems transport natural gas thousands of miles across the country.

  • Distribution pipeline systems deliver natural gas to homes and businesses through mains and service lines.

A 2017 story by Quartz pointed out that, counting workers at both the federal and state levels, the U.S. employs one inspector for every 5,000 miles of pipeline. With additional funding, that ratio (and other safety measures) could be improved -- a worthy use of funds given the sharp increase in new pipeline project proposals in the last two years.

Ports

The U.S. is exporting more natural gas than ever before. We run pipelines across our borders to Canada and Mexico (by far our two biggest gas customers), and since 2014 have exported LNG (liquefied natural gas) overseas. Importantly, our overseas exporting has ramped up dramatically since the construction of the Sabine Pass and Cove Point facilities in 2016 and 2018 respectively. Investing in the infrastructure to support and connect projects like these could be a wise use of infrastructure dollars.

What happens if we don’t invest?

The ASCE’s “Failure to Act” report from 2016 makes some rather troubling claims about the potential consequences of failing to close the investment gap in energy infrastructure. The report predicts that if we continue to spend at the same insufficient levels, over the next ten years (2016 - 2025) the U.S. economy will suffer:

  • $819 billion in GDP losses
  • $1.4 trillion in lost sales for businesses
  • Up to 102,000 lost jobs per year

And that’s only over the first ten years. If the problem persists, the report contends, the damage will only get worse. Without a significant increase to energy infrastructure spending, from 2026 - 2040 the economy is expected to see:

  • $1 trillion in GDP losses
  • $2 trillion in lost sales for businesses
  • Up to 242,000 lost jobs per year

The ASCE arrived at these figures by estimating the cost of events like blackouts to the average American business. EIA data suggests that the average energy consumer in the U.S. spent over 4 hours without power in 2016, (up from 3 hours in 2015). A lot can happen in 4 hours. Employees go home early or don’t come in at all. Manufacturing processes grind to a halt. Consumers don’t buy. Product stays on shelves. And while there are preparatory steps that a business can take ahead of time, often a blackout will strike without warning and with no indication of how long the outage will last.

The ASCE found that the average cost of a short-term power interruption was between $2,600 and $6,600 for industrial firms, while the cost was estimated to run, on average, between $900 and $1,700 for commercial firms.

Costs like these can be avoided if the country commits to getting its grades up. A grade of D+ isn’t working for anyone. So like every underachieving student has been told at one point or another in the course of their academic career: The potential is there -- let’s start applying ourselves.

Set your ZIP code and utility

Enter a valid ZIP code
Unfortunately, we don't currently service this area. Please try another ZIP code.

Loading please wait...

Don't see your utility?

We currently only provide service to the listed utilities. For question, please contact 1-888-925-9115.

Loading...

18.206.15.215