After the US blackout

When the lights went out across North America there was plenty of outrage, but nobody seems to know what needs to be done differently.

Of course, without knowing the immediate technical causes of the blackout it is hard to attribute blame or learn lessons. The massive inconvenience caused by the blackout, together with the desperate state of the US power industry, has inevitably led to frustrated attacks on everyone from environmentalists through greedy businessmen to useless politicians. However, the difficulty is that solutions won’t seem to make sense until we start to think more ambitiously.

Both ‘poor regulation’ and ‘deregulation’ have come under fire, with the federal government tilting toward a solution based on ‘more regulation’. But the constant reorganisation of the relationship between government and industry has become so tangled it is hard even to characterise particular measures as regulation or deregulation. The Wall Street Journal complained of ‘a chaotic combination of regulated and deregulated markets’ and an ‘unsteady regulatory situation’ that inhibits investment (1).

The focus on investment is to the point, but bad regulation is not the heart of the issue. It is more a symptom of a deeper problem, a displacement activity like rearranging the deckchairs on the Titanic.

There is no doubt that investment in power generation is lagging. For the moment, the problem is not an absolute lack of generating capacity. Economic activity has grown faster than the capacity of new power stations, but it has not grown fast enough to stimulate a new round of investment. The gap has been made up by more efficient use of existing capacity. That puts the strain on the grid, the transmission system that allows suppliers across the country to balance supply with demand.

There is nothing wrong with an economy becoming more efficient. But any system that operates near its limits runs the risk of breakdown. The electricity system has to be prepared to handle demand in excess of peak levels. In a rapidly expanding economy excess capacity looks like room for growth. The problem is that when growth slows that excess capacity just looks like waste, and gets cut back.

In the 1950s and 60s the US grid grew at breakneck speed, as demand and generating capacity grew at seven to eight percent each year. Much of the growth in demand was from industry – and new homes now came equipped with all mod cons, including air conditioning. In the 1990s, and especially in the recessionary years since 2001, growth in demand for electricity has been much slower. The pattern of investment in both generation and transmission fits that of a less dynamic economy.

There are also long-term difficulties for any market economy renewing infrastructure. A point is reached when the prodigious funds required for a new round of investment makes it more profitable to try and squeeze the last drops out of existing assets. This difficulty is a signature of an economy in decline. Britain dominated the Steam Age, but today we are stuck with railway tunnels and bridges that are not easily replaced. The USA might look to China’s opportunity to construct a hi-tech economy from scratch with trepidation and envy.

But these difficulties have long been a feature of economic hard times. Today, there seems to be an added lack of will to deal with them.

Politicians accuse each other of stubbornness, letting arguments over marginal issues – like whether drilling for oil in Alaska will upset the local Caribou – get in the way of a rational energy policy. While politicians may appear pig-headed, more of a problem is that nobody will force policies through. All the ruthlessness and energy that used to go into politics increasingly goes into personal bickering. Backstabbing makes politics look more confrontational, but the practical consequence is a stalemate.

It is tempting to demand more pragmatic politicians. But that is unlikely to help. You would hope that with the supposed influence of the energy industry over President George W Bush, America would at least be able to keep the lights on. The more substantial problem with the energy industry is an institutionalised hostility to thinking big.

Lowered horizons are evident on all sides of the debate. Free marketeer Lynne Kiesling took issue with ‘the tendency to think of the grid as a supply issue’. If people had to pay more, she points out, they would cut back on their energy use (2). That might be true, but there is no technical barrier to generating as much power as people need. We should focus on how we can make it happen.

Low expectations are best illustrated by the popularity of small-scale homemade electricity, or ‘distributed generation’ as its advocates like to call it. After the Second World War, firms that had made diesel generators for the military tried to find a new market in the farms of rural America. But they were put out of business by the rapid expansion of the grid. Today home generators are back in fashion.

Slate magazine has traced the rise of home generation: ‘The every-man-for-himself mind-set that swept through America in advance of Y2K spawned a new demand for home electrical power systems that hasn’t gone away since. After California’s rolling summer brownouts three years ago, in Central Valley tract homes, generators are as common as hot tubs.’ Apparently this hi-tech survivalist mentality is ‘not just for weirdos anymore’ (3).

After the latest blackout, distributed power advocate Jeremy Rifkin identified the problem with the grid: ‘each part of the system is so dependent on the rest of the system working that when a single malfunction occurs anywhere, it can result in power loss everywhere.’ In some respects Rifkin’s vision of an ‘interactive intelligent energy network’ sounds ambitious. For example, he has picked up on the potential of information technology (IT) to build a better grid. But the vision is crippled by his obsession with small-scale production, which is seen as more reliable (4).

The development of the electricity grid proves just the opposite. It is 26 years since New York’s last major blackout, and the previous one was 12 years before that. There is no practical reason why blackouts in the future should not become rarer still. Centralised electricity production is less likely to asphyxiate you in your sleep or set you alight as you refuel the generator. Even better, it makes the best use of expert engineers, while freeing the rest of us to invest our energies in other things. However, as the blackout shows, this technology is all too easily thwarted by the anarchy of the market, expressed through the mish-mash of competition and regulation, and a reluctance to invest for the long term.

The US grid has powered a global superpower. Yet now, the world can talk about it as a ‘third world’ system. The larger the transmission system has grown, the more reliable it has become. Instead of letting it stagnate, the next obvious step upwards would be the creation of a world-wide power system. That raises a host of social and economic difficulties to overcome. But both developing and developed countries would benefit. Global ambition would be a better framework for the grid of the future than today’s local thinking.

Read on:

spiked-debate: The future of energy

Back to the future, by Josie Appleton

(1) ‘Overloaded circuits: outage signals major weakness in US power grid’, Wall Street Journal, 18 August 2003

(2) The solution, not the problem, TechCentralStation, by Lynne Kiesling

(3) Talkin’ ’bout home generation, Slate, 15 August 2003

(4) Powering the people, Guardian, 19 August 2003