October 2024 Vol. 79 No. 10
Editor's Log
Editor’s Log: When money has no limits
By Robert Carpenter, Editor-in-Chief
(UI) — Power generation is rapidly emerging across North America – indeed, the world – as the primary factor that, in the near future, will impact not only our economy, but further development of modern civilization.
I would venture to say that not since World War II has such a demand for power generation exploded so suddenly upon the world. In the U.S., there are several drivers for this urge for power, most of which is to supply anticipated gigawatts necessary to meet the needs from distinct areas of our culture. In this issue of Underground Infrastructure, columnist Daniel Shumate, managing director of FMI Capital Advisors, described some of the driving forces and resulting financial interest from investors.
“The additional theme that is beginning to emerge in the underground construction segment is one of decentralization of investment,” observed Shumate. “This began with the population shift from city centers to suburban areas during 2020 and has continued to shape the infrastructure segments. Providing a decentralized population means that power, water, gas and high-speed internet have come from not only the large providers, but also entrepreneurial groups that are ensuring that communities have strong communication networks and distributed renewable generation.”
I’ve heard of many reasons why people are fleeing cities, but most center on quality of life. Fiber has been a key element that enables the transition to rural life. COVID drove home the point to the world that for a growing number of jobs, as long as you have fast broadband, you can do your job anywhere while enjoying a more relaxed pace of life.
Shumate cites the artificial intelligence tsunami as another key factor driving power generation markets. “…Privately financed power generation and transmission is also an emerging theme as the power demand from data centers fueling the AI boom exceeds current grid capacity.
“The companies are simply not getting their needs met by the incumbent investor-owned utility. The owners of these data centers have no shortage of cash and are making their own investments in their generation needs. This includes making massive private investments in clean energy generation, substations, transmission and distribution to address their power needs.”
In other words, the perceived pathway to profits exists only with massive amounts of power and investors – public and private – being more than willing to put up the money.
I would add that it’s not only AI requiring gigawatts of electricity in the near future; it is also the vision of an immediate, all-electric world ranging from electric stove tops and air conditioning to electric cars and charging stations. Artificially abrupt deadlines have been created to fulfill a preconceived destiny that can only be obtained with an immediate conversion to electric vehicles.
But to allow the production and operations of an electric fleet would require an enormous expansion of the electric grid and, of course, the capability to deliver power to the grid. We simply don’t have the resources to instantly create and power such a grid. However, the market is pushing back on this movement pending development of ‘solutions’ for the ‘electric car solution.’
Shumate also maintains that the money to develop the massive electric grid in North American is available. “… Venture capital has increased its investment in grid infrastructure to meet the growing demand for power. Venture funds are pouring billions into the technology and projects that increase power-generating capacity, grid reliability and efficiency.”
All this adds up to a demand for more power than we have previously imagined. The money will come from, well, somewhere. Private equity, utilities, government spending, but nonetheless funding will materialize.
As construction goes forward on expanding our electric grid, hopefully utilities and private owners have learned a very valuable lesson: undergrounding transmission and all supporting infrastructure is the best option. Going underground may not be the most economical method in the short term, but savings in life-cycle costs more than make up for the initial investment with a reliable, dependable and safe grid.
At no point is that lesson better presented than right now when the Southeast United States has been battered by massive hurricanes. Millions were still without power at press time, with estimates for some areas that it may take months before power is restored. Would being underground have completely eliminated outages? Of course not. But it would have greatly tempered the damage and accelerated power recovery to days rather than weeks or months. The utility damage costs would also most likely be substantially reduced.
And aesthetically speaking, can you imagine the amount of three-phase towers we’ll have scattered across farm and park lands, as the expanded electric grid sweeps the country? I can already hear the cries of NIMBY (Not in My Back Yard) rallying from the Sierra Club and a plethora of other organizations, as well as individuals.
As it has become obvious that power demands are going to increase almost exponentially in the very near future, great care has to be taken to build out a grid that is reliable with room for continued growth. Erecting towers and stringing cable across city neighborhoods and country fields is simply irresponsible.
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