Without power, economic productivity—and competitiveness—grind to a halt.
The US economy runs on electricity. Electricity lights homes, schools, and businesses; it enables toilets to flush, powers refrigeration, recharges batteries, and sustains communications. Electricity also keeps critical infrastructure and supply chains functioning. Electricity girds US competitiveness. Without power, economic productivity grinds to a halt. According to the US Energy Information Administration, power consumption will continue to grow until 2050.
But the US electric grid is in trouble. The current grid was built to withstand a climate that no longer exists. Because much of the grid’s infrastructure sits above ground, it is particularly susceptible to new weather extremes. As a result, climate effects—heavier rainfall, higher winds, deeper droughts, extreme temperatures, and more intense wildfires—increasingly disrupt the supply and delivery of power. Outages follow. Fortunately, a climate-resilient electricity grid is within reach. Attaining it, however, will require sustained planning and investment.
Old Systems Fail Under New Conditions
The US power grid’s infrastructure is massive. It consists of more than ten thousand power plants, close to 650,000 miles of high-voltage transmission lines, and over 6.3 million miles of distribution lines.
Texas suffered a devastating outage caused by a severe winter storm in 2021. Four and a half million people lost electricity, resulting in property damage of nearly $200 million.
The grid is also old and aging. The nation’s power plants have an average age of more than 30 years. For US nuclear plants, the average age is 40 years. Seventy percent of power transformers and transmission lines are at least a quarter century old. The bulk of the nation’s transmission system was constructed in the 1950s and 1960s. The design of some components rests on assumptions about precipitation derived from actuarial tables reflecting the rainfall patterns of 60 or 70 years ago. And these components were expected to last 50 years or less. This means that the current system was built to withstand the climatic conditions of the past.
As a result, power outages are on the rise. In 2022, an analysis by the Associated Press concluded that outages have jumped to more than 100 times a year in the last five years—double the approximately 50 times a year in the early 2000s. The number of minutes the average electric customer experienced electricity outages grew from 227 in 2013 to 475 in 2021. A study by the nonprofit Climate Central found that between 2000 and 2021, weather-related events caused more than 80 percent of outages. Some of these events likely bear the fingerprints of climate change.
Consider storms. In 2022, Hurricane Ian left 2.6 million Floridians in the dark, while Hurricane Fiona knocked out 70 percent of the power in Puerto Rico. A year earlier, Hurricane Ida cut off power to nearly a million people in Louisiana when winds as high as 150 miles an hour damaged 31,000 poles. Much of the state’s transmission system was built to a 1970s standard that only anticipated maximum wind speeds of 95 miles an hour. Texas also suffered a devastating outage caused by a severe winter storm in 2021. Four and a half million people lost electricity, resulting in property damage of nearly $200 billion.
Heat waves and wildfires can also challenge the electricity system. In 2021, the Pacific Northwest suffered a prolonged heat wave that melted power cables and sagged transmission lines, leading to planned and unplanned outages. In 2020, a heat wave drove Californians to crank up their air conditioning. The surge in power demand forced utilities to rely on rolling blackouts. As wildfire threats increase with higher temperatures, Californian utilities have preemptively cut power in windy and dry conditions to prevent a falling branch or downed wire from sparking a wildfire. In 2019, these preemptive shutdowns inflicted an economic cost of $2 billion.
The opportunity to marry resilience and mitigation is particularly rich with new construction.
The climate-worsened problem of too little or too much water threatens both nuclear and coal power plants. Many of the nation’s power plants are situated next to bodies of water for cooling purposes. Higher temperatures and droughts can cause the supply of cooling waters to shrink or become too warm to safely operate. Simultaneously, in areas grappling with sea-level rise, increased riverine inundation, and more intense storms, power plants face a higher flood risk.
Hydropower depends on water availability. The United States receives 7 percent of its electricity from hydropower. In 2022, Lake Mead, the largest human-made reservoir, hit its lowest point since the construction of the Hoover Dam was completed in 1936. Its declining water flows cut power generation by almost 50 percent. Similarly, if water levels in Lake Powell continue to drop as a result of higher temperatures and droughts, 4.5 million people could lose power.
Solar energy can also perform worse under changing climatic conditions. When wildfire smoke and ash prevent sunlight from reaching solar panels, dramatic reductions in electrical generation can occur. California’s unprecedented blazes in 2020 reduced solar power production by up to 30 percent overall, and cut its solar energy generation in half on the days with the largest flames.
All these power outages and reductions come at a significant cost to lives and livelihoods. One report estimated that between 2006 and 2019, the yearly outage-related costs for customers amounted to $55 billion, and consumers’ losses from power outages could swell to more than $480 billion annually between 2080 and 2099.
Indeed, the consequences already may be worse than has been assumed. A 2021 study of outages in six states assessed that it was “likely” that economic losses stemming from the effects of extreme weather on the grid “are consistently under-estimated.” For example, one cost that may go underreported is the public health threat posed by mold spreading when outages knock out dehumidifiers in flooded buildings after a storm.
Despite the financial harm, utilities’ investments in preparedness lag. According to the consulting firm ICF, US electric utilities will need to invest $500 billion to build resilience to potential climate effects by 2050. Improved planning—at both the federal and utility levels—could jump-start the needed investment.
Planning for Resilience
A mix of public and private entities owns the components of the electricity system—generation, transmission, and distribution. Within this complex system, no single entity bears sole responsibility for building the grid’s resilience. Improving the grid will require significant coordination between federal, state, and local governments, utility regulators, and the utility companies themselves. The federal government should set the direction by developing a national energy resilience plan.
This national plan could specify roles and responsibilities for reducing the risk of outages from climate-worsened extremes. Identification—and shoring up—of potential failure points will be essential. The planning process could reveal needed actions across all levels of government, the private sector, and communities to reduce the frequency and duration of power interruptions. It could ensure that efforts to modernize the grid address the needs of the most vulnerable communities. And it could drive better data collection to inform estimates of the total economic costs of power disruptions.
Self-contained microgrids that disconnect from the central system to divert energy during extreme events can give utilities greater flexibility as they seek to prevent major damage, respond to outages, and restore power.
Moreover, this national plan could drive further investment in risk reduction before disaster strikes. Every $1 spent on measures to reduce risk could save $6 in recovery costs. It could ensure that new investments in clean energy systems account for climate risk. In the wake of the 2021 infrastructure law’s passing, the US Department of Energy launched its $20 billion Building a Better Grid initiative to modernize the electrical grid. It’s a good step, but not nearly enough.
Beyond this initiative, the national plan could identify incentives to spur the American public to reduce energy consumption. Conserving energy leaves more power available during moments of peak demand. When a brutal heat wave unfolded in the summer of 2022, for example, California avoided rolling blackouts by texting residents to ask them to conserve electricity. Incentives contained in the 2022 Inflation Reduction Act for the installation of energy-efficient appliances and increased credits for developers that build energy-efficient homes will improve energy conservation. The national plan could build on these efforts.
Finally, the national plan could prompt communities to knit together investments in both clean energy and resilience. For example, to address its growing water scarcity problem, California plans to launch a pilot project to cover water canals with solar panels. This effort will generate electricity, slow water evaporation from the canals, and leave land open for other uses. For instance, if all 4,000 miles of the state’s canals adopted solar panel shields, it could save more than 65 billion gallons of water a year, which would in turn help sustain the state’s natural resources. Los Angeles recently announced that it intends to construct solar panels over the Los Angeles Aqueduct, a 370-mile-long watercourse that grapples with high evaporation rates.
The opportunity to marry resilience and mitigation is particularly rich with new construction. The community of Babcock Ranch in Florida shows the possibilities. Its developers chose land elevated from storm surges. They raised the utility plants to avoid flooding, and buried power lines wherever possible. Where burying proved impractical, they used concrete poles. The developers also built an 870-acre solar farm with the goal of making Babcock Ranch the first solar-powered town. Although it sits just 12 miles from the Florida coast, the development never lost power or the internet when Hurricane Ian swept through in 2022.
Utilities should also develop climate resilience plans. The Department of Energy has recommended that utilities engage in resilience planning, as has the ratings agency Moody’s. Yet many utilities have not embarked on these efforts in a comprehensive way. And when utilities do plan for extreme weather, all too often they have looked to historical data to assess their risks. At their core, plans should account for the conditions of the future, not solely those of the past.
Utility planning could involve strengthening the electricity grid by fortifying flood protections and elevating substations, control rooms, and pump stations; protecting power lines by burying them and replacing wooden poles with concrete ones; and improving the use of technology, such as sensors and other smart grid technologies, to pinpoint outages. Investments by Florida’s utilities in grid “hardening" was credited with reducing outages during Hurrian Ian.
Planning for solar power with expanded battery storage can lessen power disruptions. Solar power backed by batteries kept the lights on in Puerto Rico during Hurricane Fiona in 2022. Before Hurricane Maria struck Puerto Rico in 2017, only about 5,000 rooftop solar panel systems were in place. By the time Hurricane Fiona struck in 2022, the island had installed 50,000 rooftop solar arrays, many with battery backups. While more than 1 million people lost power amid Hurricane Fiona’s torrent, those with solar panels retained electricity. Puerto Rico has announced plans to produce the territory’s first virtual power plant. The virtual plant will use the existing network of rooftop solar and battery systems to allow those who don’t have direct access to solar power to tap in.
Self-contained microgrids that disconnect from the central system to divert energy during extreme events can also give utilities greater flexibility as they seek to prevent major damage, respond to outages, and restore power. The US government has allocated $1.3 billion to install microgrids in Puerto Rico. Similarly, in California, the federal government has partnered with a developer to test the use of microgrid technology for future housing projects. The homes will operate on solar power and capture excess electricity generated during the day for later use. They will also connect to a self-contained power system that can operate independently of California’s grid and have access to a “community battery” that provides additional power during outages. Some homeowners will have the option to use their electric vehicles to power their homes.
The stakes are high when it comes to ensuring the reliable flow of electricity. The delivery of power is essential to the health of the American economy. Outages bring financial losses to homes and businesses that can undermine US competitiveness. When the electricity supply dies, critical systems fail—including for transportation, water treatment, waste management, communications, and health care delivery. Without power, supply chains break, orders go unfulfilled, factories shut down, businesses function at reduced capacity, and worker productivity plummets. To buffer climate harm, owners and operators of electric utilities should incorporate the essential climate lesson: prepare for the conditions of the future, not the past. Engaging in national- and utility-level resilience planning to address changing climate risks could jump-start this process.
Alice Hill is the David M. Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations. She previously served as special assistant to President Barack Obama and senior director for resilience policy on the National Security Council’s staff, where she led the development of national policy to build resilience to catastrophic risks, including climate change and biological threats. In 2020, Yale University and the Op-Ed Project awarded her the Public Voices Fellowship on the Climate Crisis. Her book, The Fight for Climate After COVID-19, was published in 2021.
Cover photo: Down power lines and electric equipment in residential neighborhood. Shutterstock/Scott Alan Ritchie.