Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

What If We Just Nationalize the Power Grid?

A proposal.

An American flag and power lines.
Heatmap Illustration/Getty Images

The urgent need to build transmission infrastructure at dramatic pace, scale, and geographic scope is clear. To decarbonize the power sector, we’ll have to physically rebuild the grid once-over in the coming decades to connect and facilitate a hopeful explosion in new renewable generation capacity across our continental country. We will have to accomplish this as electricity demand grows, including on account of decarbonizing sectors such as buildings, transportation, and industrial production through electrification. Given the stakes of grid balancing, this task is akin to building and starting to operate a new beating heart and wider cardiovascular system, all while keeping the old one from failing amid surgery. Coordination and proactive planning of grid buildout will be key.

Despite the undeniable public benefits, investment in the grid has been stagnating, if not declining. A Department of Energy study found that annual net investment in the grid, as measured by new miles of line, was actually negative on average between 2016 and 2020. Some have faulted the National Environmental Policy Act for this underinvestment, while others have blamed anti-social NIMBYs, both of which, but especially combined, can thwart projects at the permitting stage.

The reality is more complicated and implicates the basic governance of the transmission system. The grid in the United States is owned, operated, and planned largely by a highly fragmented set of privately owned utilities and, in some places, their nonprofit associations, which are regulated at the federal and state level. Transmission owners do not propose and build transmission lines unless they are profitable for their business, which is not guaranteed most of the time. Indeed, new lines can cost transmission owners profits by creating a larger pool of power supply and reducing the energy sales and pricing power of their generation affiliates.

The Federal Energy Regulatory Commission has repeatedly attempted to prod utilities to do more by mandating regional planning procedures. FERC announced its latest regulatory initiative, called Order 1920, last month, and it requires transmission owners to undertake long-range regional planning that considers an array of public benefits, including lower energy prices and enhanced system reliability. In particular, the rule alleviates disputes over investment cost allocation. But stronger planning procedures can hardly ensure that private utilities will actually invest in needed lines. Indeed, FERC’s serial attempts on this front have so far been a failure.

As this FERC activity suggests, the grid is already subject to great public regulation, but this regulatory architecture still falls well short of the public control necessary to treat the grid as a vital common resource whose transformation must be proactively planned and precisely delivered at the system-level. Through public planning and development, we can overcome this structural fragmentation and counteract private utilities’ low propensity to investment across the transmission system. We need a centralized system of public planning, funding, and construction of transmission facilities. We need to nationalize the grid.

The benefits of grid expansion are manifold and go well beyond just the functionality of decarbonization. More connections between states and regions can lower the price of electricity and improve reliability, which will become an increasingly pressing issue in the face of further climate destabilization. And yet our transmission system consists of regional and subregional grids “that operate like jealous petty potentates, resisting stronger links that would allow renewable energy to flow across regional boundaries,” in the words of the New York Timeseditorial board. Projects founder over disputes between utilities over how to distribute costs, while other necessary new additions are never proposed in the first place. This is a structural problem that leads to quantitative underinvestment and qualitative poor coordination of investment across the balkanized system.

The public pays for investments in the electricity system, whether through taxes or consumer electricity bills in monopoly serviced systems down the line. Public investment in critical infrastructure is cheaper for the public than private investment due to the lower costs of debt financing or direct access to the U.S. Treasury for public agencies. These entities are also free from the imperative to maximize shareholder returns and pay dividends. Public investment is more flexible and can adopt a system-wide approach, as opposed to one blinkered at the level of the project. Instead of piecemeal line extensions, the grid can be expanded in a methodical and holistic fashion in accordance with social need.

Public power is firmly established in the United States. Public agencies such as the federal Tennessee Valley Authority and state-owned New York Power Authority generate and transmit power. In nearly the entire contiguous United States west of the Mississippi River, three federal power administrations own transmission lines and can construct new ones. Congress should set up and fund federal authorities across the country to build the power grid we desperately need, coordinating with each other and through federal level planning, and working with, and when needed against, the current assemblage of private utilities.

The Bonneville Power Administration in the Pacific Northwest offers a good model of governance. It is led by a single administrator appointed by the Secretary of Energy. This official has the broad authority to set rates on wholesale power and transmission and develop the regional grid. But these important decisions can only be made after close consultation with retail and wholesale customers, Native American tribes, elected officials, and environmental groups and are reviewed by FERC. This system ensures efficient, publicly accountable management of the grid.

Given the tight timeline we face to deliver on critical decarbonization pillars, one might ask, why experiment with a publicly led approach? We might stoke private utility backlash and weaken or slow the broader project of cleaning up the power supply. But private utilities have had decades to deliver a modern grid and failed. Because of the pressing need to decarbonize and fortify resilience against entrenched climate instability, the necessity of building state capacity is a sober reality. We cannot begin to build necessary state capacity without first acknowledging this necessity and acting in light of it.

North America’s power grid is called the “world’s largest machine” because it is a complex physical infrastructure that must be in perfect balance every second. Our homes, places of work and leisure, and increasingly vehicles are all plugged into the grid. Preserving modern living standards—and an inhabitable planet—requires expanding and rationally operating this common resource. This social undertaking is too important to be entrusted to private corporations.

Yellow

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Climate

AM Briefing: How Clean Energy Fared in Q1

On earnings, a DOJ memo, and flying cars

How Clean Energy Fared in Q1
Heatmap Illustration/Getty Images

Current conditions: Yosemite could get 9 inches of snow between now and Sunday Temperatures will rise to as high as 104 degrees Fahrenheit in Ashgabat, Turkmenistan, as Central and Southeast Asia continue to bake in a heatwave Hail, tornadoes, and severe thunderstorms will pummel the U.S. Heartland into early next week.

THE TOP FIVE

1. Tariffs, uncertainty were the themes of the week in clean energy Q1 calls

It was a busy week of earnings calls for the clean energy sector, which, as a whole, saw investment dip by nearly $8 billion in the first three months of the year. Tariffs — especially as they impact the battery supply chain — as well as changes to federal policy under the new administration and electricity demand were the major themes of the week, my colleague Matthew Zeitlin wrote.

Keep reading...Show less
Yellow
Sparks

The First Sign the U.S. Oil and Gas Sector Is Pulling Back

Three weeks after “Liberation Day,” Matador Resources says it’s adjusting its ambitions for the year.

Money and an oil rig.
Heatmap Illustration/Getty Images

America’s oil and gas industry is beginning to pull back on investments in the face of tariffs and immense oil price instability — or at least one oil and gas company is.

While oil and gas executives have been grousing about low prices and inconsistent policy to any reporter (or Federal Reserve Bank) who will listen, there’s been little actual data about how the industry is thinking about what investments to make or not make. That changed on Wednesday when the shale driller Matador Resources reported its first quarter earnings. The company said that it would drop one rig from its fleet of nine, cutting $100 million of capital costs.

Keep reading...Show less
Yellow
Climate Tech

Rise and Grind Through the Apocalypse

At San Francisco Climate Week, everything is normal — until it very much isn’t.

San Francisco.
Heatmap Illustration/Getty Images

San Francisco Climate Week started off on Monday with an existential bang. Addressing an invite-only crowd at the Exploratorium, a science museum on the city’s waterfront, former vice president and long-time climate advocate Al Gore put the significance and threat of this political moment — and what it means for the climate — in the most extreme terms possible. That is to say, he compared the current administration under President Trump to Nazi Germany.

“I understand very well why it is wrong to compare Adolf Hitler’s Third Reich to any other movement. It was uniquely evil,” Gore conceded before going on: “But there are important lessons from the history of that emergent evil.” Just as German philosophers in the aftermath of World War II found that the Nazis “attacked the very heart of the distinction between true and false,” Gore said, so too is Trump’s administration “trying to create their own preferred version of reality,” in which we can keep burning fossil fuels forever. With his voice rising and gestures increasing in vigor, Gore ended his speech on a crescendo. “We have to protect our future. And if you doubt for one moment, ever, that we as human beings have that capacity to muster sufficient political will to solve this crisis, just remember that political will is itself a renewable resource.”

Keep reading...Show less
Green