Make America (Electrically) Great Again: An Electric Infrastructure Plan For The Trump Team

05/09/2017 03:20 pm ET

Donald Trump – inevitable environmentalist?

This phrase seems unlikely given Trump’s rollback of much of the Obama Administration’s clean power strategy and the heated debate over whether the U.S. will remain part of the Paris climate accord.

Yet thanks to his focus on infrastructure, President Trump might end up doing the right thing for the environment – perhaps even despite himself – by taking steps to fix America’s rapidly aging electrical grid.

America’s electric grid, from the start, was designed to keep the states electrically separate. The result is a balkanized, wasteful, and inefficient grid, with neighboring states divided and functioning as separate colonies rather than an electrically joined United States. Today’s grid also fails to connect green sources of energy like wind, solar and hydropower to the population centers where this power is needed most.

This is all true despite the fact that the grid is the foundation of all modern infrastructure. The truth is that the United States has revolutionized other basic industries like telecommunications without giving the same consideration and resources to the electricity sector’s modernization.

However, The Trump Administration’s commitment to investing in infrastructure gives many of us in the business reason to hope and plan. In four steps, here is how we can modernize the U.S. grid so that it helps America grow.

First, create a targeted initiative to enable the grid to be the platform for electricity trading. This will ease the deployment of innovation in electric power technology, bring green power online, promote competition and increase grid resiliency.

We must identify new transmission links between previously under-connected regions of America, including new connections uniting the Eastern and Western parts of the country and Texas. Astonishingly, the U.S. grid is actually divided into these three distinct grids that are not connected and do not trade electricity with one another, as if there is an electrical iron curtain separating them. Even within these interconnects, there are separate regional markets operated by independent grid entities. This is a picture not of the United electrical States, but of a very divided country indeed.

The balkanized grid, with its arbitrary jurisdictional boundaries between states and regional markets, retards the roll-out of innovation and pushes green energy away. Outdated state and regional jurisdictional barriers prevent competition across states and markets and the savings and innovation that comes with it.

Second, pass new legislation dedicated to creating a more perfect electrical union, overseen by the new leadership appointed by the Trump Administration. Unfortunately, in the past many state regulators have focused on restricting electricity trade, and have been supported by similar efforts from the federal electricity regulator (“FERC”). These regulators have been more concerned about protecting vested interests than about maximizing the efficiency of the grid.

Third, accept the principle that over the long run, transmission connections between states benefit both sides. Today’s primitive and static “cost benefit studies” conclude that only one side of these connections wins. They ignore what really happens after a new transmission line between states and regions is built: markets adapt to the new cost paradigm and supply and demand continue to develop new forms of efficiency after markets are connected. As in other industries, better networks mean lower prices for consumers.

Fourth, the Trump team should eliminate the various rules from FERC meant to protect local generators from competition from other regions. The principle should be that the states and the federal government have a right to improve electric infrastructure even if that improvement causes some changes in the relative value of assets in the newly connected states.

Congress should create legislative authority for siting major electricity transmission lines that follows the authority it has already granted to siting major gas lines. The current policy discriminates against renewables and there’s no reason to treat these two types of energy infrastructure differently. The Administration should also require federal agencies to meet time limits on granting approvals or disapprovals for major electricity projects that link state or regional markets. Even for the most complex projects, 2 years should be sufficient. (Right now, the average time is ten years!)

The grid—as the life line to the modern world—deserves to be maintained, upgraded and expanded at the highest level of America’s engineering, economic and political capabilities. With a new administration at the helm, rapid innovation in the sector and fast growth in renewable sources of energy that our country needs, now is the time to radically change how we think about, build and regulate power in this country. Donald Trump, unlikely environmentalist, may be the best catalyst to make this happen.

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