Pushing the limits of an aging infrastructure, U.S. manufacturers face a future of increasing costs and instability unless new technologies and new investments can rejuvenate the system.
The following article was written by
Travis Hessman of IndustryWeek
On Sept. 8, 2011, an Arizona Public
Service field technician was sent out to a North Gila, Ariz., substation
to switch a capacitor bank -- a routine job the technician had
performed a dozen or so times before.
This time, however, he missed a step in
the process, which knocked out the entire 500-kilovolt transmission line
running through the substation.
Under normal circumstances, this wouldn't be
a big deal. With a solid infrastructure operating within standard
guidelines, this should have resulted in a brief, isolated outage.
But in our overstressed and
under-maintained grid, that single transmission line was all that
connected the region. Losing it sent a cascade of outages down the
system, blacking out enormous swathes of Arizona, Mexico and Southern
California, including all of San Diego and its 1.5 million customers.
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Andrew Herrmann:
"By making investments, you are actually saving money." |
In total, the outage left about 2.7
million customers without power -- the second-most significant outage of
the year next to the one resulting from Hurricane Irene.
For the hundreds of manufacturers
scattered throughout the region, the outage was costly. According to the
U.S. Department of Energy, these kinds of power failures cost companies
between $20,000 and $2 million.
This was not a rare occurrence. In 2011,
California led the country in outages with 371 -- more than double that
of second place New York.
Such events confound an already-difficult
environment for manufacturers trying to stay ahead in the United States
today. Maintaining a profitable, competitive business with an
infrastructure this shaky is increasingly difficult, and manufacturers
are left largely unarmed in the fight to bring in the kind of
investments necessary to change it.
So the question must be asked: Can the
United States revitalize its infrastructure to provide manufacturers and
businesses a competitive environment in which to operate and prosper?
State of the Infrastructure
The U.S.
infrastructure was in bad shape coming into this decade. Rated "D" for
overall performance by the American Society of Civil Engineers (ASCE) in
2009, the entire system proved in dire need of some much overdue
investment to catch up with global competitors.
"There is a real sense of urgency right
now within the United States," says John McDonald, director of Technical
Strategy and Policy Development for the Digital Energy division of
General Electric Co. (IW 500/4).
"We have an infrastructure that wasn't maintained very well for a long
period of time. It's getting older, so the chances of catastrophic
failure are now greater than they have been."
Catching the system up after such neglect
to prevent this kind of failure will require an investment of $2.2
trillion over the next five years, says ASCE President Andrew Herrmann.
And that is just to make a "B" on the next infrastructure report card.
Failure to make this investment, he says,
will cost the United States hundreds of thousands of jobs and hundreds
of billions from the GDP.
For the electric infrastructure alone, interrupted
operation due to blackouts, brownouts and unstable supply could cost
business an estimated $126 billion or more annually. To prevent this,
the federal government, states or utilities would have to invest $11
billion per year, Herrmann says.
Though costly, "this would protect about
529,000 jobs, $656 billion in personal income, about $500 billion in
gross domestic product and $10 billion in exports," he explains.
With manufacturers consuming one-third of
the nation's total energy per year and total energy consumption
expected to increase as much as 39% this decade in some regions,
according to the World Resources Institute, the electrical grid becomes a
critical piece of infrastructure to protect and maintain for U.S.
manufacturers to remain competitive. It is critical for them even to
stay solvent in today's environment.
With this kind of threat hanging over
U.S. manufacturing, there is an increased need now to double-down on
infrastructure investment on every level to help keep the United States
in a competitive position, says Herrmann.
"We have an infrastructure in the United
States that was essentially investments from the 1950s and 1960s. It's
getting old," he explains. "If you don't maintain it, if you cut back on
those maintenance budgets or the rehab budgets, it just gets older, and
by not doing anything, the life actually gets shorter."
For the past few years, investment toward
rehabilitating the aging infrastructure has been directed at a new
technology that promises to help improve efficiency and productivity all
through the system: the smart grid.
Smart Grid
The
smart grid
refers to a class of technology used to help bring utility electricity
delivery systems into the 21st century, via computer-based remote
control and automation, according to the Energy Department.
These systems help eliminate the
labor-intensive meter reading and maintenance required of the
old-fashioned (or "dumb") grid for the past century -- possibly
including the kind of work that caused the 2011 Southwest outage.
Though still in its infancy in many
respects, boosted by heavy investment from the federal stimulus,
smart-grid devices are beginning to be used on electricity networks all
the way from the power plants to the consumers .
With the automation this technology
provides, "instead of building a new substation or buying new lines or
purchasing more power, what utilities are doing is making better use of
their existing infrastructure by improving efficiency," says GE's
McDonald.
Distributed Generation
One way the smart grid is enabling improved efficiency is through distributed generation.
Capturing energy collected by solar
arrays on private businesses and residences across the system and
feeding it back into the grid, distributed generation works to help
reduce energy strain by providing increased supply to every user during
hot, sunny days when they need it the most.
With 3,360 solar panels installed atop its Chino-Calif. facility,
Diamond Wipes International is
able to produce twice the energy it consumes, which may save the
company as much as $135,000 this year in energy costs while also
contributing heavily to the overall power supply, says Tom Hill, vice
president of marketing and sales at Diamond Wipes.
"We are a net benefit to the level of
power in the overall grid at any point in time. That energy we are
sending back is not really being stored, it is being used by other users
of the power grid," he explains. "We are drinking from the great fount,
and we are contributing daily into the overall system, which is being
used by others."
On its face, distributed generation sounds as neat and
beneficial as Hill describes it -- businesses work with the power
companies to lower the strain on the grid, offsetting high-demand peak
hours with green-energy supply, thus meeting the state's low-emissions
requirements. But as Gregg Turner, director, Utility Segment at
Eaton Corp. (IW 500/72) points out, the equipment on the utility side may not be ready for it.
The grid, he says, is still primarily
designed to carry power only one way -- from the power plants to the
customers. As power gets injected at the ends from distributed
generation systems, he says, something as benign as a patch of clouds
can spike and ultimately crash the system.
"What happens is, utilities are faced
with periods where power is injected back into the substation on one leg
while other legs are trying to feed out their normal loads," says
Turner. "[This] causes a level of unbalance that, if not properly
managed, results in the substation going entirely offline."
Power flowing intermittently in different
directions to and from manufacturers, he says, actually increases the
operational stress on the system and can result in increased instability
-- exactly what the system was designed to prevent.
The Solution
The key to making
this technology work -- and really the key to revitalizing
infrastructure in general -- is investment. Traditionally, this has
meant cash injections from the federal level, but in the current
political environment, there is little hope of this coming through.
"Right now, we have limited power in DC,"
explains Herrmann. "We have discussions between the two parties, but
they aren't agreeing to too much of anything. It seems to be a
standstill at this point."
"Basically," he argues, "politicians are afraid.
They are living on two-year life cycles, four-year life cycles." For
leaders worrying about re-election, raising taxes for infrastructure
improvements is simply not an option.
"Getting them to actually make the
investment and realize that they'll save money by making the
investments, that's the hard part," he says. "That's why we're trying to
educate the public. They're the ones that elect them. When a politician
says, 'I can't raise the gas tax because I won't get re-elected,' if
the public starts saying, 'I want these better things, and you're going
to have to do something,' maybe things will start changing."
This kind of public awareness is critical
for change, he says. To keep U.S. manufacturing growing, the nation
must bring infrastructure back to the forefront to help make these
investments make sense in our difficult economic environments.
Revitalizing the infrastructure means getting projects through and
matching new technologies with a well-maintained system.
As Herrmann explains, "By making
investments, you are actually saving money. You're saving sitting in
traffic, you're saving brownouts, you're saving loss of jobs and costs
to the gross domestic product and industry. These are things that are
going to be coming up. If you make the investment, you're going to be
saving dollars."
