Who should pay for grid modernization?
Nilsen, Ella. White House announces actions to modernize America’s electrical grid, paving the way for clean energy and fewer outages. CNN, 2024 May 28.
The article discusses the initiative announced by the White House and DOE in the spring 2024 to modernize the grid in an effort to reduce power outages and increase transmission capacity. One major problem is that there is more electricity from solar energy waiting to get on the grid due to insufficient high-voltage transmission lines. To solve this problem, a new rule was approved by the Federal Energy Regulatory Commission that encourages utilities and grid operators to expand regional transmission capacity. In addition, the government plans to provide technical and financial assistance in the form of grants and loans to state governments to increase transmission infrastructure.
Utilities and governments should fund grid modernization collectively as both groups could benefit from a more efficient and resilient grid to handle increasing energy demand and withstand extreme weather events. Policy and market failures may affect such projects. If government policies and regulations do not align with investment in grid modernization, utilities may prioritize short-term profits over grid stability. The government, as a major consumer of energy, has an interest in a resilient grid and can address market failures through monetary incentives and direct funding.