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We need jobs: the electricity industry is already providing it!

Some of the concerns around the impact of  Nor’easter Sandy centered on the impact of the storms on the electricity grid. And rightly so; the impact of a storm like ‘Sandy’ will take a lot of money and time to recover from. Though it should not take a disaster like ‘Sandy’, this actually provides an opportune time to improve the grid. Unfortunately, the repair of the damaged systems or the upgrade of the grid will not happen for two reasons which I will discuss in more detail below

  1. The lack of skilled employees and there is a vast shortage of these.
  2. The unwillingness of all parties involved to bear the cost

The State Of The Grid

It comes as no surprise to anyone that the US electricity grid is in need of an upgrade. This basic infrastructure of the electricity grid has not changed much for the last 50-60 years especially in light of the advances in technology that have been applied to other critical industries like healthcare and defense. The grid map shown below (obtained from NPR) shows the three major grids in the US: the western interconnection, the eastern interconnection and the Electric Reliability Council of Texas (fascinating that Texas has it’s own grid. As the saying goes ‘everything is bigger in Texas’). The most that has been done to the grid in that time is maintenance.


To recover from ‘Sandy’ the eastern/northeastern utilities flew in and continue to fly experts in from around the country (with some linemen coming from Illinois and even trucks coming in from PG&E in California) to assist with the repairs to the electricity grid. Once the equipment is fixed some post repair maintenance will be required. Unfortunately the shipped in experts will have to go back to their respective states/utilities to serve their primary customer base. I suggest this time be used to assess what repairs need to be made and take it as an opportunity to move a considerable part of the grid from the antiquated technology being utilized and install some modern equipment that gets us a bit closer to the desired goal of a ‘smart grid’.

The skill shortfall

Unfortunately this ‘opportunity’ that the storm has provided to upgrade the grid will be missed. It will be missed because there is a vast shortage of skilled utility industry workers that can modernize the grid. If there were enough experts with the required skill to maintain the current grid the eastern and northeastern utilities would not have shipped experts in.  A interesting Center for Energy Workforce Development survey carried out in 2012 shares some glaring points

-       The average age of the utility industry employee is 50

-       Over the next decade 62% of the industry has the potential to retire or leave the workforce

-       Between 2015-2020 33,700 replacement employees will be required. This is just to maintain, not update, the level of the current workforce.

The skills shortage will particularly be evident in the areas of power plant operators, transmission and distribution technicians and engineers. There is a good problem here, jobs, but no immediate or long-term solution if the skills training required is not accelerated. All these point to a need to train a new crop of experts to both maintain and update the grid. But where will the money come from? This question underlies why it isn’t happening yet and might fail to happen.

Economics of the smart grid

According to research by faculty at the Kellogg School of Business Northwestern University, the electricity grid of the future will require updates to the production, transmission and consumption infrastructure.  Also included in the costs of upgrading the grid is the cost of educating the workforce required for upgrade implementation. To determine who will bear the cost we should look at who will benefit. From an upgraded smart grid consumers will expect better service from their utility, transmission providers will get information on outage likelihood and utilities will be able to shift the demand of electricity from the times when it is in higher demand (peak time) to when demand is low (off-peak). So all parties benefit and all parties should bear the cost. And this is where the real issue lies; no one wants to bear the cost and, unfortunately, government (as we have it now), which would normally provide this upgrade as a public good cannot afford to bankroll this huge endeavor.

The solution to this impasse would be willingness on all parties involved (utilities, suppliers, consumers and the government) to bear some part of the burden in an oft forgotten agreement structure called ‘shared responsibility’; utilities get subsidized by government for educational programs, suppliers partner with utilities to offset these costs, consumers accept a slight increase to their bills and the grid gets updated. This solution sounds simplistic but if the goal is kept this simple and clear it becomes easier to question any misalignment.

Until this happens we all wait for the grid upgrade. And the thousands of jobs go unfilled.

PS: All the very best to our friends on the East Coast. Know our thoughts and prayers are with you.

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