Utility Spending on the Electric Transmission System Quadrupled in 20 Years
U.S. electric utilities have dramatically increased the amount they invest in the electric transmission system. According to new data published by the U.S. Energy Information Administration (EIA), annual spending by major U.S. electric utilities on their transmission infrastructure has increased from just over $9 billion in 2000 to a whopping $40 billion in 2019. That’s right – the amount has literally quadrupled in only 20 years. So, what gives?
What is Driving the Growth in Electric Transmission System Spending?
The total pool of investment dollars analyzed by the EIA includes both investment in new transmission infrastructure as well as operation & maintenance (O&M) spending on existing infrastructure. The breakdown is roughly 60/40 in favor of new electric transmission system spending. Of the 40% that encompasses O&M spending, the vast majority was earmarked for transmitting electricity over power lines owned by other utilities or independent system operators (ISOs).
In terms of new transmission investment, most of the spending has been put forth for station equipment, poles and overhead power lines. The drivers for this spending include the need to replace old and/or failing infrastructure and reduce transmission bottlenecks, the desire to deploy storm hardening tactics and improve reliability, and the mandate to introduce renewable energy sources into the grid.
The EIA article highlights a few of the largest infrastructure projects contributing to the trend. For example, the Midcontinent Independent System Operator (MISO) spent $5 billion in 2019 and 2020 combined to replace aging equipment and add new lines, towers and substations.
Other large investments include a $1 billion project in 2019 from Pacific Gas & Electric (PG&E) and Southern California Edison (SCE) on wildfire mitigation tactics, and a $1 billion project by NJ-based Public Service Electric and Gas (PSE&G) on post-Sandy hardening efforts. And if President Biden’s infrastructure plan is deployed, you can bet this trend will not only continue, but accelerate over the next few years.
Overall, from an emergency preparedness perspective, the increase in the amount utilities are spending on their electric transmission system is encouraging. I’ll definitely be keeping a close eye on this trend going forward!
