As an industry, are we building into the past and not for the future? The over-hyped electric transition is occurring right before our eyes and yet the dynamics are not being recognized in the technological and infrastructure investments being made today by utilities.
- One hundred years ago there were 420,000 miles of railroads across the United States. Every major American city (and most mid-sized cities) had trolly lines, and railroads competed openly for freight and passengers. In 2024, there are fewer than 120,000 miles of track, and save for San Francisco and New Orleans, the trolley systems are no more. Even subways, where they exist, are losing money and ridership. More than 95% of American households have an average of 2.5 vehicles for a total of 290 million cars as compared to only 22 million people that rode a train in 2022.
- The advent of the mainframe computer grew out of World War II; and by the late 1980s, monitors began showing up on desks with dumb terminals. By the 1990s, personal computers were in vogue; today the world has moved to “the cloud.” The human genome project was not solved by a supercomputer—but a multitude of different distributed computers. And today, there are 480 million desktop computers, mobile computers, and tablets in the U.S.
- One hundred years ago there was a single telephone company with one-third of American households connected, usually with party lines. All were tied via switchboards, employing operators and central lines. Up until 1978 everyone was connected through the same company. Today, only 27% of U.S. households have a landline and there are 310 million smartphones in use served by 855 wireless telecommunications carriers.
- Cable television began (believe it or not) in the 1950s, and by 2000, was the predominant way Americans watched television programs. MASH’s finale in 1983 was the most watched episode in history with 106 million viewers. The final episode of Yellowstone, the most widely watched series of 2023, garnered seven million viewers across multiple venues. Today, cable companies are going out of business.
What happened to the railroads, computing, telephony, television, and everything else in society? Simple: hyper-localization and distributed resources. No matter how much more efficient rail is, whether it is more cost effective to operate a telephone system from a single company, the reality that millions do not use the full benefit of their computers, or that there are hundreds of ways to watch television programs, the end point is the main point.
Why then, as an industry, is the primary focus on transmission in the era of closing central power stations and an explosion of technologies at the edge of the grid? Are we building rail lines for trains that will never come?
In full disclosure, I support building transmission and spent eight years running one of the largest transmission systems in the world—the Western Area Power Administration with a 1.5 million square mile footprint. I love big iron. But, as we all know, transmission is a multi-decadal proposition at best and projects take billions of dollars to complete. For all new transmission, “hoping” it gets built is not a strategy when the end consumer is moving away and there are serious decarbonization goals to be met in an era of increased electrification. The National Renewable Energy Laboratory, or NREL, estimates 91,000 miles of new transmission needs to be constructed by 2035 to meet current decarbonization goals. Compare this with 670 miles of new line built in 2022.
We need to focus efforts on the distribution segment of the utility business as the solution, not to just reach the end consumer but to become the network provider and to take advantage of investments being made at the edge of the grid. Thinking that the world will continue to operate in a linear fashion—central generation to transmission to distribution to the meter—is as dangerous as thinking all computers will be physically linked to mainframes or that calling someone requires connections via hard wire strung on “telephone poles.”
Expanding edge-of-grid technologies are occurring at a rapid rate and many are not currently in the control sphere of the utility. This represents a significant challenge—or a tremendous opportunity. Whether it is solar, batteries, electric vehicles (EVs), or industrial process equipment, the opportunity exists to manage these assets in a new light. The industry has a choice: either let the opportunity slip by or complain about the edge-of-grid technologies creating issues for the systems.
EVs and solar inverters are a prime example of technologies that may be vilified for the potential to create problems on the grid when they should be welcomed with open arms. The current narrative, especially for EV naysayers, is that circuits will be overloaded and transformers will burn up in a Ralph Breaks the Internet way. Direct experience here at United Power has been the opposite since engineers analyze all transformers each week to understand loading. There has been a huge uptick in EVs (roughly 6,000 total in the United Power service territory) plus nearly 11% solar penetration, and yet, transformer failure due to overloading has dropped to near zero.
The vision for the role of electric distribution needs to change in both the short and medium timeframe and investments properly apportioned. It may just end up being the long-term solution as well—especially when coupled with storage.
The era of large central stations is over. This is not a philosophical choice but a practical one. The tolerance for multi-billion-dollar facilities of any kind has become impossible. And, with this, so has the concept of solely relying on transmission as the solution. To be clear, I personally believe the nation would be best served with 50 large nuclear plants and small modular reactors as well as 765 KV transmission lines crisscrossing the countryside. But the practical reality is that will not occur, even if funds are unlimited. Certainly, hydrogen holds promise and hydropower remains a stalwart backbone in much of the West. But even as hydrogen appears to be a possibility, the timing is off; and new hydropower—or even keeping some existing facilities—is not happening in the U.S.
The industry can wring its hands over reliability and resilience, or it can step up, as it has always done, to embrace edge-of-grid and hyper-localized solutions. Consider the 140-year evolution from oil to manufactured gas to coal to nuclear to natural gas and now renewables. Every utility generation has embraced an invigorated technology-based future and the time to do so again is now.
Sadly, there is an ongoing negative narrative being promulgated by some in the industry that the only way to assure a reliable future is to retain coal as a fuel source. Even if carbon capture technologies prove in time to be effective, the cost implications are significant. And, in some parts of the nation we are out of time.
Appreciating Yogi Berra’s quote (also attributed to Danish physicist Niels Bohr) that “[i]t is difficult to make predictions, especially about the future,” there are certain megatrends that will occur in the electric industry that should guide us for the future:
- The distribution system will be either the fertile ground or battleground for investments to support a reduced carbon, more consumer-centric and highly reliable network.
- The edge-of-grid technology is advancing far more rapidly than the transmission system and central generation can or will. Batteries, solar panels, electric vehicles, and intelligent system management deploying computing and communications will occur regardless of the incumbent utility’s desire to slow down their advancement.
- The tried-and-true economic models will not hold up in a world of options. The weight of utility-scale operations—even if more efficient from a scale perspective—presents a challenge in a distributed universe. Higher fixed cost financial models will lead end users, especially industrial/commercial, to seek their own solutions. Amazon is the largest purchaser of clean power in the world buying 10.9 GW of green power in 2022.
- The electrification of everything cannot wait for new transmission, especially in the western United States.
What, then, should utilities be doing?
- Become distribution system operators. Simply put, this requires taking an integrated approach to managing and operating utility systems agnostic as to fuel choice and location. Think mini versions of an independent system operator/regional transmission organization (RTO), taking care of their local needs first and then hooking to the broader network only if needed.
- Free themselves from the bonds of their existing financial models based on assumptions that no longer are valid. Third parties will manage finances like pork bellies are today in markets. For those with state regulation, begin the conversations now for this new fiscal reality.
- Create seamless integration of all resources through technology.
- Allow markets (e.g., RTOs) to act as the air traffic controllers for the limited large-scale generation that will exist in the future.
The future is already here…it’s just not widely distributed yet. As astrophysicist Adam Frank of the University of Rochester and Marcelo Gleiser of Dartmouth College commented in a recent New York Times op-ed when referring to discoveries by the James Webb Space Telescope, “We may be at a point where we need a radical departure from the standard model, one that may even require us to change how we think of the elemental components of the universe, possibly even the nature of space and time.”
That time may have come for the electric enterprise as well.