Electricity Transmission and Distribution Spending to Show Strong Growth in Coming Years

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Research by Industrial Info Resources (Sugar Land, Texas)--Over the past few years, spending in the electrical transmission and distribution sector has increased, and Industrial Info expects this to continue over the next decade. Recently, the Electric Reliability Council of Texas (ERCOT) (Austin, Texas) announced plans for more than $8.9 billion in transmission line improvements. Currently, ERCOT oversees more than 39,000 miles of transmission lines throughout the state of Texas. Since the late 1990s, ERCOT has made more than $14 billion worth of improvements to the transmission and distribution system in Texas.

The new plan will call for the state to add more than 8,000 miles of transmission lines and upgrade more than 1,000 additional miles of existing transmission assets. With the influx of new electric transmission projects, ERCOT is also planning numerous substation additions and upgrades over the next five to six years.

Across the nation, several factors are driving increased spending on electricity transmission and distribution systems, including:

• the integration of new renewable energy projects under development in regions such as the Southwest, West Coast and Rocky Mountain regions
• the need for increased stability, support and security for the aging U.S. transmission system
• support of the SMART-grid initiative occuring throughout the nation
• the need to improve dispatching and control of generation assets by the control authorities

Industrial Info is tracking approximately 165 transmission projects with an accumulated total investment value of more than $58 billion that are set to kick off over the next six years, with an expected increase of project spending of about 15% annually. A large majority of these projects are being installed to facilitate the implementation of windfarm projects.

Click on image at right for a breakdown by market region of active electric transmission and distribution projects in the planning, engineering or construction stages.

Currently, there about 10,000 to 15,000 miles of transmission lines being looked at for the Southwest, Rocky Mountain and Midwest regions to shore up renewable energy projects. The non-renewal of the production tax credit (PTC) last year and the fact that it has not been passed this year signal a possible slowdown in certain aspects of the renewable energy market for next year. If the PTC is not renewed, the U.S. will see a number of transmission line projects slow in development. However, other elements, like the SMART-grid initiatives will not slow. An estimated $155 billion will be spent over the next decade, half in the implantations of the SMART-grid program.

Outside of this program, the Power Industry is seeing many other transmission and distribution projects, including more substation upgrades, converter stations upgrades and installations, and industrial facilities switchyard upgrades. For the most part, our current electrical grid dates back to the early 1960s. Since this time, we have seen numerous items, such as deregulation, that put the system's strength to the test. These include:

• more rapid deterioration for power plants being cycled up and down
• a decline in investment dollars in the upkeep of the transmission system
• little overall planning from states
• the lack of ability to assign cost of transmission lines that cross state lines
• an increase in renewable assets
• a increase in congestion
• a lack of spending for maintenance and upkeep

The Obama administration and the Federal Energy Regulatory Commission (FERC) passed the Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities (Order No. 1000), which will eliminate some of the confusion surrounding the cross-state allocation costs.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.