Publication Date: October 2008
Publisher: Manhattan Institute for Policy Research. Center for Energy Policy and the Environment
Author(s): Peter W. Huber
Research Area: Energy
Keywords: oil; energy; electric; grid
Coverage: United States
Electricity - not oil - is the heart of the U.S. energy economy. Power plants consume as much raw energy as oil delivers to all our cars, trucks, planes, homes, factories, offices, and chemical plants. Because big power plants operate very efficiently, they also deliver much more useful power than car engines and small furnaces. Electricity is comparatively cheap, we have abundant supplies and reliable access to the fuels we use to generate it, and the development of wind, solar, and other renewables will only expand our homegrown options. Our capital-intensive, technology-rich electrical infrastructure also keeps getting smarter and more efficient. With electricity, America controls its own destiny.
A backbone grid built with state-of-the-art high-voltage technology and spanning the continent could readily move 25 percent of America's power over very long distances, at a cost well under 0.5 cents per kilowatt-hour moved. Overlaid on the existing, fragmented system, a backbone grid will let cheap power chase high demand around the clock and across the country. It will squeeze significantly more electricity out of every dollar of invested capital and every dollar spent on raw fuel. The economic benefits can be shared at both ends of the line, whichever way the power moves. And the savings that a backbone grid delivers will only increase as environmental costs are progressively folded into the economic spreadsheets.
The U.S. grid is the most ubiquitous and advanced energy delivery network in the country and on the planet. Building out a backbone grid - a financially modest undertaking for an industry as large as the power industry already is - will unleash innovation and competition on both the supply side and the demand side of our energy market. To get over $4 gas, we should let American capital, labor, and know-how get on with what they already do so well, and connect us to the 4-cent electricity.