June 15, 2023

Strides to Strengthen the Electrical Grid


7 Min. Read

The rapid expansion of electrification technologies and the push toward clean, renewable energies will be increasingly prevalent in 2023. With the growth in home, electric vehicle (EV), solar, and all other non-grid forms of electrification technologies, a dated electrical grid is swiftly becoming the weakest link in the clean energy chain.

Below, we’ll touch on how to build a more resilient grid and the supporting technology a strengthened grid will need.

Building a Better Grid

Net Zero Emissions by 2050 Scenario (NZE) outlines the path we’ll need to take to achieve zero C02 emissions. Doubling the current funding from $300 billion to $600 billion annually through 2030 to upgrade grid infrastructure is a crucial step that needs reinforcing in 2023. With this more substantial focus on the grid, electrification can continue to grow.

The Inflation Reduction Act and Its Effect on the Grid

The Inflation Reduction Act of 2022 is the most significant clean energy legislation ever passed. It includes sweeping measures to reduce greenhouse gases (GHGs) for businesses, nonprofits, educational institutions, and local, state, and tribal organizations that follow specific guidelines through incentives such as tax credits and rebates.

Tax credits from the Inflation Reduction Act allow applicable parties to deduct a portion of their purchases as well as installation and maintenance cost from their federal taxes, and will soon allow customers to realize these savings at the point of csale for certain technologies, such as electric vehicle.

The goal of these incentives is multi-faceted, aiming to strengthen America’s energy security, create good-paying and high-quality jobs, and drive shared economic growth. By providing support and incentives, the intention is to promote sustainable and resilient energy solutions while boosting employment opportunities and fostering overall economic prosperity.

These measures recognize the interconnectedness between energy, job creation, and economic development, working towards a more secure and prosperous future for the nation.

The Investment Tax Credit (ITC) and Production Tax Credit (PTC) currently determine what specifications must be met to qualify for these incentives and familiarizing yourself with them can help ensure you are best able to take advantage of their offerings as you expand your utility programs and encourage customers to adopt more sustainable technologies.

Focusing on Deployment: Guidelines for ITC and PTC

Projects with lower than one mega-watt of alternating current (1MW-AC) may receive an entire 30% base ITC without meeting the new labor standards that all projects over 1MW-AC must meet. Projects over 1MW-AC will receive a base 6% tax credit with the potential for the full 30% tax credit if they meet labor standards.

New labor standards require that all laborers and mechanics involved must be paid at least the prevailing wages for the following five years upon completion of construction. The new standards state that, as of 2024, contractors must complete a minimum of 15% of the labor by utilizing qualified apprentices to increase their contribution to the workforce, thereby further bolstering the workforce and apprentice education.

Similar to the ITC, the base PTC for lower than 1MW-AC projects will receive a minimum of 1.3 to 2.6 cents/kWh. Over 1MW-AC projects require the same labor standards for apprentices. This will also require all laborers and mechanics to be paid at least prevailing wages for the 10-year duration of the PTC.

Bonus credits may also be of additional benefit to qualifying candidates. Low-income, domestic content, or energy community bonuses are available in addition to the standard ITC and PTC incentives.

On Jan. 1, 2025, the Clean Energy Investment Tax Credit and Clean Energy Production Tax Credit will replace the ITC and PTC. The most significant difference is that these will no longer be for specific technologies. All estimated net-zero GHG emission electrical generation facilities will apply. The benefits will stay the same but may be adjusted as the U.S. reaches GHG emission goals.

Educating your utility customers on these incentives can help encourage the transition to electrification in your region, and utilities should also consider how they can utilize federal and local savings to make their own improvements.

Supporting Technologies with a Better Grid

With upfront investment incentives, the Inflation Reduction Act adds to the already ever-present benefits of reducing GHG emissions, self-reliability from the grid, and long-term savings, so now is a cost-effective time to begin converting to net zero emissions.

But 1,400 gigawatts of interconnection projects are lying in wait. Once completed, these projects have the ability to power 80% of the U.S. grid with clean energy by 2030.

Currently, the grid faces the impact of more extreme weather patterns, encompassing severe winter storms and intense heat waves, leading to increased electricity needs. The growing demands for cooling, heating, and various daily technologies have further strained the grid’s capacity. Unfortunately, the grid was not initially designed to accommodate these escalating needs, which climate experts predict will continue rising in both volume and severity.

Deployment strategies are being implemented for transmission lines, with the Department of Energy (DOE) developing the Transmission Facilitation Program (TFP) to allocate $2.5 billion toward transmission infrastructure. The TFP aims to supplement projects that would not otherwise begin construction without additional support. Projects that are already funded and underway remain unaffected by the TFP.

Line transmissions (high-power voltage lines) are another significant hurdle. Many stakeholders see an enhanced U.S. transmission system as crucial for facilitating the expanded utilization of wind and solar energy in electricity generation while enhancing resilience to extreme weather events. Battery storage can further improve the grid’s resilience by providing back up energy as needed.

In 2023, some of the most significant strides toward remediation for these current weaknesses can now be taken with more financial ease.

Plans to Strengthen the Grid

TFP and other similar projects are still going to take time to build infrastructure. One of the most prominent bottlenecks is the time it takes for many of these projects to get through the approval process.

What used to be a one-to-two-year process can take as much as four years. The grid has not been able to expand at the same rate as clean energy products that increase the draw on the electrical grid, such as EVs.

Activists pushing for the construction of transmission lines that enable electrification technologies are also worried about the environmental impact. Increasing infrastructure directly impacts the environment, and issues surrounding these problems can take decades to resolve. The Federal Energy Regulation Commission (FERC) has a plan to combat these outlined problems as soon as possible.

These plans cover a mix of regulations around minimizing the number of structures being built. The key is avoiding over-building while maintaining the capabilities of meeting transmission and resource needs. FERC plans have not yet addressed all aspects causing backlogs and ways to reduce upgrade costs, indicating that these are areas that will require attention in future planning.

How Infrastructure Utilities Must Improve

The FERCs plan requirements will impact grid operators and transmission-owning utilities. These guidelines have been established to enforce accountability due to utility owners’ failure to allocate resources toward transmission upgrades to meet the growing demand. Setting deadlines for studies and proposals is backed by the repercussion of financial penalties.

Project developers will also incur the burden of proof on land-rights procurement, permitting, and customer base. Grid operators and utilities have a rising need for prospective projects and are adjusting to working with developers with a high track record of completion to meet deadlines.

Project developers should also be able to demonstrate in-depth knowledge of the industry. Infrastructure will need ample time to upgrade, and there are ways that consumers can also lessen the electric burden on the grid.

For instance, decarbonizing dual-fuel systems, improving the performance of heat pumps, or even setting the thermostat back can lessen the burden on the grid. Partnering with installation companies and informing customers has an enormous impact on lessening the burden.

Utilizing Strategic Partnerships

Utilities are searching for high-quality project developers that can execute at a fair cost. Qmerit is North America’s leading expert on installing and integrating electrification technologies. We’re dedicated to finding the best solutions for homeowners, businesses, and utility partners.

Our in-depth knowledge puts your utility company at an advantage because we help you to reach your goals while maximizing your return on investment and electrical grid resilience.

Qmerit’s Peace of Mind Guarantee encourages customers to electrify their homes and business safely, and we’ll work with you to ensure you’re using all tax credits and incentives. With the most trusted installation network in North America, you’ll unlock our expertise and years of success to determine and use the best electrification strategy in your region,

Choose the right partnership for your electrification needs; choose Qmerit.

Author: Tom Bowen

Tom Bowen

President, Qmerit Solutions and Commercial Electrification