Fixing the US power grid: A challenge for 2023 and beyond

Lack of investment in the country’s transmission grids has become a huge roadblock to clean energy and reliable power. Will 2023 be the year things start to change?
By Jeff St. John

  • Link copied to clipboard
poles and  wires at an electricity substation
(Adrian Greeman/Construction Photography/Avalon/Getty Images)

The grid may be the weakest link in the chain connecting the U.S. to a clean energy future. 

Strengthening it to support the decarbonization of the country’s electricity system will take hundreds of billions of dollars of new investment, according to multiple studies. But money alone won’t be enough. It will also require a rapid evolution of the regulatory structures that determine how high-voltage transmission lines get built. Tricky regulatory issues include how to site the lines without running roughshod over landowner rights or harming the environment, how to speed up the construction process, and how to determine who should cover the costs.

That’s a highly complex and contentious set of challenges to take on. But the past year has offered more evidence that the grid we have today simply isn’t capable of doing what needs to be done. It’s not reliable enough to protect Americans from the rising threats of climate-change-induced extreme weather. It’s also not robust enough to support the massive growth in clean energy needed to combat climate change.

At least 2022 didn’t see any grid disasters on the scale of the one that left millions of Texans without power during Winter Storm Uri in February 2021. But both Texas and California were forced to take emergency action to prevent heat-wave-driven grid imbalances this summer, and grid regulators warned that summer and winter shortfalls could force utilities and grid operators to impose rolling blackouts across broad swaths of the country.

This worsening reliability situation is the result of rapidly changing conditions on both the supply and the demand side of the grid-balancing equation.

On the demand side, more frequent weather extremes of heat and cold are driving unprecedented demand for electricity to cool and heat homes, while the push to electrify transportation and building heating will add major new draws on the grid.

On the supply side, drought is sapping hydroelectric supplies and cooling capacity for thermal power plants. Hurricanes and floods are weakening aged grid infrastructure. Fossil-gas shortages threaten to leave some regions without adequate fuel for the gas-fired power plants that provide the marginal power to keep the grid running when other resources run short. Meanwhile, nearly half the country’s coal-fired power plants have been shuttered over the last decade — some due to climate-change mandates, but many more because coal increasingly can’t compete against cheaper alternatives.

There’s an enormous amount of solar and wind power under development across the country that could help make up for those losses. A growing share of this capacity under development includes batteries that can be used to store and shift that variable clean energy to when grids need it the most.

This map shows wind, solar and energy storage projects being developed or built in the U.S. as of the third quarter of 2022.
Map of wind, solar and energy-storage projects in development or construction as of the third quarter of 2022 (American Clean Power Association)

But if those clean-energy projects can’t be quickly and affordably connected to the grid, electricity shortages will become more likely in parts of the U.S.

The huge problem of grid expansion and clean-energy interconnection

Nearly 1,400 gigawatts of solar, wind and energy-storage projects are now backed up in U.S. transmission interconnection queues. That would be enough capacity to make the U.S. grid 80 percent clean by the end of the decade, according to an April report from Lawrence Berkeley National Laboratory.

But the prospects for this pipeline of projects actually coming online are growing increasingly dim. Over the last few years, the time it takes to secure an interconnection agreement for a new project has stretched from an average of 1.5 years to more than 3.5 years.

LBNL graph of rising wait times for projects to be approved for interconnection. The average duration was 3 years in 2021

What’s more, the LBNL study found that the costs of grid upgrades have soared. Five years ago, the upgrades needed to connect a new project to the grid usually cost less than 10 percent of a project’s overall price tag. Now that’s grown to as much as 50 to 100 percent of the project cost.

There are many reasons for these growing delays and rising costs, but the most fundamental one is that the grid isn’t being expanded quickly enough to absorb the massive growth in clean energy projects. New transmission lines can cost billions of dollars, and arguments between utilities and state regulators over how to allocate and share the costs of those projects make for a fraught and contentious process that can often stymie ambitious expansions.

Even if the powers that be can agree on how to share those costs, proposed transmission lines can face multiple legal challenges from every government entity and private landowner along its path, as well as from environmental and conservation groups worried about its impact. These challenges can take up to a decade to resolve and have killed off many of the most ambitious proposed projects over the past decade.

Clearing backlogs and curbing upgrade costs will take a lot of work on multiple fronts, grid experts agree. Many of the key challenges have been taken up by the Federal Energy Regulatory Commission, which regulates the regional transmission organizations (RTOs) and independent system operators (ISOs) that manage the transmission grids that provide electricity for about two-thirds of the country.

Over the course of 2022, FERC released a sprawling set of proposed regulations aimed at smoothing the processes for planning and building large-scale transmission and for managing the ballooning number of projects seeking to interconnect to the grid. Over the course of 2023, these regulatory efforts could end up creating new structures that lift some of the barriers to expanding grid capacity for clean energy.

ISOs, RTOs and state regulators are also undertaking reforms to transmission planning, cost allocation and interconnection that could speed and streamline the processes involved. But many conflicts remain to be resolved between state and federal regulators, between regulated utilities and independent transmission developers, and between proponents and opponents of altering regulatory and legal structures for challenging new transmission projects.

Even some of the biggest wins for transmission boosters over the past year will take many years to help resolve the bottlenecks that exist today. The agreement among stakeholders at the Midcontinent Independent System Operator to invest $10.3 billion in new transmission is expected to add about 53 gigawatts of interconnection capacity across its northern region, for example. But those projects will take six to eight years to build, and they could still face legal challenges.

Creating new transmission markets where they don’t exist 

That long lead time makes it vital that regulators take action today to prepare the grid for the clean-energy growth needed to reach the country’s decarbonization goals, proponents of renewables say. One path of action could be to expand the energy-market and transmission-planning structures that ISOs and RTOs manage for much of the country to the remaining parts of the country that don’t have them already.

As this map indicates, large swaths of the U.S. Southeast and West lie outside the ISO and RTO system, which was largely created in the late 1990s and early 2000s.

Map of U.S. grid operators overseen by the Federal Energy Regulatory Commission
The territories of major regional transmission organizations and independent system operators (Sustainable FERC Project)

Over the past few years, efforts to expand regional energy markets in the Southeast and West have picked up steam. 

In the West, dozens of utilities have joined the real-time energy imbalance markets” operated by California grid operator CAISO and the Midwestern RTO Southwest Power Pool. These markets allow utilities to buy and sell power amongst themselves to balance short-term shortfalls and surpluses, including the ebbs and surges of wind and solar power that might otherwise need to be curtailed. Both CAISO and SPP are working on expanding these real-time markets to include day-ahead trading, which encompasses a far greater scale of energy generated and consumed across their regions.

In the Southeast, a consortium of major utilities has created a similar energy-market structure that could offer the same kinds of benefits. That market officially launched in November and is expected to grow to include 23 utilities and other entities across 12 states when it expands next year.

But many clean-energy groups want the West and Southeast to move beyond energy trading and into the realm of transmission planning. They believe that’s a vital next step toward allocating capital to build the new transmission lines needed to meet ambitious nationwide clean-energy goals.

While many of the states within those regions haven’t set their own clean-energy targets, others have. These include Colorado and Nevada, where legislators passed laws in 2021 ordering state agencies and regulators to pursue membership in a regional transmission organization by no later than 2030.

Advanced Energy Economy, a trade group of companies with clean-energy goals, has been a big backer of expanding the scope of regional energy markets to include transmission planning. This summer, it released a report that found that an RTO covering 11 Western states could expand clean-energy capacity by up to 4.4 gigawatts and save states $2 billion per year in energy costs through 2030.

Getting all the utilities and states in a region to agree on how they’d share costs and cede authority over transmission planning to a newly created RTO would be a fraught and complicated process, however. Clean-energy trade groups including AEE have pitted themselves against the Southeast U.S. utilities that formed the region’s new energy market, saying that it won’t provide enough independent oversight to ensure that it promotes clean-energy development over protecting the fossil-fueled power plants owned by utilities in the region.

But as states are ramping up their supply of clean energy resources, grappling with extreme weather events and all sorts of other…challenges, including energy affordability, there is a regional conversation that is spurred around how do we better facilitate those energy resources,” Amisha Rai, AEE managing director, said during a December webinar.

How do we ensure better deliverability, better facilitation of the transmission lines that we have in the region, and better planning and coordination to ensure we’re building out that energy infrastructure in the best way?” she asked. Regulators, utilities, clean-energy developers and consumers eager for carbon-free power are increasingly engaging on these questions.

If you enjoyed this story, help us produce more like it. Donate to support Canary Media!

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.