For direction on a modern electric grid, follow the interstate highways

The United States is in the midst of a massive drive to reach 100 percent clean electricity by 2050, led by the enormous promise of wind and solar power and the increasingly urgent need to deal with our changing climate. Along that ambitious road, the main challenge won’t be our ability to produce enough clean energy, but instead to put in place the seamlessly connected nationwide transmission grid to move that clean electricity from where it’s produced to the millions of homes and businesses where it’s actually needed. 

Consider that the current system — which was designed for a fossil fuel era dominated by coal, oil, and natural gas — must now be recreated to meet the enormous needs of a vastly different world of clean energy.

There are two significant obstacles: financing and permitting.

Fortunately, a proven model exists to help the nation meet this daunting challenge. It is America’s interstate highway system, launched by President Eisenhower in the 1950s. That extraordinary network of controlled-access highways stretching coast to coast has efficiently met the travel and commerce needs of a burgeoning U.S. population. It can now serve as a valuable template for spawning an effort of comparable size, scope and commitment to meet this country’s rapidly growing demand for clean energy for decades to come.

As the nation undertakes its seismic shift to clean electrification, the centralized transmission system — created earlier in the 1950s — becomes increasingly outdated and incapable of meeting the future needs of fluctuating renewable sources like solar and wind, which require wider geographic coverage to ensure local energy demands are met. 

According to researchers at Princeton, the U.S. will need to expand its electricity transmission system by 60 percent by 2030 and may need to triple it by 2050. Electric distribution began 140 years ago, in September 1882, at Pearl Street Station in New York City Pearl Street Station, and will now have to grow its transmission capacity by that same amount over the next 15 years to reach the nation’s goal where greenhouse gases emitted into the atmosphere are less than those removed from it A 2022 report produced for the U.S. Department of Energy concluded “essentially no major original transmission projects have been planned and built in the last decade.”

What will make this achievement possible is not just the production of renewable forms of energy, but the ability to transport them from points of generation — which in the case of wind is mostly in the Midwest and solar across the South — to where they’re needed across the rest of the country. Currently, the backbone of electric transmission is a network of lines that deliver high-voltage power from large generators to local grids that act as the conduit for final distribution to homes and businesses. While that system has served the country’s electricity needs for decades, clean energy will demand greater flexibility and geographic coverage from the grid.

Not coincidentally, the challenges that faced construction of the interstate highway system are the same ones that must be overcome to build out a new interstate electric transmission system. As a result, the mechanisms employed 70 years ago to successfully develop, finance, coordinate and maintain the nation’s intricate network of high-speed roadways, while not perfect, offer a durable model for a modern-day system to distribute clean energy from mostly wind and solar sources.

One expedient strategy for transmission planners when attempting to acquire new rights-of-way (along with siting approvals) from a jumble of local, state and regional regulatory authorities is to use existing rights of way. These typically include highway and railway corridors. Interstate highways and their rights of way are owned by the states where they were built, and could potentially provide key corridors for expanding the electric grid while avoiding extended legal battles and roadblocks at the community level.

As for the allocation of costs, the interstate highway system can again provide useful guidance to a new era. Initially, 90 percent of the construction and maintenance costs of interstate highways in the U.S. were financed through the Highway Trust Fund, which in turn is funded by user fees, primarily fuel taxes collected by federal, state and local governments.

It is likely an enhanced electric transmission system will also need a centralized and sustainable form of financing along the lines of the Highway Trust Fund, one that’s funded broadly and fairly by fees on all end users’ electric energy, whether household or industrial, perhaps with an exemption for low-income individuals. A 2017 estimate showed that the total construction cost of the interstate highway system was $129 billion and has returned at least six dollars in economic productivity for every dollar invested in it.

Estimates for grid improvement range from $360 billion to as much as $2.4 trillion by 2050. The $65 billion in the 2021 Bipartisan Infrastructure Bill is a good start, but only a partial one.

Per our calculations, in 2022, the United States spent approximately $600 billion on electricity. A 10 percent tax on this expenditure would raise $60 billion in the first year and, if increased 10 percent a year until it doubles, would raise $900 billion to invest in the grid over 10 years. This is the same approach that was used to finance the interstate highway system.

Without effective leadership, planning and coordination from the federal government, of course, any project to carve out a new low-carbon infrastructure for this county will most likely fail. Just as the administration of Dwight D. Eisenhower developed nationally unified standards for construction, signage and even speed limits for interlocking freeways, any upgraded system for energy transmission must also be built in accordance with strict national guidelines to ensure effective operation and optimal results. 

The sponsoring administration in Washington must be prepared to centralize those coordinating responsibilities in a governing body with broad powers to set policy and resolve disputes at the state level. One approach could be the SITE Act, recently introduced in the U.S. Senate. This bill establishes a process for the Federal Energy Regulatory Commission to authorize the construction, modification and operation of interstate electric transmission facilities, including the exercise of eminent domain.

It’s clear, of course, that wind and solar power alone is not a silver bullet for the climate crisis. But for the near term, a revitalized and vastly expanded system of electric transmission is the most direct route to a clean energy future. And to that critical end, planners would be well advised to look studiously at the interstate highway system developed in the 1950s. 

The key components of that monumental achievement were financing and permitting — the same challenges that must now be overcome to build out the future interstate electric grid, fully capitalize on the untold promise of wind and solar power and cut the emissions that are quickly making our planet a perilous place to live.

Thomas Healey is a senior fellow at Harvard University’s Kennedy School of Government. He was an assistant secretary of the Treasury under President Reagan.

Robert Litterman is a founding partner of the New York-based investment firm Kepos Capital and served as chair of the Commodity Futures Trading Commission subcommittee which wrote the 2020 report, “Managing Climate Risk in the U.S. Financial System.”