IIR Webinar: As North American Grid Changes, Need for Further Transmission & Distribution Spending Emerges

Researched by Industrial Info Resources (Sugar Land, Texas)--On Wednesday, Industrial Info's experts presented a webinar on the outlook for the North American power transmission and distribution (T&D) sector and what is expected in the coming years. Construction on the North American grid has changed drastically over the past 10 years or so. Coal fired-power gave way to natural gas, which has been overshadowed by renewable forms of energy such as wind and solar. Microgrids for municipalities, institutions, military bases and industrial sites also are becoming more prevalent. As these changes occur, so too does the need for further investment in the T&D infrastructure.

Wind and solar have become the rising stars of new power construction in the U.S. and Canada. Industrial Info is tracking about $93.7 billion worth of solar power and $48.5 million of wind power that are set to begin construction in 2022 and 2023. As these wind and solar developments often are located in areas where baseload power generation has traditionally been built, this leads to the need for new T&D infrastructure to reach these remote locations.

This trend only seems set to grow, with several states implementing renewable portfolio standards (RPS) that aim for a partial or total use of renewable energy by a specific date. States continue to raise the bar for their RPS goals, including Oregon and North Carolina, which are now aiming for 100% clean power by 2040 and 2050, respectively.

But even in areas that are sticking with older coal and natural gas-fired plants, the grid is aging. Much of the T&D infrastructure is approaching 40 years old or more, necessitating equipment replacement and upgrades, leading to further spending. Industrial Info is tracking about $27.5 billion for transmission lines, $4.1 billion for rebuilds and upgrades, and $4.9 billion for substation projects that are set to kick off in North America in 2022-23.

However, these projects often are not easy to build. Permitting time for new transmission lines can be quite long, especially if the line in question spans more than one state. It's not uncommon for new transmission projects to take five to six years to obtain full permitting.

Coupled with the rise in renewable energy is the buildout of battery energy storage systems. While these can be stand-alone facilities, they tend more often to be co-located with renewable (especially solar) facilities, and this trend will almost certainly increase as tax credits are in place for battery storage systems co-located with renewable facilities and receiving at least 75% of their power from renewable energy.

Other factors necessitating the buildout of additional T&D infrastructure include the rise of microgrids. There are more than 450 microgrid systems in North America rated above 465 kilowatts, and this number is growing. In particular, the U.S. is instituting microgrids regularly at many of its military bases--quite a large buildout.

With the increased use and new locations of renewable energy facilities, battery storage, aging infrastructure and the rise of microgrids, T&D spending is on the rise. Industrial Info is tracking about $40.9 billion of T&D projects set to kick off in North America over the next two years, a number that will grow as the grid continues to change and evolve over the coming years.

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Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.