By 2030, electric vehicles
are forecast to make up over half of all new cars sold
in the U.S. That could put a big strain
on our nation's electric grid, an aging system that
was built for a world that runs on fossil fuels. Electricity demand across
the United States is really expected to increase in
coming decades, somewhere between 14% and 19% by 2030
and between 27% and 39% by 2035. Over the past decade, demand
only increased by about 5%. But now "electrify
everything" has become a strategy and a mantra for
the clean energy movement, calling for the
electrification of transportation, but also of
space heating for homes and offices, household
appliances like stoves, and to the extent possible,
processes like iron, steel and chemical production.
About 60% of electricity generation in the U.S.
still comes from fossil fuels, and so electrifying
all of these sectors isn't a climate solution unless we
also invest in a major buildout of renewables. So you electrify as many
things as possible and you then decarbonize the supply
of electricity, and in so doing, decarbonize the
economy. That happens to be
happening at the exact same time. So we have both supply side
and demand side drivers of big grid needs. That means we need major
changes to the grid. More high-voltage
transmission lines to transport electricity from
new wind and solar power plants to the areas where
it's needed most, smaller distribution lines and
transformers for last mile electricity delivery, and
hardware like inverters that allows customers with home
batteries, EVs and solar panels to feed excess
electricity back into the grid. But it's not going to
be cheap. In a study commissioned by
the California Public Utilities Commission,
Shumavon's grid analytics company, Kevala, forecasts
that California alone will have to spend $50 billion
by 2035 in distribution grid upgrades to meet its
ambitious EV targets. And that's just one state's
transportation sector. Other parts of the country
and the economy are electrifying quickly, too. When you carry this through
to the whole country and you think about beneficial
electrification, we're probably talking about a
number that looks more like 3.5 to $5 trillion. But the U.S. Is not on track
to spend anywhere near this. And building the
high-voltage, interstate transmission lines that are
key to greening our electric grid is a bureaucratic
nightmare, given all the utility and regulatory
agencies involved. Permitting can take a
decade or more. But our nation's grid needs
are at least starting to gain attention. So this is a known problem,
but it is also a very hard problem. It's endemic to
the way that power has been generated in this country
since we started building electric grids. Scrambling to avoid the
worst impacts of climate change, the Biden
administration has set an ambitious target of
creating a 100% carbon-free electric grid by 2035. But with electricity demand
increasing every year, that's going to require a
massive buildout of both renewable energy resources
and grid infrastructure. An owner of a new Tesla
Model 3, who drives the national average of around
14,000 miles per year, would use about the same amount
of electricity charging their vehicle at home as
they would on their electric water heater over the
course of a year, or about ten times more electricity
than they would to power a new, energy-efficient
refrigerator. Larger electric vehicles, like the
Ford F-150 Lightning, would use more electricity than a
central AC unit in a large home. And then it's not just
electric vehicles, but it's building heating and
cooling. And Congress just decided we wanted to
manufacture silicon chips in this country. Those use a
lot of power. And you're hearing about
artificial intelligence everywhere, and that's a
lot of churning chips somewhere in a data center. So we got a lot of power
demand coming to this country when we really
didn't have any for the last like 25 years. By 2035, light-duty electric
vehicles, a segment which excludes large trucks and
airplanes, are projected to comprise about 14.6% of
total electricity demand, up from just 0.6% today,
according to data from Princeton's Zero-carbon
Energy Systems Research and Optimization Laboratory, or
ZERO Lab. This number represents an
optimistic scenario in which the provisions in Biden's
Inflation Reduction Act prove highly effective. In
this same scenario, residential electricity
use, such as heating, cooling and lighting, will
represent about 34% of electricity demand, while
commercial use in places such as offices or data
centers will be about 26%, and industrial uses such as
iron, steel and paper production will represent
about 20%. But though transportation
is projected to use less electricity than these
other segments, it's driving the overall increase in
demand, especially in the short-term. The electricity
use of light-duty vehicles is projected to increase
3,400% by 2035. Compare that to a mere 18%
increase in the residential sector or 7% growth in the
commercial sector. Today we have about 470-ish
thousand vehicles connected to PG&E's grid. We have a goal of
connecting 3 million, building out the grid to
connect 3 million vehicles by 2030. PG&E's service territory in
Northern and Central California covers about one
in seven electric vehicles in the U.S. How it handles
the EV transition could serve as a model for the
nation, but it's no easy task. The utility is tied
to a four year funding cycle for grid infrastructure
upgrades, and Krefta says that the currently
allocated funding relies on outdated data that didn't
anticipate such rapid EV adoption. That has PG&E
applying for numerous state and federal grants that
could help it meet its electrification targets. I think right now people
have an overly simplistic view of what
electrification of transportation means. What I actually would
caution is that it's very much a double-edged sword. If done right, it will be
phenomenal. If mismanaged, there are
going to be a lot of upset people, and that is a real
risk. That's a risk for
regulators, that's a risk for politicians, and that's
a risk for utilities. If the nation doesn't match
the EV boom with a comparable boom in grid
infrastructure buildout, Shumavon says that drivers
can expect charging difficulties. That could
look like long queues or only being able to charge
at certain times and places. And an overly strained grid
will be more vulnerable to extreme weather events and
prone to blackouts, which California experienced in
2020 and has only narrowly avoided since. The most straightforward way
to meet growing electricity demand and keep our
electric vehicles charged is to bring more energy
resources online, preferably green ones. But though it's
easy to site coal and natural gas plants close to
population centers, the best solar and wind resources
are usually more rural. As the United States tries
to move its power and electricity generation from
small, local, regional, fossil fuel-powered
generation points to a renewable grid, a clean
grid, you're going to have to completely remake that
because wind power comes from places where the wind
is blowing. Solar power comes from
places where the sun is shining. Wind and solar
power are not generated exactly where there are
large sources of demand for energy. That means that what the
U.S. really needs is more high-voltage transmission
lines, which can transport solar and wind resources
across county and state lines. These large power
lines will also help address the intermittency of
renewables, because if the sun isn't shining or the
wind isn't blowing in one state, green electricity
can be imported from whatever region happens to
be windy or sunny at that moment. But Gramlich says that while
we're constantly spending money replacing and
upgrading old lines, we're hardly building any new
ones. I think we need probably
about 20 or $30 billion a year on new capacity, new
line miles and new delivery capacity. We're spending
close to zero on that right now. Princeton's ZERO Lab found
that the Inflation Reduction Act has the potential to
cut emissions by about 1 billion tons by 2030. But if transmission doesn't
expand beyond its historical growth rate of 1% per year,
over 80% of these reductions could be lost, since the
growth of wind and solar would be severely limited. We're going to need 2.3%
growth in transmission lines per year to be able to
maximize the benefit that the Inflation Reduction Act
is bringing to our energy system. Shumavon agrees that while
we must build more, we also need to build smarter. So historically, planning
for the grid has happened mostly by looking at trends
and waiting until capacity is needed to be added and
then adding that. It's been essentially,
straight line assumptions that you can do in Excel. But as consumers adopt
solar, home battery storage and EVs, their electricity
use has become more difficult to predict and
for utilities to adapt to. In Kevala's study for the
California Public Utilities Commission, the company
utilized power use data collected from customers
smart meters in combination with demographic and
purchase history data to forecast when customers are
likely to adopt green energy technologies like solar
power or EVs based on what's in their economic best
interest. That data can provide utilities and
regulators with insight into exactly when and where the
grid needs upgrades, helping to get all the stakeholders
on the same page so that hopefully permitting for
local distribution lines as well as larger transmission
lines can be expedited. So certainly we all
understand that we'll need new wires or bigger
transformers or things along those lines. But the grid
is actually managed, it is operated, and the tools
that are necessary to operate the grid will need
to evolve to be able to support the level of
complexity that we are talking about. The U.S. electric grid is
actually made up of three distinct grids, the
Eastern, Western and Texas interconnections, which are
almost completely isolated from each other, save for a
few small connection points. That means that very little
electricity is exchanged between them. And though
there's widespread agreement that a national grid would
be better, actually building the large transmission
lines that would make this possible is a regulatory
headache. Building more transmission
is like herding cats. If you think about those
3,000 plus sources of power generation spread out all
throughout the United States, every single
utility, county, stakeholder, regulator that
needs to be involved in order to get the approval
to put a new line of transmission up, it is
pulling teeth. And who's supposed to pay?
How much, and how are we going to decide? And then
permitting is another area. You know, all these horror
stories you hear about a transmission line that
takes 18 years to get permitted. You know, that's
true. That's happening. Before new energy projects
like solar or wind farms can get grid-connected, they
undergo a series of impact studies to evaluate what
new transmission equipment is required, how much it
will cost and who will pay. The list of projects took
somewhere in this process is massive. There are two terawatts of
power generation stuck in these queues, compared to
there's only 1.25 terawatts of generation operating in
the country. So more than the amount we
have operating is stuck in these interconnection
queues. 1,350 gigawatts of that
potential capacity comes from over 10,000 new energy
generation projects, the overwhelming majority of
which are solar or wind. The remaining 680 gigawatts
are energy storage projects. But in the meantime,
distributed energy resources like residential, solar and
battery systems can help to pick up the slack as
customers can generate their own power, sell excess
electricity back to the grid or store it for later use. And automakers are
increasingly equipping their EVs with bidirectional
charging capabilities, which allows customers to use EV
batteries to power homes or provide electricity back to
the grid just as a regular home battery system would. Tesla doesn't currently
offer this functionality, but has indicated that it
will in the coming years, while other models like the
Ford F-150 Lightning and Nissan Leaf already do. We're doing a lot of work
right now with different automakers to really kind
of understand what it would take to enable that vision
of the future. So what does it mean to
connect your vehicle to your home? How can you leverage
your vehicle to charge whenever there's renewables
on the grid and they're clean and low cost and then
discharge back to the grid during the evening hours? While it's clear that
electrifying the nation's vehicle fleet, as well as
the clean energy transition overall, relies on a large
investment in grid infrastructure, experts
agree that current funding falls far short. There's a $2.5 billion
program called the Transmission Facilitation
Program, but there's only $2.5 billion there. And we spent $2.5 billion
on transmission in a month and a half. Just it's like
a drop in the bucket. The Inflation Reduction Act
also includes $3 billion in funding for transmission
line buildout. But though these numbers
sound impressive, they're far from the 20 or 30
billion per year that Gramlich says we need for
such a massive infrastructure expansion. And even if we did start
spending big today, transmission lines take
years to build. There's going to be an
in-between period where the need is very high, but the
transmission can't be built during the time period
where the need happens. And distributed energy
resources are going to play a very active role in
managing that process because no other resources
will be available. I would imagine we're going
to end up depending on batteries. I would imagine
we're going to end up depending on micronuclear
reactors. I'm going to imagine that
we're really going to focus and there's going to be a
lot of emphasis on energy efficiency and energy
timing use. PG&E, for example, is
thinking about how to optimize charging times for
large electric vehicle fleets. So one thing that we're
trying to do is to work with some of these companies
that are putting in substantial loads to
provide flexible load constraints where we can
say, you can only charge 50 EVs at 7 p.m. but at 2 a.m. you can charge all 100, or
you can charge 90 of your EVs. Krefta hopes these
constraints are temporary though, and says that as
the grid evolves, PG&E is looking to implement
dynamic pricing, incentivizing consumers to
use more electricity during off-peak hours through
lower electricity rates. But ultimately, many believe
that what's needed most is a legislative deal on
transmission infrastructure buildout. Democrats seem pretty lined
up around the need to build out transmission, mainly
because of their interests in clean energy growth. Republicans seem to want
permitting reform for a wide variety of infrastructure,
that includes fossil infrastructure. If Democrats and Republicans
can agree to expedite permitting for all types of
energy infrastructure, fossil and renewable,
Gramlich says that's where we might see a deal. West
Virginia Senator Joe Manchin is spearheading this
effort, with a Biden-backed permitting reform bill
introduced in May after similar measures failed
last year. The politics will be tricky
to navigate, but whether it's this bill or another
effort, something has to give and soon. We need to start yesterday
and get this done very soon. We don't have very much
time at all if we want to actually meet our
decarbonization targets.
