Manufacturers Can Lock Arms With Utilities To Ensure Reliable Grid

Shades of 2021 visited some manufacturing CEOs in Texas and the rest of the Deep South last week as temperatures dropped dangerously close to where some would worry the Lone Star State could undergo the same sort of power-grid failure that caused havoc to their companies and the economy three years ago.

A thousand miles to the north, Linda Apsey wasn’t much worried about the effects of a traditional January cold snap on the Midwest’s electricity infrastructure as she was concerned about what will happen to the region’s electrical grid in the months—and years—ahead.

And she was hoping her hoping her transmission company, Novi, Michigan-based ITC Holdings, could get help from manufacturing executives to ensure that the regional electrical grid will be able to supply factories with all the energy they need to continue expanding the comeback of U.S. manufacturing.

“We don’t even have a grid that can meet today’s needs, much less the needs of the future,” Apsey, whose company serves Upper Midwest states and is the largest independent electricity-transmission company in the United States.

“Overall, we do have a reliable grid, because of course not everything demands power and energy at the same time,” she said. “The grid is fully capable in most cases of meeting the day-to-day needs of the economy. What gets challenging today is days of peak demand—in our case, in the summer—or in cases of extreme climate events.”

But electricity demand continues to mount across the country, far outpacing any expansion or fortification of the grid. “Looking out into the future, we have serious and significant underinvestment in the grid, so we, like other utilities, have been making significant reinvestment in our transmission infrastructure,” Apsey said.

To her point, ITC is part of a consortium of Midwestern utilities that is in the midst of “making significant investments in major transmission projects that would help us facilitate future energy demands,” to the tune of $10 billion overall and $1.5 billion by ITC, with her company also planning five-year investments totaling $5.6 billion.

At the same time, Apsey said, ITC has been experiencing “a significant increase in customer-interconnection requests to facilitate major manufacturing facilities” and, in the case of Iowa, lots of data centers. “Like we haven’t seen in decades,” she said. “That drives the need for more and more high-voltage transmission infrastructure.”

And for the future, she said, “We want a grid that’s highly reliable and we want it to be resilient against climate and weather events, we want it to be secure and access the cheapest source of generation, as well as access clean energy resources. And by the way, now we have to have a grid that can accommodate the electrification of our economy.”

Manufacturing CEOs can help efforts to ensure adequate energy for their factories via the grid in a number of ways, Apsey said. They include:

• Back reforms. “We’re at this precipice, and it’s absolutely important that companies like ours, customers and policymakers work hand in hand,” Apsey said, “What that means is we’ve got to put forth and support policy reforms that will allow this infrastructure to get built and realized quicker, faster, sooner, because the longer we wait, the more expensive it becomes. And it delays the plans and needs of customers.

“The more we can work hand in hand to understand the needs and requirements that our customers have, the more we can work hand in hand to support necessary infrastructure, the faster we’ll get there.”

All of that coordination, Apsey said, “will provide further confidence and courage to policymakers so they can make appropriate decisions.”

• Help build consensus. Manufacturing CEOs can monitor and provide input to policy proceedings of regional transmission organizations, which coordinate and monitor electric gris and are using an interregional, long-range approach to plan for trends including the interconnection of renewable resources, increasing demands from electrification, and the anticipated impacts of moving toward a carbon-neutral economy.

“Often there are different perspectives on what should happen, but sometimes when we don’t have agreement, it can further delay progress,” Apsey said. “We need a united front with customers on what is needed, which can provide further confidence and courage to policymakers so they make the appropriate decisions.”

• Don’t go it alone. It’s one thing for manufacturers to erect, say, solar arrays and natural-gas generating capacity for unexpected or peak needs—but it’s entirely more risky and certainly more expensive for them to try to become self-sufficient or even mostly self-sufficient in providing their own electricity.

“Public utilities drive economies of scale,” Apsey said. “You get the benefit of the averaging of demand, so if everyone were going to put in their own facilities, they’d be duplicating capital and variable costs. Fundamentally, having grid-scale reliability and access to all sources of generation is going to be cheaper and more reliable than having your own facility and cutting the cord to the transmission grid.”