Every time you plug in your phone, turn on your microwave, or charge your electric vehicle (EV), you're using electricity from a network of interconnected sources called the grid. The grid refers to the area where the energy is produced as well as the wires and electrical systems that transport energy from the generation source to your house.
Today, we use 14 times the energy we used in 1950 – and grid modernization, as well as the creation of a "smart grid," have led to the development and expansion of the grid. The grid we use now is more interconnected than ever, with various sources of energy (renewable and non-renewable) constantly producing electricity to meet our increasing energy demands. In this article, we'll explain how the grid has evolved and what the future of energy production looks like.
The U.S. created its first "grid" in 1882.
After the Great Depression, the electricity industry transformed from competitive and unregulated to regulated and monopolized by zones.
The integration of renewable energy sources such as wind farms, community solar, and home solar have been important in maintaining energy security and reliability of the grid.
Smaller and local sources of energy are now replacing large-scale systems through a movement called decentralization.
Going solar with EnergySage can help you become more grid-independent (while saving money!).
The grid we know today is an interconnected system of power plants, transmission lines, and connectors – it's a key infrastructure that we depend on for everyday life. We'll explain how the grid has developed over the years, from its establishment in 1926 to the modern grid today.
The first grid
You probably rarely stop to think about where your electricity is coming from and how the mechanics of it work. In reality, the grid we know today has a long history starting in 1935, when President Roosevelt passed the first federal regulation pertaining to electric power. The Public Utility Holding Company Act (PUHCA) established vertically integrated utilities in monopoly service areas and gave price, infrastructure, and transmission control to state governments. However, even before this was written into law, the technology and construction of the grid had been ongoing for several years.
The first "grid" dates back to 1882 when Pearl Street Station, the first central power plant in the U.S., began producing electricity. This power plant was powered by coal, and it initially served 85 customers in New York City, though its success enabled it to grow in size. Direct current (DC) electricity and alternating current (AC) electricity began competing against one another – while DC electricity can travel further, ultimately, AC electricity prevailed because it's more efficient and is easier to convert from higher to lower voltages.
In the 1900s, the industry was unregulated and quickly became competitive, with multiple options available to customers. However, as the great depression hit, many companies shut down, and the industry became regulated: all remaining companies were assigned specific zones where they could establish independent monopolies monitored by the government. By the 1960s, the price of energy had stabilized, and today, there are many state-wise regulatory commissions that determine the price of electricity.
The grid today
Even today, several power plants and transmission lines established in the 1900s exist – in fact, some operating coal-fired power plants date all the way back to the 1940s! While the modern grid is still dependent on outdated infrastructure, it has also undergone improvements since its establishment, and it now supplies electricity to millions of homes across the U.S.
Today, you can think about the electric grid in three different phases: generation, transmission, and distribution. First, electricity is generated by a number of sources, including fossil fuels such as oil and gas, nuclear energy, and renewables. The electricity is then transmitted over long distances through high-voltage transmission lines – most of these transport AC, as opposed to DC, electricity. Finally, once the electricity reaches its region, local substations convert it to lower voltages before distributing it to your home.
Grid modernization refers to the grid updates needed to create a smarter electric grid that can support more electricity generation and longer transmission distances. Two major factors that contribute to grid modernization include expanding renewables and decentralizing energy sources.
The integration of renewable energy sources such as wind and solar has been important in maintaining energy security and reliability of the grid. Frequently referred to as "decarbonization," this integration and eventual shift of the grid is essential for long-term energy security, especially because there's a finite supply of fossil fuels, and the U.S. continues to increase its energy consumption. The U.S. has already made great strides in expanding renewable energy: in 2017, 97 percent of the new energy capacity added to the grid was from renewable sources.
However, the integration of renewables into the grid poses some challenges; for example, it's hard to predict the exact energy production from solar panels over a specific time period – obviously, we can't control how much sunlight we get each day! To overcome this barrier, the U.S. has created high-voltage, direct current (HVDC) transmission lines in some areas of the country that can transport electricity over long distances. So, if the sun's shining or the wind's blowing in a neighboring state, these transmission lines can transport the generated electricity to you. The biggest challenge to expanding HVDC transmission across the country is permitting: because these lines cross so many jurisdictions (and don't directly benefit all of them), it can be difficult to convince all stakeholders that they're worth it.
Energy storage, such as utility-scale batteries or fuel cells, can also help support the grid when renewables aren't able to produce enough electricity. But, as homes and businesses start to electrify, we need a grid that can support greater demand – meaning our current aging infrastructure likely won't cut it.
Localizing energy sources
Across the U.S., many communities are seeing a shift towards a decentralized grid in which smaller and more local electricity sources replace and support large, utility-scale systems. Energy producers and consumers are no longer mutually exclusive; for example, you might produce the electricity you consume right at home if you have a solar energy system! Renewables often power decentralized systems – also referred to as distributed energy resources (DERs) – like microgrids and stabilize the grid during times of high demand. If they're paired with battery storage, they can also increase resiliency for homes or businesses during power outages.
The U.S. government has recently enacted a few key policies that will support a more modern electric grid, including the infrastructure bill (2021), the Inflation Reduction Act (2022), and FERC Order 2222 (2021).
President Biden signed the bipartisan Infrastructure Investment and Jobs Act (primarily known as "the infrastructure bill") into law in 2021. The bill allocated $65 million for a much-needed electric grid upgrade, which includes expanding transmission lines and finding new energy sources to integrate into the grid. Ultimately, the bill aims to stabilize the grid and increase energy security by supporting renewable energy sources to reach President Biden's goal of 100 percent clean electricity by 2035 and a zero-emissions economy by 2050.
Inflation Reduction Act
Just recently passed in 2022, the Inflation Reduction Act will help decarbonize the U.S. electric grid, which currently relies on natural gas and coal for 60 percent of its electricity generation. The bill provides $270 billion dollars over the next ten years to facilitate decarbonization as well as new tax credits for nuclear, clean hydrogen, carbon capture, clean fuels production, clean manufacturing, and wind, solar, and battery manufacturing. There have also been investments specifically to improve the reliability and resilience of rural electric systems and create more jobs in the energy and utilities sector.
FERC Order 2222
In September 2021, the Federal Energy Regulatory Commission (FERC) published Order 2222, which focuses on removing barriers to the participation of DERs **(**like solar farms) in all regional wholesale electricity markets. Previously, some DER market players may not have been approved to be integrated into the grid, but now they're able to aggregate together to reach minimum size and performance requirements. Ultimately, this Order should help lower electricity costs while providing more grid flexibility and driving innovation within the electric power industry.
How outdated is the power grid?
Most transmission lines in the U.S. are at least 25 years old, and some that were initially established in the early- to mid-1900s still exist today. This old infrastructure, combined with regional utility monopolies, makes it very difficult to update and integrate new transmission lines into the grid.
Why is the price of electricity increasing?
The increasing price of natural gas, as well as the yearly increase in demand for electricity, is increasing the price of electricity every year. Geo-political conflict and threats to the natural gas supply chain are key factors in price increases.
Will transmission lines be buried soon?
While transmission lines installed underground are less vulnerable to weather damage and power outages, there are several concerns that hinder existing lines from being buried in the U.S.: it's quite expensive, and the process can be very disruptive to communities. However, new transmission lines installed in areas undergoing development are now often buried due to the resiliency benefits.
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