Where to Spend Infrastructure Stimulus Money

Vanessa Edmonds

Vanessa Edmonds

Today we are living in a digitally connected world where Americans rely on uninterrupted and affordable electricity. To continue providing it, more money needs to be spent on modernizing aging utility assets and making new investments. The good news is that progress is being made. Utilities are taking proactive steps to strengthen the electric grid through resilience investments, and, in turn, outages have declined slightly.

The bad news is that threats still exist, and some are increasing. Extreme weather events are an example. According to the 2021 Infrastructure Report Card, “Among 638 transmission outage events reported from 2014 to 2018, severe weather was cited as the predominant cause. Additionally, distribution infrastructure struggles with reliability, with 92% of all outages occurring along these segments.”

Biden’s Infrastructure Stimulus Plan

“Where is the money going to come from to make these investments?” is one of the key questions utilities are wrestling with. While the answer is complicated, some of the money may come from Biden’s new infrastructure stimulus plan. If it passes in Congress, the federal government will deliver a $2 trillion, eight-year,  infrastructure modernization plan. Included in the plan are investments in the electric grid, food systems, urban infrastructure, community health and hospital, and transportation assets. 

Utilities, specifically, will receive money for stimulus projects to speed up the transition to clean energy and modernize the grid. Industry investments include:

  • $100 billion to upgrade the U.S. electric grid;
  • Carbon-capture projects (capturing, transporting, depositing, and storing carbon dioxide where it will not enter the atmosphere); 
  • $174 billion towards electric vehicles; and
  • Repeal of subsidies and foreign tax credits for the fossil fuel industry.

In terms of timing, White House Press Secretary Jen Psaki said during an April news conference, “We’d like to see progress by May and certainly a package through by the summer.”

Avoiding Vanity Projects

How utilities should use this money—if it becomes available—is a topic being discussed in every utility board room in the country. It will be featured during an upcoming PowerSession hosted by the Utility 2030 Collaborative and Energy Central, “Avoiding Vanity Projects with Infrastructure Stimulus.”  Discussion leaders will lead an open session where key stimulus investment-related questions will be asked and answered.

According to Investopedia, a stimulus package is a, “Package of economic measures a government invokes to stimulate a floundering economy. The objective of a stimulus package is to reinvigorate the economy and prevent or reverse a recession by boosting employment and spending.

” With this in mind, it will be critical for utilities to identify and rule out vanity projects very early on, in favor of those that will achieve the goals of stimulus investments. Vanity projects are generally high-profile endeavors that don’t actually help a business achieve its core objectives and goals. They often arise from pressures being put on business leaders to get behind the bandwagon trend of the moment.

The session will be very informative for those who make investment decisions in business operations and the electric grid. The registration link is coming soon.

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