Published on May 13th, 2016 | by Joshua S Hill8
Investment Gap In US Electricity Infrastructure Could Wreak Havoc
May 13th, 2016 by Joshua S Hill
Failure to increase investment in America’s electricity infrastructure could have massive consequences down the line, according to a new report.
A new report, published this week by the American Society of Civil Engineers investigating the infrastructure investment gap in a number of the country’s infrastructure sectors, has found that underinvestment in the electricity sector could have massive consequences down the line.
According to the report (PDF), the average annual investment gap for America’s electric generation, transmission, and distribution sector through 2025 is expected to decrease from $21 billion to $18 billion. The average annual investment gap through to 2040 is expected to show an overall average annual decrease from $30 billion to $23 billion (in 2015 dollars), with the total investment gap through 2040 now expected to be $565 billion, a cumulative investment gap of $177 billion through 2025, and $388 billion from 2026 through 2040.
“If we want our economy to thrive then we need to invest in its backbone,” said Greg DiLoreto, past president & current chair of the Committee for America’s Infrastructure, American Society of Civil Engineers, referring to the country’s entire infrastructure network. “Instead we’ve allowed it to live on borrowed time, and are paying the price of its inefficiencies every day.”
“The continued underinvestment into our transportation, energy, and water systems is hurting families and businesses. While there has been some recent legislative success, it unfortunately has not been nearly enough to modernize our ageing infrastructure.”
The report highlights the three distinct elements that make up the entire sector: generation facilities, high-voltage transmission lines, and local distribution systems. Built over the course of a century, the first two elements — America’s bulk power system — are today, “a complex, patchwork system of regional and local power plants, lines, and transformers that have widely varying ages, conditions, and capacities.” Furthermore, as the report continues:
“Regulations and policy are complicated and inefficient, leading to uncertainty from infrastructure owners in where and when to invest. As electricity is a subset of the broader reaching energy systems of the U.S., investment in the larger energy network is more significant than reported here but vitally needed.”
Based on current trends, the investment gap through 2025 is expected to be 22% due to generation, 24% due to transmission, and 54% due to distribution infrastructure. By 2040, the cumulative gap will reach $565 billion, with an annual gap in that year set to exceed $25 billion, which will mostly be due to projected shortfalls in generating capacity.
If such repeated underinvestment is allowed to continue, the costs on the country’s economy will be drastic, ranging from higher cost of electricity, costs due to power unreliability — as the “projected investment gap will lead to a greater incidence of electricity interruptions” — or costs associated with having to adopt more expensive industrial processes. Specifically, as costs to businesses and households increase, national GDP will fall by a total of $819 billion by 2025, and $1.9 trillion by 2040. The US economy will see 102,000 fewer jobs by 2025, and 242,000 fewer jobs by 2040.
“Because of the compounding effects of inefficient infrastructure, the economic effects are extraordinary,” said Steven Landau, Vice-President, Economic Development Research Group, Inc.
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