Welcome back to The Sunstone Way.
Our world relies increasingly on electricity to make things work – lights, appliances, the computer I am writing this blog on, etc. As we shift inexorably from fossil fuels for transportation, electric vehicles continue to multiply.
And the explosion of demand for artificial intelligence (AI) has driven a boom in data centers – huge blocks of computer servers requiring megawatts of electricity to operate and keep cool.
Meeting Demand
With the dual realities of rapidly increasing demand and a need for clean energy to slow climate change, the push is on to generate more electricity. Solar and wind power generation is expanding rapidly, as is battery storage to make electricity available when the sun isn’t shining or the wind isn’t blowing. Since 2021, California alone has added more than 20,000 megawatts of new clean energy supply.
Add the potential for geothermal power generation, safe nuclear plants, and more experimental energy sources like ocean waves, and progress is being made. We remain in a transition phase, still relying on fossil fuels like natural gas to provide the electricity we need, but we’re getting there.
But there’s another side to the electricity question – getting the electricity from where it’s generated to where it’s needed.
Make The Connection
One of the greatest accomplishments of the United States was construction of a nationwide grid of high-power electric lines, providing electricity to densely populated cities and remote rural farms. It wasn’t built all at once, but by region, usually spreading out from major generation plants. One region would connect to those next to it, which were doing the same, creating a grid.
Once a grid is large enough, operators can send electricity to where it is needed from power plants many miles away. For example, there are no large plants generating electricity anywhere near the Ports of Long Beach and Los Angeles. So the operations there pull electricity – more almost every day – from the network that connects the ports – the grid.
But that grid is aging and limited in capacity. The World Resources Institute estimates the U.S. needs between 1,400 and 10,100 miles of new high capacity electrical lines annually to handle the expected tripled demand by 2035. Last year, about 275 miles of new high-voltage transmission was added.
The need for more investment is well known. In 2023, utilities nationwide spent $27.7 billion on transmission and $50.9 billion on distribution – $7.7 billion and $6.4 billion more than the year before. But about 90% of that spending was to replace aging equipment. In the Los Angeles area, plans to put transmission lines underground has increased cost significantly.
Some Solutions
A renewed commitment to infrastructure clearly is needed on a national level. Technology including advanced conductors could boost existing line capacity by 20%-40%.
But those are long-term solutions. Some major projects, such as data centers and electrification of the Ports of Long Beach and Los Angeles, need more electricity now.
One potential answer is creation of a microgrid. A microgrid is just what it sounds like – a localized energy system that can generate, distribute and manage electricity for a specific area. Microgrids often are connected to the main electricity grid for an area, but have the capacity to operate independently when necessary.
Ability to generate electricity locally is key to a microgrid. Think solar or wind coupled with a battery system for reliability. Or further in the future, a small modular nuclear reactor could be the power source. It’s all in the works.
Transportation Grid
Range. It’s the number one concern for alternative fuel – electricity and hydrogen, primarily – vehicles, whether it is passenger cars or cargo-hauling trucks.
In a chicken-or-egg moment, people hesitated to buy electric vehicles because they were afraid they would run out of juice on the road while charging station builders hesitated to put in far-flung systems because they were afraid there wouldn’t be enough electric cars on the road to make it worthwhile.
We seem to have gotten over that hurdle, at least for cars. There are about 206,000 public EV charging ports available now. Current estimates are that we’ll need 1.2 million ports nationwide by 2030.
Hydrogen, natural gas, biodiesel, and other alternative fuels face the same challenges.
An Opportunity
Providing electricity and the grids to carry it are among the biggest challenges we face as we move forward. Is this an opportunity for technology to come to the rescue? How about entrepreneurship?
It’s time to invest in solutions, for the community’s sake. It’s time to take advantage of the opportunity to create something new. After all, that’s The Sunstone Way.
Remember, always be a Sunstone!
John Keisler
CEO & Managing Partner
Sunstone Management, Inc.
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