Growing power consumption and the U.S. administration’s plan to rely more heavily on renewable generation sources will increase the demand on America’s already overloaded electricity grid and require major investment in transmission and distribution networks.
Upgrading power transmission and distribution systems is likely to cost as much as installing new generating capacity over the next 20 years.
While Congress provided an extra $4.5 billion of funding for grid improvements in the recent fiscal stimulus, federal loan guarantees and other support, far more investment will be needed if the administration’s targets for renewable generation are to be realized.
In its “Annual Energy Outlook 2009″ (AEO2009), the Energy Information Administration projects consumption will increase by 1,000 billion kilowatt hours (26 percent) between 2007 and 2030. The United States will need to install 259 gigawatts (GW) of new generating capacity to replace aging generators taken out of service (30 GW) and meet increased demand on the system (229 GW).
A report prepared for the Edison Foundation by consultants Brattle Group last year put the capital cost of capacity installation at between $500 billion and $1 trillion (depending on how much of the total is met by cheap sources such as coal and gas and how much by expensive sources such as nuclear, wind and solar). Click here for PDF.