Why climate change will force a power grid makeover
<p>We can't fail in revamping the nation's power grid, but how are we going to pay for it?</p>
Superstorm Sandy gave us a preview of how vulnerable our power grid and fuel systems are to a primary fallout of climate change: extreme weather. As the event made clear, climate change adaption will force extensive changes to the U.S. power grid.
Public utility commissions, government planning groups, policy makers and utilities are in the process of identifying grid infrastructure that is at risk from more extreme weather. Each state will have unique and unavoidable impacts. Once grid vulnerabilities are identified, these weak points will need to be prioritized for upgrading, replacement, relocation or other "hardening" projects.
New York City Mayor Michael Bloomberg announced the Special Initiative for Rebuilding and Resiliency, which is charged with producing a plan for creating hardened infrastructure that can withstand disastrous future weather events. Much of the estimated $19.5 billion price tag would be spent on strengthening transmission and distribution lines, relocating vulnerable substations and generation plants and investing in more highly distributed generation and energy storage assets to "ride out" any service disruptions.
Midwesterners thinking climate change has no impact on their electrical grids should consider the 2011 springtime flooding of the Missouri River. This historic flood that inundated the Ft. Calhoun nuclear power plant won't be historic in the future. It will be routine as climate change increases winter and spring precipitation. The local utility already passed a 6.9 percent electricity rate increase to pay for plant repairs estimated at $200 million. These repairs likely won't cover future projects to reduce the facility's vulnerability to more floods occurring with greater intensity and regularity.
Ironically, the Midwest also will suffer more frequent and severe droughts due to climate change. U.S. power generation plants use enormous amounts of water, estimated at up to 40 percent of all freshwater withdrawals or 200 billion gallons per day. Climate change threatens existing generation facilities that may not have sufficient water in the future for their operations. The money to upgrade, harden, replace or relocate power generation, transmission and distribution assets will come from somewhere. Right now, that most likely will be the pockets of ratepayers.
Failure is not an option
American citizens should be alarmed. Our world-class economy and modern society cannot be sustained with our current infrastructure.
The American Society of Civil Engineers (ASCE) recently pointed out the deplorable state of our existing assets in the 2013 Report Card for America's Infrastructure. We collectively depend on systems that earn a cumulative D+ grade. The American energy infrastructure, which includes oil and gas production and distribution and electric grids, received a D grade. The D grade is defined as "infrastructure in poor to fair condition and mostly below standard, with many elements approaching the end of their service life. A large portion of the system exhibits significant deterioration. Condition and capacity are of significant concern with a strong risk of failure."
The report contains telling statistics. Significant power outages climbed from 76 in 2007 to 307 in 2011. Most occurred in the distribution grid. Congestion also has increased as demand outstrips the capacity of existing transmission and distribution lines to carry sufficient electricity. The traditional answer has been to build more centralized, large-scale generation plants and string miles of transmission lines to address these capacity issues.
This is illustrated by utility investment. Despite the number of smart grid projects in the distribution grids across the U.S., the ASCE pegs the investment gap between now and 2020 at $57.4 billion. We are underinvesting in the distribution grid that already experiences the most service disruptions. In contrast, investment in transmission infrastructure has been increasing at a respectable 7 percent since 2001. However, the ASCE report points out that build-out of new transmission lines is fraught with problems that range from costs to obtaining necessary permits to gaining concurrence from local residents who may see the power lines but not the benefits.
The report accurately diagnoses how dire the situation is for the nation's electrical grids, but their recommendations for the energy sector put too much emphasis on transmission investments as a solution. A continued reliance on centralized generation and the relative fragility of high voltage transmission lines is completely out of alignment with the growing acknowledgement amongst regulators, political leaders and industry that grid resiliency is not addressed this way. Climate change adaptation planning recognizes that investment needs to be focused in distribution grids. Policy makers and planners should heed suggestions to decrease dependence on fossil fuels and increase energy efficiency through improved technologies and consumption behaviors.
The report card's summary recommendations also make sense:
• Increase leadership in infrastructure renewal: Agreed, but we also need revisions and upgrades to inject resiliency into the grid.
• Promote sustainability and resilience: Agreed, but we need to emphasize solutions that are sustainable to protect our natural environments, such as renewable energy sources. That's been ignored for too long, and the result is climate change. We need to promote resilient designs and technologies into the grid, particularly at the distribution level.
• Develop and fund plans to maintain and enhance America's infrastructure: Agreed. We need consistent, reliable and cost-effective funding sources so federal, state and local projects can be completed. We can close the $57 billion finance gap by recognizing that resilient distribution grid-based solutions that harden the grid to withstand more extreme weather events caused by climate change are the smartest strategic investments. That's the most effective way to go from a D grade to an A+.
Closing the finance gap
How will we pay for this? Climate change adaptation plans to harden our electrical infrastructure will be unavoidable and expensive. The grid needs to be upgraded anyway, providing a momentous opportunity to re-architect our electrical grid to last another 100 years. As a society, we cannot tolerate disruptions to our economy nor reductions in safety and quality of life measures from a power grid that lacks resiliency and reliability.
The shortfall is huge. The ASCE estimates we're underinvesting in the distribution grid by $57 billion. That's based on simply updating existing grid infrastructure, not hardening the grid through asset relocation, resiliency strategies and upgrading infrastructure to withstand extreme weather events caused by climate change.
Utilities can develop short- to long-range plans to upgrade infrastructure, but they don't have unlimited budgets and their actions sometimes are limited by regulatory policy. Right now, the only answer is that the money comes from the pockets of ratepayers or local taxpayers. But adapting the grid for climate change reasons isn't always caused locally. It's a nationally shared responsibility because of our use of fossil fuels.
So how do we fund the multi-billion investments needed to adapt our electrical infrastructure to climate change? I suggest we create a federal Grid Resiliency State Revolving Fund program to finance projects.
The U.S. government now funds drinking water infrastructure projects for publicly and privately held water agencies through the Drinking Water State Revolving Fund program. A similar model could work for grid resiliency projects responding to the negative impacts of climate change. State involvement helps ensure that funds are targeted to the infrastructure projects that reduce the most grid vulnerabilities caused by climate change. The program can accommodate investor-owned utilities, publicly owned utilities and rural coops.
Of course, there's the challenge of finding the money to fund such a program. Here are two ideas:
1. Structure resiliency bonds modeled on the successful war bonds program in World War II, which raised $185 billion for the war effort from 85 million Americans. These bonds are private loans to the government with a guaranteed interest rate and payout upon maturity. The bonds, which would be used for climate adaptation projects for the grid, could be made available in small to large denominations, making it easy for everyone to participate.
2. Eliminate the $4 billion annual federal tax credits, subsidies and other special treatments given to the fossil fuel industries, transferring that recovered money into the Grid Resiliency State Revolving Fund.
The Revolving Fund project qualifications should give priority to deploying distributed energy resources (DER) and renewable energy sources in distribution grids to deliver grid resiliency. Architecting multiple new sources of clean energy into the distribution grid reduces greenhouse gas emissions and grid reliance on a few centralized energy sources. DER also facilitates new sources of capital willing to invest and take the full financial risk burden away from utilities.
These tactics can go a long way to mitigating the worst impacts of climate change to our economy and society.
Editor's note: To learn more about the smart grid and the convergence of sustainability and technology, be sure to check out VERGE SF Oct. 14-17.
This is a condensed version of a three-part series that originally appeared at Smart Grid Library.
Storm image by B747 via Shutterstock.