A new report from Guidehouse Insights explores the current and historical spending levels on transmission and distribution (T&D) infrastructure in North America, and the rapidly changing drivers of grid investment that highlight the need for future spending increases.
As efforts to prepare for and combat climate change gain momentum, the energy grid occupies a unique space as the most important component of the solution—and a potential casualty. Reliability concerns are currently propelling short-term investments for aging grid infrastructure. According to a new report from Guidehouse Insights, the exponential deployment of distributed energy resources and intermittent renewable generation that is expected over the next decade will require a more sophisticated response capability than exists today.
“The US energy grid, like many around the world, is at the center of a significant transformation and poised for an influx of capital,” says Michael McConnell, managing consultant with Guidehouse Insights. “The importance of modernizing the grid infrastructure is reflected in recent federal spending bills, which put clean energy and grid infrastructure at the forefront of national priorities. Over the longer term, the electric grid will play a central role in facilitating the transition to carbon-free energy sources, and grid investments will be compounded by the need to serve growing electricity demand.”
Across the board, the system needs repair because of its age, hardening measures due to severe weather and external threats, modernization to increase efficiency, and a sizeable expansion to facilitate renewable generation growth. The age and condition of the existing T&D infrastructure is reflected in recent system performance metrics, which show a measurable decline in grid reliability. Recent trends show that spending on T&D infrastructure is increasing, but the rate of spending to date is significantly below what is required to build a resilient grid of the future, according to the report.
The report, Stakeholders Should Prepare for Significant Increases in Grid Infrastructure Spending, examines the current and historical spending levels on T&D infrastructure in North America, and the rapidly changing drivers of grid investment that highlight the need for future spending increases. It also breaks down the 2021 Infrastructure Investment and Jobs Act, providing context for the many potential funding sources for T&D upgrades. An executive summary of the report is available for free download on the Guidehouse Insights website.