Moving electricity is getting more expensive
- Jan 19, 2022 9:34 pm GMT
It’s never been cheaper to produce electricity in the United States. And yet, much to the chagrin of us all, utility bills keep going up. That’s because while generating power is getting less expensive, the cost of transporting that power to consumers continues to climb. These two opposing movements were summed up in a recent article at CanaryMedia.com:
“Two trends are clear. First, the cost of generating power has declined significantly — from 6.8 cents per kilowatt-hour in 2010 to 4.6 cents per kWh in 2020, using 2020 inflation-adjusted figures. That’s due largely to falling natural gas prices and the growing share of power coming from wind and solar. With renewables making up the vast majority of new generation capacity, the generation share of utility costs is likely to continue declining over the coming decade.
At the same time, the costs of the infrastructure needed to deliver power rose from 2.6cents per kilowatt-hour in 2010 to 4.3 cents per kWh in 2020 — nearly equal to the cost of generating the power itself. Delivery costs have in fact been rising steadily since 1998, according to the EIA — an outgrowth of the need for new grid infrastructure to replace aging lines and equipment and accommodate new wind and solar power farms, as well as for new technologies such as smart meters to modernize the utility system. And according to multiple studies, the U.S. will need much bigger grid investments in future years to accommodate the massive growth in renewable energy that will be required to decarbonize the power sector.”
In most parts of the country, rising infrastructure costs have outpaced savings on the generation side. This inconvenient fact should inform policy relevant to future transmission development and related issues like solar net metering.
Most pressing, it would seem, is the country’s overall stagnation on transmission development. As it was pointed out in an Atlantic article last year: “Since 2009, China has built more than 18,000 miles of ultrahigh-voltage transmission lines. The U.S. has built zero.”
However, there have been signs over the past two years that transmission might be in for an overhaul. The Biden team has given us pretty explicit reason to believe they’re interested in transmission development. During a recent presentation of the American Society of Civil Engineer’s C- infrastructure rating last year, Secretary of Transportation Pete Buttigieg stressed the need for more investment in the country’s transportation, water and electric systems. He said he thought there was about a $2.59 trillion spending gap. Interest in transmission has also picked up in the mainstream press. After decades of articles on renewables, far off storage systems, and Greta Thunberg style heroics, big outlets have finally started to explain the grid’s bottleneck to their audiences and emphasize the need for more lines.
It’s also possible that other changes underway in our society will take some of the burden off our power lines. While the electrification of buildings and transportation threaten to overtax our grid, some commentators predict they’ll do just the opposite. Solar powered school buses with massive batteries pumping electricity back onto the grid when they’re out of use, for example.
Stephen Baker, co-author of Hop Skip Go: How the Mobility Revolution is Transforming our Lives (Harper Collins, 2019), had a similar message when I talked to him a couple years ago about his book. Asked what common misunderstanding he thought people had about the future of mobility and energy markets, he responded:
"The biggest one, I’d say, is that people tend to assume that new technologies will simply follow the patterns of the old. For example, today you drive around in a gasoline-powered machine, tomorrow it will be electric, and a decade from now autonomous. But you’ll keep following the same itineraries.
This isn’t the case. In the next stage of networked mobility, transportation should be far more efficient. Most of us have cars that are only in service 5% of the time. The rest of the time they’re parked. The idea for networked (and eventually autonomous) cars is to squeeze much more production out of them, most likely as a shared resource. This could dramatically reduce our consumption of energy. Then again, if transportation is cheap and efficient, we might use it much more capriciously, perhaps sending an autonomous car across town for tacos or croissants."
Let’s hope either that the Biden administration gets something done on transmission, or that the Stephen Bakers of the world are proven right. Because the status quo can’t hold for much longer.
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