Editorial from the Bloomberg Opinion editorial board
The sharing economy, from taking Uber rides to uploading our lives to the cloud, seems so 21st century. But electricity has been all about networks since 1909. That’s when Thomas Edison’s protege Samuel Insull began tying farm towns into his nascent Chicago grid. He found that by serving different patterns of demand, shared generating stations could deliver more power, cutting the price of modernity for everyone.
This founding principle should be rediscovered — both to fight climate change and to make energy supply more resilient.
The Biden administration has called for a zero-carbon grid by 2035. It’s a stiff challenge, one that would require years of sustained effort uninterrupted by changes of political control in Washington — and the cost would run into trillions. But the goal is right, and settling for the status quo really isn’t an option. The question is how to make progress toward carbon-free power as quickly and as cost-effectively as possible. And part of the answer is renewed attention to networks.
The grid has a less recognized role in fighting climate change. An example: Virtually all U.S. onshore wind-power potential and more than half its solar potential lie in 15 states between the Rockies and the Mississippi (including Texas). Yet those states account for less than a third of U.S. electricity demand. Linking those clean resources with demand elsewhere in the country is critical to cutting emissions. Tying intermittent renewable sources together over larger areas also enhances resilience: Wind farms hundreds of miles apart spin at different times but supply the same grid.
As Insull discovered more than a century ago, networked power sources also enjoy higher utilization, reducing the cost of each kilowatt-hour. In a report published last August, researchers modeled linking the separately managed southeastern grids under a single regional operator. Their conclusion? The move would save consumers almost $400 billion by 2040 while cutting carbon emissions roughly in half.
The economic aspects of interconnection are straightforward, but its regulation is not. Reforms since the 1990s have brought about two-thirds of U.S. electricity consumers under competitive wholesale markets, some of which span multiple states. Yet the Federal Energy Regulatory Commission’s push for further integration and regional planning has met local resistance and stalled — in the process, slowing efforts to address climate change. For example, at the end of 2019, some 734 gigawatts of proposed generating capacity — most of it in the form of renewables or storage — languished in queues awaiting connection.
The promise of new federal investment in a more connected grid might persuade states to cede some planning authority.
A green grid is a giant investment, making it an easy target for opponents. But the benefits greatly outweigh the trillion-dollar costs — and tapping the scale economies of networks would maximize the return on private and public money spent. What was true a century ago, surprisingly, remains true today.
