$2.5 billion to modernize America's electricity grid to face climate change

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  • Introducing a transfer facilitation program to adjust the tools of modernization financing mechanisms
  • Allocates $2.5 billion as part of the $20 billion initiative to “build a better network”
  • The modernization plan begins with the development of network parts that are more than 25 years old (70%)
  • The goal of modernizing America’s electricity grid is to increase its resistance to climate change and meet demand
  • The US Department of Energy is buying 50% of the capacity of new transmission lines for 40 years

The electricity sector in America continues to receive support from the administration of President Joe Biden and the Department of Energy, which announced – at the end of last month – allocating $2.5 billion to make upgrades and upgrades to the grid in line with the effects of climate change.

Yesterday, Tuesday, May 10, the ministry confirmed that these allocations come within the transport facilitation program, which is the largest investment in the private infrastructure law in the field of electricity transmission lines managed by Biden.

The program is also a first step for larger investment batches amounting to $20 billion earmarked for spending on the ministry’s new initiative “Building a Better Network”.

Upgrading the electricity grid in America

US Secretary of Energy Jennifer Granholm explained that making updates to the electricity network allows Americans to obtain supplies at all times and places, stressing that network expansions and the availability of supplies enhance the possibility of deploying clean energy necessary to achieve climate goals and reduce energy prices.

Electricity in America
The Minister of Energy announces programs and tools for financing the plan to modernize the electricity grid in America – Photo from Reuters

Granholm pointed out that the chronological age of nearly 70% of America’s electricity grid has exceeded 25 years, which necessitates updating it, pointing out that the Transportation Facilitation Program – which works to provide several jobs in the country – was driven by the stimulus of the bipartisan Presidential Infrastructure Act.

Non-governmental data had estimated the need to modernize America’s electricity grid, by expanding transmission line systems by up to 60% by 2030, and triple that percentage by mid-century.

These expansions aim to enhance the American response to renewable energy expansions and meet the demand for electricity, especially since several states have witnessed frequent power outages due to bad weather fluctuations, the most prominent and longest of which over the past two decades was a cut that lasted for more than 8 hours in 2020.

Transport facilitation program and funding sources

The US Department of Energy announced, on Tuesday, that it is seeking information on the input of spending allocations related to the Transportation Facilitation Program, which is concerned with providing financial support and overcoming spending obstacles to electricity grid upgrades.

The expected updates are concerned with spreading new transmission lines on a large scale, providing clean electricity to all parts of America at affordable prices, supported by technologies to confront climate change and absorb its effects.

The program supports the achievement of the Biden administration’s goals of increasing the capacity of America’s electricity grid to absorb clean supplies by up to 100%, by 2035.

The program allows the Ministry of Energy to borrow about 2.5 billion dollars, through 3 tools: loans, the ministry’s contracts for public-private partnerships, and contracts for capacity projects for the ministry, according to the ministry’s website.

The ministry allows spending of specified allocations to support the electricity grid in America with high-capacity transmission lines and developed.

Electricity in America
Upgrading the electricity grid in America requires huge investments to support transmission lines – Photo by TECO Times

Program action plan

Projects that seek to implement action plans to modernize the electricity grid in America will begin at the end of December 2027, and the ministry is scheduled to set deadlines for receiving funding requests soon.

The program allows the Ministry of Energy to purchase up to 50% of the maximum transmission line capacity, for a period of up to 40 years, through capacity contracts, and the US Department of Energy aims with this step to reduce the spending challenges that will face modernizing the electricity network in America, and stimulate investments.

The ministry set its goal in launching the transport facilitation program in “guaranteeing the replenishment of the fund’s resources” by continuing the ministry’s capacity purchases to promote increased consumer demand to the extent sufficient to cover the cost.

And by making the necessary upgrades to America’s electricity grid, it is gaining strength to withstand wildfires, weather fluctuations and other aspects of climate change that have affected the regularity of electric current and generation capabilities over the past years.

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