pwr_june-2024 - 21

POWER GRID INFRASTRUCTURE
gies to enhance their performance and
extend their lifespan. "
Finding Funding
Investment from the DOE and other
government agencies will help with grid
upgrades and new construction, but outside
funds almost certainly are needed
to help finance projects. Utilities and grid
operators are setting aside funds for upgrades;
for example, National Grid plans
to invest more than $4 billion to transform
its energy delivery system across
upstate New York
through
a
project
called Upstate Upgrade. The money will
go toward dozens of projects, including
new substations, and rebuilding more
than 1,000 miles of transmission lines.
National Grid plans to roll out these projects
over the course of six years.
The DOE in an April-released report
(Figure 2) titled " Pathways to Commercial
Liftoff: Advanced Grid Deployment "
wrote that the U.S. could use advanced
technologies on existing T&D systems
to support as much as 100 GW of incremental
peak demand when each technology
is installed individually, a number
that rises when that tech is installed in
combinations. The DOE said that the use
of technologies such as DLRs and virtual
power plants (VPPs) could help defer $5
billion to $35 billion in T&D infrastructure
costs over the next five years.
" The responsibility for funding T&D
upgrades is multifaceted and should be
shared among grid operators, transmission
operators, independent system
operators, and the government, " said
Jeremy Klingel, a senior partner in the
Energy & Utilities group at Chicago, Illinois-headquartered
West Monroe. " It's
crucial a cost-recovery mechanism is
established to ensure that the financial
burden does not fall disproportionately
on the last project in the queue, as others
will also benefit from the upgrades.
" While utilities may pass some costs
to customers, the rise of private infrastructure
investment in T&D can provide
capital and accelerate project completion.
The financial burden should be distributed
across the utility's rate base,
necessitating a shift in the utility model
and alignment with state regulation
for fair cost distribution, " said Klingel.
" Private equity's role in infrastructure
investment is becoming increasingly significant,
offering a more cost-effective
and rapid path to interconnection, which
ultimately benefits the end users. This
approach ensures that the necessary
financial burden is equitable and not
June 2024 | POWER
said. " Typically, the operation of a grid
will involve assets from multiple owners.
In these cases, while the operation
and maintenance of the assets are carried
out by the utility owner, the system
operation is managed by a discrete organization,
which could be owned by a
private investor. "
Jason Huang, CEO of California2.
This April 2024 report from the U.S. Department
of Energy (DOE) detailed what the
U.S. power grid needs to support increased
electricity demand over the next few years.
Source: DOE
frivolous, aligning with the greater good
while spreading costs across the utility's
entire rate base. "
" Private investment in power grids
can play a crucial role in financing infrastructure
upgrades, supporting innovation,
and driving the transition to a
more sustainable and resilient energy
system, " said Andrews. " Finding private
money and investment is not an
issue. However, the extent of private
investment in power grids may vary
depending on factors such as regulatory
policies, market structures, and the
availability of investment opportunities.
Private enterprise investment will likely
play an increasing role in power grids,
but not to the extent of taking over the
management of these assets. "
Pascal Radue, executive vice president,
Generation and Transmission, at
Paris, France-based electrical infrastructure
company Nexans, told POWER:
" Responsibility for T&D upgrades is a
complex issue conditioned by local and
national requirements. As we grow the
grid networks, it is important that upgrades
are carefully considered to ensure
that the solutions are sufficiently
future-proofed while mitigating the cost
impact for the end consumer. "
Radue said it would be possible for
a private investor to take over a grid's
operation. " Investor-owned utilities are
already highly prevalent globally. There
is no reason why a new private investor
could not, subject to obtaining all
necessary licenses, either take over
or start a new utility company, " Radue
www.powermag.com
based TS Conductor, which makes
conductors for the power grid, said,
" Privatization and/or public-private partnerships
[P3s] are going to be part of
a hot-button issue. But it's important to
keep in mind that private sector investment
vs. ownership vs. management of
public infrastructure are three related
but very different issues. We're talking
about the capital to get new infrastructure
built, who owns it once it's built,
and who manages and operates it and
keeps it in good working order.
" There are plenty of examples of
the private sector providing power and/
or grid services-from single, large assets
such as solar or wind farms or from
many aggregated DERs [distributed energy
resources] in VPPs, DR [demand response]
programs, etc. But transmission
infrastructure is inherently different, because
it is a common, shared backbone.
This emphasizes the privatization distinction
between financing new infrastructure,
managing that infrastructure, and
who owns it. Could some transmission
lines go the way of toll roads through
fuller privatization? It's not outside the
realm of possibility. But given how critical
and central this infrastructure is, it's
hard to imagine putting such important
infrastructure into private hands. "
Huang added, though, that " there is
still a role for the private sector to play
here. I think there's no question that
the private sector can and should play a
role bolstering and accelerating government-led
work. This is akin not only to
toll roads, but also things like the work
of NASA and SpaceX. That's where
companies like TS come in, developing
advanced conductors that grid operators
and utilities can leverage. Overall,
this conversation should be less about
'private companies taking over management'
of infrastructure such as T&D,
and more about how the government,
utilities, and the private sector can work
together toward shared ends. "
Needed Technology
There's plenty of agreement that new
transmission lines to deliver electricity
are needed, and also that existing infra21
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