Grid Infrastructure Investment Would Unlock Public Utilities Modernization

Published: September 21, 2021

SLED Market AnalysisAdministration TransitionArchitecture Engineering and ConstructionInfrastructurePublic Utilities

$28 billion was included in the bipartisan infrastructure bill for investment in electric grid infrastructure. This means that the impact on the SLED market of potential “grid transformation” will have to be in the capacity and modernization opportunities that are opened up for publicly owned power generators.

Toward these ends, the Biden administration has declared: “Through investments in the grid, we can move cheaper, cleaner electricity to where it is needed most.” Since taking office the administration has already rolled out more than $8 billion in investments in the western U.S. where recent heat waves, high winds, and blizzards have exposed the fragility of the current aging infrastructure.

However, in regard to the state, local, and education (SLED) market, it must be understood that nearly all of the “grid” (i.e., transmission and distribution infrastructure) is owned by the private sector—with the notable exception of Nebraska, which has a publicly- or cooperatively-owned infrastructure. As the National Conference of State Legislatures (NCSL) puts it:

Regardless of the exact numbers, investment (in the grid) will be needed to incorporate a more diverse energy supply, increase resiliency and upgrade infrastructure. Although many of these upgrades may require significant investment, many can result in operational savings while providing resiliency and other benefits. Technologies that increase knowledge of grid operations, for instance, can allow utilities to better balance fluctuating supply and demand, respond to outages, optimize resource use and increase efficiency.

The SLED power utilities market—while representing a small subset of the total national market—is not insignificant.  According to the U.S. Census Bureau’s "Survey of Construction," SLED power utilities (including electric, gas, and oil) spend between $6 billion and $8 billion on infrastructure in a given year.  This is roughly 10% of the national total.  The U.S. Energy Information Administration’s (EIA) has found that nearly 2,000 publicly owned electric utilities serve 24 million customers while more than 800 cooperatives serve another 20 million. (Click here for a map of public power utilities.)

Beyond operational enhancements, a transformed grid will allow public utilities and coops to participate in the major trend of decentralization power generation.  This is one of the drivers for changes in the electric power system as identified by the U.S. Department of Energy’s “Quadrennial Technology Review – An Assessment of Energy Technologies and Research Opportunities” (2015).

The growing penetration of variable generation resources, such as wind and solar, adds higher levels of non-dispatchable resources to the system. With more variable generation, transmission system operators require tools and resources to maintain reliability while addressing the need for short, steep ramps; the potential for over-generation—particularly with distributed generation where curtailment is not readily achievable; and decreased frequency response. (pp. 56-57)

So, for the time being, contractors doing business with public power utilities and coops  will have to expect business as usual in electric power generation until the proposed grid transformation makes possible more ambitious investments.