Stress on US electrical grid fuels new investments
As the United States stands on the brink of a new era of potential industrial growth, one critical component is still a giant question mark: the electrical grid. The vast network of power plants, transmission lines and distribution systems forms the backbone of our nation's energy infrastructure, delivering electricity to homes, businesses and factories.
Our power generation and transmission infrastructure is showing its age — brownouts have become routine in California — and rebuilding and modernizing the grid will require manufacturing capacity of its own. Luckily, we're starting to see those projects take shape.
This is JP Hampstead, co-host of the Bring It Home podcast with Craig Fuller. Welcome to the 15th edition of our newsletter, which explains how the movement of electrons across transmission lines helps power the movement of atoms everywhere else.
The U.S. electrical grid is a marvel of engineering, spanning millions of miles and connecting thousands of power plants to millions of end-users. It's a complex system that must maintain a delicate balance between supply and demand, ensuring that electricity is available whenever and wherever it's needed. This system doesn't just feed constant demand but has to respond to complex market dynamics impacted by weather and generation capacity.(Photo: USDA/Lance Cheung. Public domain)
In recent years, our grid has come under increasing stress. Extreme weather events, from hurricanes to winter storms, have exposed vulnerabilities in the system. The Texas blackouts of 2021 served as a stark reminder of the grid's fragility after it left millions without power for days. These events have highlighted the urgent need for modernization and increased resilience in our energy infrastructure.
But it's not just natural disasters putting pressure on the grid. The rise of artificial intelligence and a domestic manufacturing boom have sent electricity demand skyrocketing after more than a decade of level use. According to recent projections, electricity demand is expected to increase by a staggering 128 gigawatts over the next five years – that's five times greater than what was anticipated just two years ago. This surge in demand is being driven by the rapid expansion of data centers, the electrification of transportation and the revitalization of American manufacturing.
The energy needs of the United States are set to take off in the near future. As we race to compete with global powers like China in advanced technologies and manufacturing, reliable and abundant electricity becomes more crucial than ever. The North American Electric Reliability Corp. (NERC) has highlighted the need for an additional 35 GW of transfer capability across the United States – equivalent to the output of roughly 35 nuclear power plants – to strengthen energy adequacy under extreme conditions and alleviate shortfalls during weather events.This pressing need for grid expansion and modernization hasn't gone unnoticed by industry leaders. Major players in the power generation and transmission equipment manufacturing sector are making significant investments to meet the growing demand and ensure America's energy future.
GE Vernova, a key player in the power sector, has announced a substantial $600 million investment in its U.S. manufacturing sites. This move is aimed at boosting production capacity for critical grid components and advanced energy technologies. The investment reflects GE Vernova's commitment to supporting the ongoing energy transition and meeting the surging demand for electrical infrastructure.
Mitsubishi Electric is also stepping up to the plate. The company's U.S. subsidiary, Mitsubishi Electric Power Products, is investing $86 million in advanced switchgear production and power electronics in the United States. This includes the construction of a 160,000-square-foot factory in the Pittsburgh region, which will initially focus on producing vacuum and gas circuit breakers – essential components for managing and protecting electrical systems. The investment is expected to create over 200 jobs when the facility becomes fully operational, contributing not only to grid resilience but also to local economic growth.
Power management company Eaton announced a $340 million investment to increase U.S. production of three-phase transformers. These transformers are crucial for maintaining reliable electrical power across various sectors, including utilities, large commercial operations, industrial facilities and data centers. Eaton's new facility in Jonesville, South Carolina, set to begin production in 2027, represents a significant boost to domestic manufacturing capacity for critical grid components.
These investments by industry giants are more than just business decisions – they're a vote of confidence in America's industrial future. By expanding domestic production of vital grid components, these companies are not only addressing the immediate needs of our electrical infrastructure but also positioning the United States for long-term energy security and economic competitiveness.
It's clear that the electrical grid will play a pivotal role in powering America's reindustrialization. The challenges are significant, from updating aging infrastructure to integrating renewable energy sources and meeting skyrocketing demand.
But it appears that the weaknesses and shortfalls of the electrical grid are already motivating significant investments in manufacturing — over $1 billion in electrical transmission equipment manufacturing in the past few months.
'Nuclear power is the most reliable and efficient energy the world has ever known, and these partnerships will help drive this project forward. Nuclear power is critical to our nation's long-term energy future. Building [a small modular reactor] is not going to be easy. We are Americans. We do hard things, because it's in our DNA.'– Jeff Lyash, president and CEO of the Tennessee Valley Authority, the U.S.'s largest public utility, on Feb. 13
The capacity of major transmission lines in kilovolts. (Map: Wikimedia Commons)
Apple will spend more than $500 billion in the U.S. over the next four years
Apple announced on Monday its largest-ever spend commitment, with plans to spend and invest more than $500 billion in the U.S. over the next four years. This new pledge builds on Apple's long history of investing in American innovation and advanced high-skilled manufacturing, and will support a wide range of initiatives that focus on AI, silicon engineering and skills development for students and workers across the country.
'We are bullish on the future of American innovation, and we're proud to build on our long-standing U.S. investments with this $500 billion commitment to our country's future,' said CEO Tim Cook. 'From doubling our Advanced Manufacturing Fund, to building advanced technology in Texas, we're thrilled to expand our support for American manufacturing. And we'll keep working with people and companies across this country to help write an extraordinary new chapter in the history of American innovation.'
Why Trump's Clean Energy Rollbacks Could Derail a Factory Boom
The flood of investment has been driven by two major categories of subsidies provided under the Biden administration. One offered incentives for the construction of several enormous semiconductor plants set to begin operation in the coming years. The other supercharged the production of equipment needed for renewable energy deployment.
This second category is in jeopardy as the Trump administration and the Republican-led Congress seek to roll back support for low-carbon energy, including battery-powered vehicles, wind power and solar fields.
Trump Told Drugmakers to Move Production to US or Face Tariffs
President Donald Trump warned drugmakers in a private meeting that tariffs are coming and said companies should hustle to move overseas manufacturing to the U.S., according to two people familiar with the conversation.
Trump also didn't commit to pushing Congress to water down a drug pricing program enacted under President Joe Biden that the pharmaceutical industry has been seeking relief from.
The post Stress on US electrical grid fuels new investments appeared first on FreightWaves.
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