Every four years the American Society of Civil Engineers (ASCE) publishes a report card detailing the condition and performance of a wide spectrum of infrastructure categories from Aviation to Wastewater. The most important category is Energy (obviously) and its grade improvement from a D+ in 2017 to a C- in 2021 is certainly positive, though it’s a little like being happy that you’re no longer the Tommy Callahan (“Tommy Boy”) of your class. We’ve written several times about the importance of upgrading the electric grid, believing it a necessary component toward achieving de-carbonization goals. Below are four pieces of our electric grid transformation that are falling into place.

Tommy Boy

First, there is motivation. Look no further than the blackouts in Texas and California where for different reasons the grid failed its customers. The ASCE report indicates there are 600,000 miles of backbone transmission lines and around 5,500,000 miles of local distribution (“last mile) lines operating in the United States. The majority of the nation’s grid is aging, with some assets even over 100 years old. The report estimates 70% of the entire grid is well into the second half of its lifespan. Think of the stress the addition of electric vehicles will add to the grid over the next few decades. There is clearly a need.

Second, there is opportunity. The “Americans for a Clean Energy Grid” have identified 22 high-voltage transmission projects in the U.S. that could begin construction in the near-term. These projects mostly connect to high quality wind and solar resources with the potential to interconnect 60,000 MW of renewable capacity, increasing America’s wind and solar generation by nearly 50% from current levels.


Source: Americans for a Clean Energy Grid

Third, public will. Upgrading the electric grid is receiving support from two distinct camps: (1) those who want an aging grid replaced, and (2) those who want to accelerate the transition to renewable energy. Combining widespread electrification with renewable power has become a central pillar of energy and climate policy in Europe and is gaining momentum in the United States. We’re most excited about bipartisan support for upgrading infrastructure, reducing the probability that a big infrastructure plan will once again be kicked down the road.

Fourth, investment. On March 25th, UBS outlined the case for a $140 trillion of annual global investment by 2050 and estimated $20-$30 trillion annually will be spent on infrastructure alone, primarily electric grids. Other reports peg the number at $10-$15 trillion. Either way, that’s a lot of green! More important though is that incentives are in place to encourage developers to build.

investment chart


Source: UBS Research

These four pieces are falling into place, and that bodes well for the energy transition. How do we know this? It seems every few days there is a new project announcement for renewables or energy storage (batteries), where buried in the project details are improvements to the grid. On May 3rd, Tucson Electric switched on the 100-megawatt Wilmot Energy Center, its biggest solar and wind project to date. Built and owned by NextEra Energy, it also includes 30MW of battery storage. This month, TEP also expects to open the 250MW Oso Grande Wind Project in New Mexico. Combined these two systems will double TEPs large scale renewable energy resources. These large-scale renewable generation facilities will link to newly upgraded transmission lines, all part of TEP’s goal of generating 70% of its power from renewables and cutting carbon emissions by 80% by 2035.

So even though Energy’s grade in 2017 was Tommy Callahan, perhaps with a little investment and work he’ll look more like his father (Thomas “Big Tom” Callahan) in 2025.

RENEW Performance Tracker

perf 5.20

Source: Bloomberg

Renewables Roundup

ASCE Report Card for America’s Infrastructure

IEA Issues “NetZero by 2050”, A Roadmap for the Global Energy Sector

US Gives Go-ahead for its First Major Offshore Windfarm

EU Vows to Develop Sustainable Blue Economy

Wind Giant Vestas Says It Can Now Fully Recycle Turbine Blades

California Governor Earmarks $3.2B to Boost EV Adoption

Tesla Will No Longer Accept Bitcoin Over Climate Concerns, says Musk

*No Warranties. The accuracy and/or completeness of any Eagle Global Advisors index, any data included therein, or any data from which it is based is not guaranteed by Eagle Global Advisors, and it shall have no liability for any errors, omissions, or interruptions therein. Eagle Global Advisors makes no warranties, express or implied, as to results to be obtained from use of information provided by Eagle Global Advisors and used in this service, and Eagle Global Advisors expressly disclaim all warranties of suitability with respect thereto.

You Must Make Your Own Investment Decision. It is not possible to invest directly in an index. Index performance does not reflect the deduction of any fees or expenses. Past performance is not a guarantee of future returns. You should not make a decision to invest in any investment fund or other vehicle based on the statements set forth in this document, and are advised to make an investment in any investment fund or other vehicle only after carefully evaluating the risks associated with investment in the investment fund, as detailed in the offering memorandum or similar document prepared by or on behalf of the issuer. This document does not contain, and does not purport to contain, the level of detail necessary to give sufficient basis to an investment decision. The addition, removal, or inclusion of a security in any Eagle Global Advisors index is not a recommendation to buy, sell, or hold that security, nor is it investment advice.