U.S. Grid Struggles to Cope with Changing Times, Electricity Generation

With the constant unveiling of new “smart” devices such as adaptive thermostats, refrigerators decked out with cameras that can be viewed from your phone, lights and garage doors that can be controlled from across the country, and Amazon’s mystifying household helper Alexa, we get the feeling that our electricity system has evolved and matured to become better and smarter, making us more efficient consumers of power. Yet the system that underlies it all hasn’t changed much and is in fact struggling to keep up. Overwhelmed by shifting technologies, generation practices, and economic policy changes, the U.S. electric grid is beginning to feel its age.


Smart home devices are among the many smart technologies in a burgeoning private and public industry.

The U.S. electric grid is in some ways the largest machine in the world; it’s a series of interconnected and independent power production centers that network across the entire United States. The grid has evolved with and been built to cater to centralized energy generation, in which power is produced at dams and nuclear or fossil-fuel power plants and then transmitted on high voltage power lines to surrounding households.

In recent years, however, it’s become more popular for people or businesses to generate their own solar or wind power, and the grid has seen major increases in this type of energy production that it has not been optimized for. From 2015 to 2016, annual residential solar installations saw an increase of 150%, jumping from four thousand to ten thousand megawatts of capacity installed. The grid is old and in need of major investment to adapt to new, delocalized means of energy production. As of 2014, the average age of a generation plant was thirty years and the average transformer age was forty years—both built long before solar or wind energy were in any way relevant.

The grid is old and in need of major investment to adapt to new, delocalized means of energy production.

Deregulation and other policy shifts have further handicapped the grid. Prior to the early 1990s most electricity generation and transmission was handled by local, vertically-integrated monopolies that were tightly regulated by the government. Most demand shifts were handled locally to better control the direction and flow of energy to households. However, in 1992 the Energy Policy Act allowed the Federal Energy Regulatory Commission to separate transmission and generation in an attempt to promote competition and lower prices. Private companies became the generators of power and built fossil-fuel plants in far off places where it was cheap, and the utilities that were supposed to transmit this energy no longer had a consistent supplier, forcing them to go through the hassle of a bidding process to bring energy from the countryside to the cities.

Utilities had no choice but to transmit power long distances, and in an interconnected system, the direction and path taken by the electricity is difficult to control. This led to over-stressing of certain lines at unpredictable times, causing lines to shut off and divert that power elsewhere, potentially causing a chain reaction of failures that could lead to a blackout. This is exactly what happened in 2003 when a blackout of the northeastern power grid left many without power for several days, affecting 50 million Canadian and U.S. residents. At the time it was the second largest blackout in the world.

Updating the grid would cost $476 billion over 20 years, but is projected to save consumers $2 trillion in the same amount of time.

Now the growing popularity of residential or commercial solar installation has made things even more challenging because the age and disposition of the grid and the economics that govern it are struggling to cope with independent power producers. In a process called net-metering, independent power producers can sell back into the grid at retail price, which utilities don’t want because residences or businesses that produce power avoid the price of grid up-keep. Furthermore, as more people generate their own electricity and devices become more efficient, demand slackens, which forces utilities to raise prices and repeat the cycle in a process known as the “utility deathspiral.” However, grid parity (the point where going off-grid is cheaper than being on it) has not been reached, and so the grid is still essential to providing necessary electricity.

Paradoxically, the increasing availability of solar and wind sources has made investing in those sources less appealing. Before renewable technologies had any reasonable share of power production, utilities had a system of purchasing power on the hour from several independent companies, starting with the lowest bidder and going up until they had enough to satisfy demand, then paying all suppliers the same amount the highest bidder charged. Renewables have very low marginal cost because wind and sunlight are free, so they would always be the lowest bidder but rely on more expensive sources to give them a profit. However, as more renewables enter the sector, those top-end prices are coming lower and lower and making it harder for renewables to earn money to pay for their capital investments. An overhaul of this method is greatly needed in ever-expanding use of renewable sources.

Pricing issues and transmission difficulties have led the Department of Energy to invest $4.5 billion in smart grid technology since 2010. A smart grid would have many more monitoring devices to track the load on certain lines and would “talk” to a control system that could more effectively manage and divert power to prevent overloads that lead to blackouts. In the past, utility companies had to send workers out to manually check and monitor equipment; with a smart grid, the devices would constantly provide updates so that they could be continuously monitored. According to Reuters, updating the grid would cost $476 billion over 20 years, but is projected to save consumers $2 trillion in the same amount of time by increasing efficiency. At the current rate, funding is far too low for any significant headway to be made. Only incremental changes and demonstrations, but nothing on a large scale, are being pursued.

It will become more apparent in the coming years that major overhauls of the energy system are necessary, and that we’re way behind where we should be. Perhaps necessity will divert government funds, but it must happen sooner rather than later.

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