On a special episode (first released on May 29, 2024) of The Excerpt podcast: As another very hot summer approaches, a surge in demand for air conditioning is inevitable. But the nation’s electrical grid is aging and overtaxed in some areas. There were major failures last year in Texas. Meanwhile, solar and wind projects want access to new customers while oil and gas interests would prefer that this not happen so fast. The established utilities want to keep their monopolies after all. How can regulators, businesses and government leaders navigate this minefield successfully to benefit the American people? Ari Peskoe, the director of the Electricity Law Initiative at Harvard Law School’s Environment and Energy Law Program, has some ideas for what could help reinforce the country's electrical infrastructure.

Hit play on the player below to hear the podcast and follow along with the transcript beneath it. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.

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Dana Taylor:

Hello and welcome to The Excerpt. I'm Dana Taylor. Today is Wednesday, May 29th, 2024. And this is a special episode of The Excerpt. As we head into what promises to be yet another very hot summer, we anticipate a surge in demand for air conditioning, but the nation's electrical grid is aging and overtaxed in some areas. There were major failures last year in Texas. Meanwhile, solar and wind projects want access to new customers, while oil and gas interests prefer that this not happen so fast. The established utilities want to keep their monopolies after all. How can regulators, businesses, and government leaders navigate this minefield successfully to benefit the American people? I'm now joined by Ari Peskoe, the Director of the Electricity Law Initiative at Harvard Law School's Environment and Energy Law Program. Thank you for joining The Excerpt, Ari.

Ari Peskoe:

Thanks so much for having me today.

Dana Taylor:

Let's start with the elephant in the room. Are we at the point where we can call our electrical grid issues a crisis? Give us a 30,000 foot view here.

Ari Peskoe:

Well, I don't think this is something that folks need to worry too much about. This is something that industry and policymakers really need to get on top of. I don't know that we're at a crisis yet, but the industry, particularly the electric utilities, have a certain way of doing things and bringing change to the industry can be a long process. So ideally would've gotten started on some things about 10 years ago, but there's certainly no time for delay in trying to modernize our electricity system. We need to make sure that the system is capable of bringing new, cleaner sources of energy online and meeting demands of growing industries, particularly artificial intelligence, electric vehicles, things that we all hope to see. But right now, I think the short-term focus should be on making sure that the industry is efficient, something that historically has a pretty poor track record on, which is why we need to make sure we have the right policies in place, as I said, to make sure we're squeezing the most out of our existing system.

Dana Taylor:

So let's talk about some of those common sense steps. How can our current power grids be made more resilient?

Ari Peskoe:

I mean, one simple thing is to incentivize consumers, particularly large businesses, to shift their energy use to periods of lower demand. So we know when it's a really hot day, for example, in August, that everybody's going to be using their air conditioning systems and the grid is going to be potentially in some parts of the country, basically at capacity. But we can get a little more room on the system if we encourage large energy users who may be reasonably indifferent to exactly when they're using energy to just shift their use to another time of day like the middle of the night when we know most people will be using less energy. So that's a classic technique called demand response. But unfortunately utilities have not been forward-thinking on that. There's more advanced technologies that can be incorporated into the physical infrastructure that can help make sure we're utilizing the maximum capacity of our power lines.

So just to give you one example, the amount of energy that can move through a particular line changes with temperature and wind speed. But when the industry operates the system, it often assumes that the capacity is constant. It doesn't really account for these clear factors that we know about, we can measure, we can factor them in. Other countries, other utilities around the world are far ahead of our utilities on the dynamic line rating is what it's called. And that's something that our industry can be doing a lot better about it to make sure that we're, again, using the existing system in the most effective way possible.

Dana Taylor:

All right. Let's talk about Texas because that seems to be in a category of its own. Its grid is independent and it's also been experiencing a lot of extreme weather, which leads to more demand. How is it handling the surge in demand and are there lessons that the rest of the country can learn from its failures?

Ari Peskoe:

Yeah, as you mentioned, Texas does have largely its own electricity grid. Most of it is generally cut off from the rest of the country. I think that's something that the state should be reevaluating. I don't think it makes a lot of sense these days to actually do that, but they've wanted to maintain their independence. And three years ago, there was just a horrific winter storm that cost many lives, billions of dollars in damages. And Texas has tried to address the situation, but I think unfortunately it's sort of aimed at the wrong target. A lot of the reports, the analysis that has looked back on the situation has actually blamed the natural gas industry was part of the problem. The natural gas system shut down. That in turn meant that electric generators that relied on natural gas weren't able to produce power.

And part of the problem with sort of a circular loop here, the electric utilities weren't when they had to shut off power because there wasn't enough supply, they sort of accidentally shut off some of the natural gas producers in the process, and that just sort of led to a spiraling catastrophe. So I don't know that Texas is really a bellwether for what we ought to be doing in the future. It's sort of a cautionary tale. I think the lesson there is we really should be making sure that our power systems are better connected to each other. This is just a classic lesson we all learn when we're kids, is we ought to be sharing, and that really helps everyone, and that's certainly something that our energy system needs to do a better job of.

Dana Taylor:

What are some other places that are struggling to meet demand and why?

Ari Peskoe:

The country is divided into about a dozen regional grids, which are really sort of alliances of utilities that are the key players and they need to do a better job of connecting to each other by building more interstate, high voltage power lines within the region as well as reaching to connect to their neighbors. We know that our energy system is very much affected by the weather, and one way to alleviate those problems is to make sure that your energy system is sort of bigger than the weather. And the more you can connect across regions, the better job you can do of making sure the lights stay on and costs stay affordable to consumers.

Dana Taylor:

I did want to ask about the business of providing electricity. It's a unique industry here in that most of the utilities are effectively operated as monopolies. Is the answer more effective regulation?

Ari Peskoe:

Certainly more effective regulation is definitely part of the solution here, and another part of it is competition. In virtually every sector of our economy, we believe in the power of competition to lead to better results for consumers to bring innovation and lower prices. And so utilities are monopolies sort of as a matter of law. They generally have the exclusive right to deliver energy directly to consumers, and that right has led to dominance at the bulk power system, which consists of the power plans that generate most of our power as well as those high voltage interstate power lines that connect everything all together and really for historical reasons, utilities dominate those segments of the industry as well.

Over the last 30 years, policymakers have done a lot to bring competition to power plant development. I think that's led to good results. It's made it easier for cleaner sources of power to come online, and I think there's a lot more work to be done to open up that high voltage transmission space to new investors, entrepreneurs, and competition because there's a lot of interest in building this infrastructure that can bring huge public benefits, but the utility industry has, of course sought to maintain its dominant position and block new entry.

Dana Taylor:

Clean energy advocates have had to fight to expand the network of wind and solar power sources. Do you think that we're at the point where clean energy sources could help meet the demand?

Ari Peskoe:

Oh, absolutely. So we know we can do a lot more on clean energy. There's so much potential in this country. We have such great resources for wind and solar, and the real challenge is extending the network, the transmission network to reach that potential. And it really is in some ways just as simple as building this really very old technology. There's nothing particularly novel about a high voltage transmission line that technology has been around for decades. We just need the industry to get to work on it. These projects do take some time. So as we're hopefully with better regulation, pushing the industry to invest more in this infrastructure, as I said earlier, we need to make sure we're getting the most out of our existing system because that can also help bring more wind and solar online faster.

Dana Taylor:

America has experienced some massive grid failures, including one in 1965, another in 2003. The latter is estimated to have cost 6 billion in productivity and caused 11 deaths. Are we at all better prepared to avoid this going forward, or is it just a matter of time?

Ari Peskoe:

I think there were definitely a lot of lessons learned from that major blackout 20 plus years ago. It led to a greater standardization of the sort of technical standards that the industry uses to keep the lights on. There's been a lot of effort since then at increasing regional coordination. Hopefully they will remain sort of once in a generation events because sort of the human cost of them is tremendous. The economic cost is tremendous. We're also reliant on electric power in our everyday lives. And so even when the disruptions are just a couple of hours, we all notice it, and it's definitely something that policymakers and the industry take very seriously.

Dana Taylor:

Let's talk about other kinds of threats to the power grid. I'm thinking of hackers, foreign enemies. What keeps you up at night here?

Ari Peskoe:

I mean, frankly, those sorts of threats are no doubt serious. They're sort of above my pay grade, I think. I don't have security clearances for those things, so they don't keep me up at night. I know those threats are out there. I mean, unfortunately, it can be in some ways a dangerous world. But hopefully, again, these have thus far been extremely rare events that people in very high positions of power have a job to take very seriously. But I think sort of normal Americans like me and you, these sort of threats aren't part of our daily lives. What I worry about more, it's just the long-term trajectory for the industry because the technologies we have today, both in terms of how we can generate power, how we can move it around the system, how we operate a power system are very different today than they were a generation ago. And so we just have to make sure that the industry keeps moving forward. And whether that's better regulation that's going to get it there or more competition, we just have to keep pushing the utility industry to do better.

Dana Taylor:

We've talked about what's happening here in the US. Are there any innovations or new approaches that other countries are using that you think might be useful here?

Ari Peskoe:

Particularly Europe seems to be ahead of us both in terms of their ability to expand the interstate high voltage system to connect across countries. Again, we're having trouble connecting across utilities and across states, and they're moving across international boundaries much more aggressively than we are because again, the benefits of sharing are so clear and have been for so long for this industry. And they also seem to be ahead of us about deploying some of these advanced technologies that can help squeeze more out of our existing infrastructure. So this technology, a lot of these solutions are not technologically hard to implement. It's really just the institutions, particularly the electric utilities that have been so resistant to change, in part because they've been monopolies that just aren't subject to the normal sort of economic pressures that companies face, where in many sectors of our economy, either you innovate or you go out of business, and that just doesn't hold true for these electric utilities.

Dana Taylor:

Well, I'm based in Florida and it's going to be a long hot summer. I'd like for the AC to stay on. Ari, thank you so much for joining me on The Excerpt.

Ari Peskoe:

Thanks so much for having me today.

Dana Taylor:

Thanks for our senior producers Shannon Rae Green and Bradley Glanzrock for their production assistance. Our executive producer is Laura Beatty. Let us know what you think of this episode by sending a note to [email protected]. Thanks for listening. I'm Dana Taylor. Taylor Wilson will be back tomorrow morning with another episode of The Excerpt.