Will COVID-19 be a boon for transmission infrastructure?
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- Jul 27, 2020 9:34 pm GMT
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When the COVID-19 pandemic made its way to North America in March—or at least when we realized it had arrived—many utility commentators rightfully worried that social distancing and the subsequent economic fallout would spell disaster for the region’s many transmission infrastructure projects. Luckily, it seems now that those worries were exaggerated. Despite some early pauses, most of such transmission projects have picked back up and, indeed, other new ones are coming into the fold. In fact, it’s starting to look like COVID-19 may prove to be a boon for transmission infrastructure.
As legislators and opinion makers begin to look past the current public health crisis to what’s sure to be a long economic recovery, many are wondering out loud what can be done in terms of policy to speed the whole thing up. A couple themes make regular appearances in these conversations: infrastructure projects and green energy. General infrastructure is pretty intuitive. It’s a straight forward job creator, and its benefits are obvious and apolitical. The U.S.A. really has a miserable infrastructure system compared to other developed economies around the world—have you ever driven on a Western European toll road? It’s heaven on earth.
Green energy, on the other hand, is more politicized in the U.S., but it’s a very popular economic stimulus source nonetheless. And recently, renewables have made bi-partisan headway. Just check out this letter that seven republican senators sent to Mitch McConnel last week.
How could transmission projects coincide with renewable and infrastructure economic stimulus initiatives? Well, to start, putting up power lines is just the kind of boring but reliable job creator that both Republicans and Democrats can often agree on in times like these—not so different from highways. What’s more, many utilities around the country already have developed transmission projects ready to go, they just need money and the green light. However, thanks to transmission lines’ integral part in transporting renewable energy, now such projects boast a kind of sex appeal that could get more progressive voters and politicians going, so to speak.
The connection I’ve laid out isn’t just a conversation topic in utility geek circles, it’s getting mainstream coverage. For example, the potential of transmission projects in the post-COVID recovery was the theme of a recent article in the L.A. Times. In the story, the author describes how transmission lines could ferry in a renewable revolution while providing much needed jobs:
“Building more power lines wouldn’t stop the spread of COVID-19. But energy experts say investing in transmission would put people back to work and help urban areas across the country ditch fossil fuels. The burning of those fuels not only drives the climate crisis, but generates lung-damaging air pollution that has been linked to greater likelihood of death from the coronavirus.”
Beyond the appeal of job creation and green energy adoption, there’s one other factor that could increase demand for conventional transmission projects: The COVID-19 crisis has significantly slowed the corporate adoption of micro-grids. 2019 was one of the biggest years ever for micro-grid installations, but 2020 is shaping up to be one of the slowest, according to a new study released by Wood Mackenzie. The same report predicts that micro-grid development will be negatively impacted by COVID over the next several years:
“Despite 2019 capacity beating Wood Mackenzie’s forecast expectations, the outlook through 2025 is more conservative due to coronavirus impacts.”
“Shelter-in-place orders and social distancing have already delayed permitting, engineering, construction and interconnection processes for developing microgrids. “While these challenges are being felt now, some developers have expressed concerns around originating new deals as some customers wait to see how the pandemic and recession impact their core business.”’
Viewed consequentially, even the worst tragedies in human history have had some positive effects. Maybe a more robust transmission network will be one of COVID’s unforeseen benefits.