To access the full paper, download the PDF on the left-hand sidebar.

Introduction

In the 21st century, Americans face the task of addressing human-made contributions to potentially disastrous climate change. Along with longstanding worries about resource depletion, ecosystem damage, pollution, and attendant human health effects, these concerns provide the impetus for integrating renewables into energy systems to displace hydrocarbons. Governments, activists, and even corporations have adopted various goals—all trending toward using more, and in some scenarios exclusively, renewable energy resources to generate electricity. The primary resources under consideration include wind, sunshine, geothermal energy, and hydro.

Today power systems experts offer multiple approaches to integrating renewables. Proponents argue for nanogrids, microgrids, smart grids, supergrids, macrogrids, and global grids as the models for introducing solar and wind power, energy storage, and advanced system controls. At one extreme, advocates call for complete disaggregation of large networks in favor of tiny, locally controlled systems and at the other they encourage intercontinental connection around the globe. Naysayers warn against excessive cost, excessive government intervention in the private sector, technological and physical shortcomings, environmental downsides, and threats to stability, reliability, and resilience. The characteristics of renewable energy resources—the intermittency of wind and solar in particular, and the scales of some new technologies both very large and very small—will introduce new challenges to power system stakeholders.

After nearly 150 years of expansion and increased integration of power networks in the United States, investors, generators, owners, operators, regulators, and customers have grown accustomed to aspects of electrification that are most certainly mutable over time. When the vast majority of customers turn on a wall switch in this country, they expect immediately available power to turn on lights that will not flicker and machines that run steadily for as long as desired, without interruption, and at a reasonable cost. Investors, generators, and transmission line owners alike expect a fair return—whether by regulation or market competition—for the cost of doing business. They expect regulators and operators to reasonably protect their infrastructure from sudden shutdowns, sudden excessive demand, and sudden changes in rules, costs, and revenues. Operators expect to be able to dispatch power to meet demand while maintaining system reliability. The processes by which all of this occurs developed piecemeal. New generating technologies, new ownership regimes, new storage opportunities, new scales of operations, and relatively new primary energy resources are already causing disruptions. The priorities of the past— for example, increasing integration into state and regional grids in order to realize economies of scale and also improve system reliability—may not apply in the future. Tomorrow’s homeowner may prefer the green credentials, local control, and resilience offered by rooftop solar panels with a battery wall setup. That same owner may or may not seek the reliability offered by a grid connection; and may or may not be willing to pay for the necessary infrastructure to keep the rest of the grid running. Or, a different customer may lobby for green power only, from a giant windfarm located several states away, regardless of the cost of transmission. That customer may or may not acknowledge the need for giant storage facilities and/or interconnection with other generating sources to assure reliability.

How will Americans navigate the decisions ahead? Herein lies an opportunity to consider historical trends and exceptions. Were there periods in the past when utilities (or others) debated the relative merits of independence and integration for power generation? If so, who made the decisions, what were they, and how did different factors influence the outcome? Can these experiences help us frame choices we face today as we try to bring more renewables into our systems?

In fact, these debates occurred regularly throughout the history of electrification in the United States. Often negotiations over more or less integration occurred outside matters of economy, technical feasibility, energy efficiency, and customer satisfaction. For example, in the early years, tension between government-owned power companies and privately owned utilities characterized American electrification and as a result, physical interconnection was often conflated with holding company, or private sector, expansion. Municipal utilities and rural cooperatives at times sought participation in networks to access power generated by larger and more efficient facilities; at other times, they resisted interconnection because it was seen as further domination by investor-owned utilities.

Over time, considerations evolved, as did technologies, political preferences, economic context, and questions of national defense and industrial development. This research paper offers three case studies that illustrate the array of issues framing movement toward increased interconnection over the course of the 20th century:

Case 1. From “Fashion” to Wartime Necessity, 1900-1918. In the early 20th century, industrial manufacturers transitioned from a strong preference for operating their own in- house generating plants to acquiring (renting) power from central stations. In this first case study, the dominant issues included “fashion,” shifting and expanding operating costs, technical innovations, resource shortages, and, ultimately, the pressures of a world war. Today’s proposed nanogrids and microgrids resemble the early isolated plants, along with some of the attendant benefits and costs for owners and operators. Key technological differences, however, may lead to different choices and different outcomes in the future.

Case 2. Defense Considerations, 1935-1945. Throughout the 1930s, utilities and federal authorities argued over war readiness and the need for central government control. Different planners called for both new installed generating capacity at the sites of defense manufacturing and increased integration of existing capacity. Once the United States joined World War II as a combatant, the focus shifted almost entirely to expanded interconnections. In this second case study, the compelling issues were time, resource availability, and defense necessity, and the process resulted in technical innovation. This case brings the focus to how significantly a major crisis can influence the direction of electrification, thwarting even the proposals that look most reasonable and logical in favor of strategies that can be adopted most quickly. It further illustrates the degree to which the American power industry, though compliant during wartime, resists central control.

Case 3. The Biggest Interconnection, 1960-1975. In 1967 utilities and the US Bureau of Reclamation completed alternating-current (AC) links between the Eastern and Western Interconnected Systems, creating a nationwide grid. This took place against the backdrop of the 1965 Northeast blackout and public debate about the merits of interconnection. Within eight years, following unstable operations, the utilities abandoned the links. Between 1975 and 1987, however, utilities installed direct-current (DC) links that allowed for the scheduled exchange of power without requiring synchronized operation. The DC- linked interconnected systems no longer formed a nationwide grid. In this third case study, nationwide interconnection proceeded despite technical inadequacy and doubts about the efficacy of the project; it was followed by integration through new technologies. A return to DC connection sidestepped the trend of expanding AC interconnections over the prior 75 years. When contemplating macrogrids and large high voltage direct current (HVDC) connections, this case offers a reminder that what seems the logical next step of a synchronized nationwide grid may not be the feasible next step. Further, for the largest infrastructure projects proposed, buy-in across a very broad community of stakeholders will be crucial.

By revisiting these stories, we can examine historical tensions within American power systems and consider how they might affect 21st century decision-making. Trade journals, government reports and statistics, national archival materials, and secondary literature provide details and insights regarding the evolution of power networks throughout the 20th century. One striking issue emerges: different stakeholders pushed the decisions in particular directions at different times. This reflects the organic development of America’s power systems. No central government authority, no single private sector company, no comprehensive technical solution dominated the process at any time. As one researcher describes it, the American power system operates under “nodal governance,” that is, decision-making authority is dispersed. In assessing options for bringing more renewables into the system, it would be wise to keep this salient feature in mind. At any point in the process, particular stakeholders, unexpected concerns, major diplomatic or political events, or innovative technologies may influence the path forward in ways that are difficult to anticipate based on the choices of the past.

The sections of the paper are organized as follows:

Background—An overview of power systems today, focusing on the composition of generating sources, status of interconnections, ownership of elements, and governance structure in the United States.

Integrating Renewables—A short summary of past efforts to increase the contribution of renewable resources to power production, with particular focus on federal and state rule changes that incentivized development of wind and solar industries.

Visions of the Renewable Future—A brief description of the myriad approaches available for increasing the share of renewables in our power systems. It contrasts the “small is beautiful” approach of nanogrids and microgrids with the “bigger is better” approach of macrogrids, supergrids, and global grids.

The Case Studies

Conclusion—Observations about the historical cases and how they frame contemporary decisions about adding more renewables through greater or lesser integration.

This material may be quoted or reproduced without prior permission, provided appropriate credit is given to the author and Rice University’s Baker Institute for Public Policy. The views expressed herein are those of the individual author(s), and do not necessarily represent the views of Rice University’s Baker Institute for Public Policy.