The recent news of President Obama’s $7 billion program to bring electricity to 20 million households and businesses in six sub-Saharan nations in Africa is both timely and strategic, as electricity is foundational to economic growth and is the linchpin — the most fundamental critical infrastructure — of modern society.
The news also served as a reminder that the United States faces its own pressing challenges regarding its electric infrastructure.
Access to affordable energy has been a fundamental driver of prosperity throughout the globe and in the U.S., but it has also led to a high degree of waste and complacency about investing in infrastructure. The average U.S. citizen consumes about 100 times the amount of electricity used, on average, by citizens of sub-Saharan nations. And yet, according to a 2011 report by the World Economic Forum, U.S. infrastructure ranked below 30th for the quality of our electric power sector. Currently, electricity outages cost the U.S. economy about $80 billion to $188 billion annually. (See related quiz: “What You Don’t Know About Electricity.”)
The price tag for modernizing the centralized U.S. grid is enormous, partly due to our extensive legacy infrastructure. Having studied this in-depth, I, along with others at the Electric Power Research Institute, have calculated that each $1 invested in a modernized grid garners a return of $2.80 to $6 to the broader economy. The return on investment begins immediately with job creation and economic stimulus. To reach these numbers we used a very narrow definition of “smart grid.” If the definition is broadened, the benefits increase. (See related story: “Who’s Watching? Privacy Concerns Persist as Smart Meters Roll Out.”)
Employing the latest technology can enable developing nations to move closer to the 21st century at a fraction of the cost developed nations will pay just to maintain the status quo.
A smarter, stronger grid would reduce the low-end estimate of current outage costs — $80 billion annually – by $49 billion, in my estimates. That smarter grid would increase the system’s efficiency by about 4.5 percent. That’s worth another $20.4 billion, annually. Together, improving just those two aspects – reducing outages, improving efficiency – brings about $70 billion in annual benefits. A smarter grid would also reduce CO2 emissions by 12 to 18 percent (according to the Pacific Northwest National Laboratory, 2011).
To accomplish this, cost estimates for the U.S. as a whole range somewhere between $338 billion and $476 billion for a smarter grid, and about $82 billion in hardening costs for a stronger grid. So when you recast it as a 20-year project, it’s going to cost the U.S. somewhere between $25 billion to $30 billion a year for 20 years.
That means investing between $25 billion to $30 billion a year for 20 years to make the existing grid more reliable by upgrading existing infrastructure and adding sensors and controls to run it more efficiently. In the U.S., existing infrastructure is so extensive we have little choice but to upgrade it. And the goal going forward is to cut the amount of energy used per capita, while maintaining prosperity and comfort. (See related post: “Who Will Swelter This Summer? The Pressures on the Nation’s Power Grid.”)
The nations of sub-Saharan Africa affected by the recently announced $7 billion plan – Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania – have a different challenge. Two-thirds of all people in sub-Saharan Africa have no access to electricity. Grids of limited reach and reliability exist mostly in limited urban areas, while the countryside goes without. Those urban grids must be upgraded for reliability, just like ours, but the bulk of the impact will be felt in the countryside. And that’s where it gets interesting.
The rural areas of developing nations are essentially “green fields” that make it cost effective to apply the most advanced technologies available. Self-contained “microgrids” that rely on solar photovoltaic panels, LED lighting, satellite dish antennas and other advanced technologies can provide the cost-effective means to bring a basic level of electricity service to under-served regions. Providing just a tiny fraction of the electricity every American consumes daily could provide citizens of developing nations with the means to light the darkness, improve sanitation, support education and bring communications, computing and the Internet to their fingertips. This would raise the standard of living and drive economic development.
Such efforts, in fact, are already under way. Employing the latest technology can enable households, businesses, neighborhoods, villages, towns and cities in developing nations to move closer to the 21st century at a fraction of the cost developed nations will pay just to maintain the status quo. (See related story: “Solar Energy Brings Food, Water, and Light to West Africa.”)
The hunger for a better life, aided by the latest, most cost-effective technologies, may well bring a ferocious competitiveness among newly empowered citizens in developing nations that will give citizens of the developed world a run for their money. In fact, nations that best implement new energy strategies and invest in modern energy infrastructure may reshuffle the global pecking order. Emerging economies in Africa could even leapfrog ahead of other more developed nations, just as the four “Asian Tigers” – Hong Kong, Singapore, South Korea and Taiwan – have powered the Southeast Asian economy. Not incidentally, the Asian Tigers are pursuing grid modernization with the latest technology.
So, while the challenges for emerging economies are great, our task here at home is just as daunting. The nations that make prudent investments in electricity infrastructure today will become the economic powerhouses of tomorrow. As we assist the nations of sub-Saharan Africa to meet their challenges, we would do well to address our own critical challenges as well.