A couple of weeks ago I wrote a post about the cost of climate change. The current estimate is $196 trillion. That amount theoretically gets the world to net-zero by 2050.
I look at the number and roll my eyes. The chances of achieving that level of funding is, well, zero.
But the question the world should be asking is whether allocating that enormous sum is actually a wise financial decision?
Those of a certain age may remember the Fram oil filter – pay me now or pay me later – commercials from the 70s. The concept was simple – spend $4 for an oil filter today or hundreds - if not thousands - of dollars on an engine repair later.
The concept applies directly to climate change and to modernizing our electric grid.
For example: the Department of Energy currently estimates that power outages cost the U.S. economy $150 billion annually, and that doesn’t take into account the human toll.
A recent Grid Strategies report examined regional transmission operators (RTOs) data to estimate the cost to consumers of grid congestion. These costs result when there’s insufficient transmission capacity to deliver the lowest-cost power to consumers. To compensate for congestion, and keep the lights on, grid operators buy more expensive power from alternative sources. And guess who pays for that?
Grid Strategies puts that cost to U.S. consumers at $20.8 billion in 2022, up 56% from the previous year.
So what did the Inflation Reduction Act allocate for the grid?
A whopping $13 billion, along with $250 billion in loan guarantees for projects that reduce greenhouse gas emissions. Good luck jumping through hoops to apply for that money.
Joshua Rhodes a research scientist at the University of Texas at Austin believes it will be cheaper to upgrade the grid than to deal with the effects of climate change.
Now no one knows for sure, but with the escalating number of weather-related disasters, including heat waves and cold snaps, both of which directly impact congestion and grid performance – I’m guessing he will be proven correct.