How Could We Possibly Spend All That Money? The Electrical Grid Edition

If you remember back when the stimulus bill was being discussed, one of the claims made by many, including some so-called progressives, was that it’s really difficult to figure out how to spend a lot of money. Of course, I challenge you to find any politician who couldn’t spend the money–and most of those expenditures will be useful, not the proverbial bridges-to-nowhere. Well, here’s one way we could spend the money–the electrical grid (boldface mine):

Our grid is old. The average substation transformer is 42 years old—two years older than the designed lifespan of a substation transformer. For the most part, our grid hasn’t been modernized—it’s largely mechanical equipment operating a digital world, Clark Gellings said. Perhaps most importantly, the grid isn’t being prepared for the future.

”From 1995-2000, the electricity sector put less than ⅓ of 1% of net sales into research and development,” Massoud Amin said. “In the following six years, that number dropped to less than 2/10 of 1%. We are harvesting the existing infrastructure more and investing less and less in the future.”

…If we want the grid to work as well three decades from now as it does today, we need to put some money into it. Massoud Amin has estimated the cost of grid improvements. To make the grid stronger—adding more high-voltage lines and upgrading the existing ones—he says we need to spend about $8 billion a year for 10 years. To make the grid smarter—digital, centralized, automated, and with the kind of big-picture communication that helps us stop blackouts before they happen—it’ll take an investment of $17-20 billion a year for 20 years.

That sounds like a lot of money. That sounds completely undoable. And maybe it is. But Amin says you have to think about what you’re saving, as well. Remember how much the 2003 blackout cost us? Most blackouts that happen aren’t that big. They’re local things, that happen to your neighborhood, or your town, or your county. But they happen a lot. Depending on what part of the United States you live in, the grid averages 90-214 minutes of blackout time per customer, per year*. And that’s not even counting the blackouts that happen because of extreme weather or other disasters, like fires. All that downtime adds up. Amin says the average cost is more than $100 billion per year.

But it would be really hard to spend money. Sure, there could be problems if this led to misallocation or shortages of resources and people. But money, when you have a fiat currency, is not limiting.

Spend the damn money.

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2 Responses to How Could We Possibly Spend All That Money? The Electrical Grid Edition

  1. Newcastle says:

    The power grid is privately owned out here in the Great Basin. How do you suggest the tax money (from what source?) be given to the private utilities? Just write a check to Utah Power & Light for a few hundred million and tell them to spend it well? The infrastructure really needs the upgrades but a large portion of the populace will go nuts if you start dumping tax dollars into the coffers of a private for-profit corporation that could simply raise its rates to cover the required capital investments. Of course any time that someone proposes raising electrical rates to pay for grid improvements the general population goes insane. Think of the poor folks who won’t be able to pay their bills etc. It just isn’t that simple.

    • You have to work with regulators on this, but it can be done. The government works with private contractors all the time (e.g., most academic scientists). You can provide tax credits etc. for infrastructure upgrades.

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