Caught Between a Volt and a Kilowatt: The Disconnect Between Government Policy and Regional Infrastructure that Short Circuits an Electrified Economy

by Steven Mauss, CEO and President at Knowledge Relay, Inc.

I recently enjoyed a series conversations with a senior official at the U.S. Department of Energy (DOE). In one of our conversations, we discussed capacity planning and the painful disconnect between government policies—where mandated usage changes are widely promulgated—and the actual U.S. power infrastructure (and new power plants) which falls to regional planners.

This strategic disconnect may be leaving Americans leery to make the switch to an electrified economy—for example, you might like to buy an electric car but are concerned about having enough charging stations, or even enough electricity availability, if too many people make the switch before the U.S. power grid is ready to accommodate.

Here are just some of these new government regulations:

• The Infrastructure Investment and Jobs Act, which allocates significant funding to support the EV sector, including $7.5 billion for EV charging infrastructure and building a network of 500,000 chargers across the country
• The Inflation Reduction Act, which extends tax credits for EV purchases, including new incentives for commercial and used EVs. It also provides substantial funding for battery manufacturing and critical mineral production, supporting the domestic supply chain for EVs.
• The Federal Fleet Electrification goals to electrify federal fleets, including U.S. Postal Service vehicles, with all new light-duty vehicles being electric by 2027 and all federal vehicle acquisitions being electric by 2035.
• Environmental Protection Agency (EPA) new regulations for the majority of new passenger cars and light trucks sold in the U.S. are electric or hybrids by 2032. These regulations are designed to significantly reduce tailpipe emissions and drive the transition to zero-emission vehicles.
• The California Air Resources Board (CARB) recently adopted “Advanced Clean Cars II” which would require 100% of new cars sold in Model Year 2035 to be electric vehicles.

All these new rules beg the question: How is the disconnect from government mandated goals to grid infrastructure and actual power generation reality to be resolved?

In California, for a local example, we often experience “brown outs” that discourage us from switching to electric anything. Yet, the CARB’s aggressive mandate for EVs fails to align goals with reality—specifically, addressing how all those new EVs will be powered by California’s already overburdened electrical grid. And California is likely to be 90 terawatt-hours (tWh) short of expected demand if their mandates are all realized. Studies have suggested that California will need to increase its electricity generation capacity by more than 40% by 2035 to meet the demand from the anticipated EV growth alone.

America’s power planning seems to be caught between a volt and a kilowatt!

Let’s Talk Numbers

• In 2023, “The United States generated 4,178 terawatt-hours of electricity” according to Statista. This figure includes all sources of electricity generation, such as fossil fuels (natural gas, coal, oil), nuclear, and renewable energy sources (wind, solar, hydro, geothermal, and biomass).
• Based on 2019 data, USAFacts estimates “the U.S. would need to produce 20-50% more electricity in a year if all cars were EVs.”
• More specifically, ChatGPT 4.0 cites, “The U.S. Energy Information Administration (EIA) projects that the energy demand from EVs could add up to 1,200 tWh annually by 2050. This represents a [28.7%] increase from current levels, requiring significant upgrades to the electrical grid and increased generation capacity.”
• Regionally, the Northeast U.S. is “Expected to see a significant rise in electricity demand due to high population density and urbanization,” and “Likely to rely heavily on renewable energy sources and energy efficiency measures to meet the increased demand.”
• The Midwest “Anticipates substantial growth in electricity consumption, driven by industrial activities and EV adoption,” and “Wind energy will be a key contributor to the region’s power supply.”
• The South is projected to experience “the highest increase in electricity demand due to rapid population growth and high EV adoption rates,” and “Natural gas and solar energy will play crucial roles in meeting this demand.”
• Finally, the West will see “Significant increase in electricity demand, especially in California, due to aggressive EV adoption and clean energy goals,” and “Solar and wind energy will be primary sources of power, with significant investments in grid infrastructure needed.”

What’s fascinating about this AI response is how heavily biased toward renewable energy sources it is. ChatGPT references no contributions from nuclear energy—perhaps because of bias in its programming or perhaps because its sources include more renewable energy articles.

“U.S. reactors have supplied around 20% of the nation’s power since the 1990s,” notes the DOE, and “Nuclear energy provided 48% of America’s carbon-free electricity in 2023, making it the largest domestic source of clean energy.” But while nuclear power is certainly a path forward, it takes about 15 years from design to completion to build a power plant of substantial capacity, so the planning for nuclear as a contributing power source must start now.

ChatGPT also leaves out the actual current vs. projected production requirements for each region—it just states that there will be increased energy demands and postulates how they are going to be met.

And all of these estimates are just for EVs—if industries moved more to electrification for warehouses (automation), logistics (electric forklifts and container drayage), and shipping (electric boats, planes, and trucks), the actual energy demand would be much, much higher.

What Can Be Done (Better)?

“The United States has only recently put resources into upgrading our energy infrastructure,” writes the University of Texas Permian Basin. “The Bipartisan Infrastructure Law, passed in 2021, dedicates more than $20 billion to upgrading our power grid… yet these endeavors are both costly and complex. High-voltage transmission lines, which can effectively deliver power from a variety of sources to all corners of the country, must span myriad cities, counties, and states, and those areas fall under the authority of many different utility companies and regulatory agencies. Permitting alone can sometimes take more than 10 years.”

So, while funding is, of course, a necessary component, allocating those funds effectively is critical to closing the gap between electrified ambition and realization. Unfortunately, today’s political environment makes Federal and state (or local) government cooperation difficult. So where should we focus?

I have four suggestions on what the U.S. energy industry might do to ensure a more electrified economy the next twenty years:

• Invest in High-Capacity Transmission Infrastructure: No one doubts that a significant upgrade to the current transmission infrastructure and power grid is necessary to handle increased electricity demand and integrate renewable energy sources. This involves building new high-capacity transmission lines to connect renewable energy-rich areas—like the Midwest for wind, northeast for nuclear, and the southwest (and Florida) for solar—to major load centers. This strategy would also include modernizing existing infrastructure, some of which is 100 years old, to ensure reliability and resilience against severe weather and other disruptions.
• AI for Allocation: Another idea might be to train generative AI models on government databases to more accurately predict (a) electricity demand in any given area, and (b) the amount of electricity that will need to be available to the national grid at any given point in time. Then, the federal government could work with regional utilities to help them fund/finance the clean type of power generation they will need to meet the demand.This model flips the mandate to a stimulus—incenting regional utilities to prepare for what we know is coming. And yes, private industry could play a funding role, too . . . though the up-front costs for building a new power plant are typically outside the capacities of utilities and/or banks, especially when considering the long time to generate ROI.
• Decentralization and Integration of Distributed Energy Resources (DERs): Transitioning to a decentralized grid model that incorporates distributed energy resources could surely enhance the U.S. grid’s flexibility and resilience. But this involves integrating technologies like SMRs, rooftop solar, battery storage, and microgrids, allowing for more localized generation and consumption of electricity. This approach must further support a bidirectional flow of electricity and so enable consumers to become producers and contribute to grid stability.
• Policy and Regulatory Reforms: Innovative policy and regulatory frameworks are crucial to facilitate grid modernization. This includes creating new incentives for investment in grid infrastructure, streamlining the permitting process for new transmission projects, and establishing standards for integrating renewable energy and DERs. “It’s essential to prioritize safety, reliability, and affordability of energy services to ensure a smooth transition,” notes West Monroe. “Something that will take time and cost money.” As such, federal planning must factor local resources and existing infrastructure, then craft practical regulatory policies that ensure our grid updates will meet regional needs effectively.

But perhaps most importantly, we need effective leadership. Our federal government must “provide for the general welfare” and could play a useful role here. After all, “for every dollar spent on infrastructure, the U.S. economy can generate an estimated $1.50 to $2.50 in economic output. Some studies suggest that, in times of economic slack, the multiplier can be even higher, reaching up to $3 or more.”

Contrast that with what we find in Senator Tom Coburn’s Wastebook every year . . . and imagine if we repurposed even a fraction of that waste to enhance our power generation and grid capacity!

The longer we wait to address this problem, the more devasting the negative impacts will be.

Message me or contact Knowledge Relay to share your thoughts on a more electrified U.S. economy and how the energy industry might achieve it!