ASCE says lack of investment in transmission hurts economy

transmission project construction elp

In its latest report in infrastructure investment trends, the American Society of Civil Engineers said that electricity infrastructure is expected to have the second-largest funding gap in the coming decades, behind only surface transportation, and that the current underinvestment in grid infrastructure could reduce reliability and harm the U.S. economy.

The May 10 report is the continuation in an ASCE series on underinvestment in infrastructure, with the group noting that since 1998, U.S. infrastructure has earned persistent D grade averages, and the failure to close the investment gap with needed maintenance and improvements has continued into 2016. Previous reports broke down the underinvestment in different sectors of the economy, while the most recent report addresses the economic impact of underinvesting in infrastructure.

“This report again shows us that every day we delay, our infrastructure goes from needing to be repaired to needing to be replaced,” Greg DiLoreto, chairman of the Committee for America’s Infrastructure at ASCE, said in a May 10 statement.

The report, “Failure to act: The impact of infrastructure investment on America’s economic future,” says underinvestment in surface transportation is expected to reach $1.1 trillion by 2025, followed by electricity at $177 billion, water and wastewater at $105 billion, airports at $42 billion and inland waterways and ports at $15 billion. For the electricity sector, which includes generation, transmission and distribution infrastructure, the underinvestment gap is projected to reach $565 billion by 2040, according to the report.

The report uses figures based on researching the needs for future infrastructure investment, estimating funding available and using past investment trends to come up with the underinvestment levels.

ASCE said the electricity sector underinvestment gap in 2025 would be 22 percent in generation, 24 percent in transmission and 54 percent in distribution. The underinvestment gap for generation has shrunk compared with previous reports due to improvements in the availability of generation and decreases in the rate of demand growth predicted by NERC, ASCE said.

The transmission and distribution gaps, on the other hand, are higher than previous reports due to an increasingly decentralized generation network, “which requires additional transmission capacity for load balancing and resiliency” and distribution investments to optimize power flows instead of making expensive new generation investments, ASCE said in the report.

“The projected investment gap will lead to a greater incidence of electricity interruptions if aging equipment is not addressed, capacity bottlenecks are not resolved, and increased demands are not accounted for,” the report said.

For the U.S. electricity sector, the report said higher costs from power outages and adoption of more expensive industrial processes could exacerbate the national trade deficit by allowing more foreign-made products to be imported and sold at cheaper prices.

Extending current investment trends in the electricity sector will harm the economy, with a reduction in GDP of $819 billion by 2025, the report said.

For the nation as a whole, across all sectors covered in the report, the reduced GDP could be seen in the form of increased production costs, decreased consumer spending, fewer jobs, lower incomes, and more expensive infrastructure in the form of higher costs for transportation, electricity and water, ASCE said.

The report notes that in recent years, various state legislative actions and some federal funding measures have helped stabilize the infrastructure spending gap, but the overall picture remains, in that an underinvestment is hurting the nation’s economy.

“If we want our economy to thrive then we need to invest in its backbone," DiLoreto said in the statement. “Instead, we've allowed it to live on borrowed time, and are paying the price of its inefficiencies every day.”

DiLoreto said: "The continued underinvestment into our transportation, energy, and water systems is hurting families and businesses. While there has been some recent legislative success, it unfortunately has not been nearly enough to modernize our aging infrastructure.”

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