Electricity Energy Policy

Perverse Economics of the Electric Grid: As Generation Gets Cheaper, Transmission Costs Soar

Electrons are cheap – at least electrons are cheap to create. Until recently, it was also cheap to deliver electrons from power plants to customers. That is no longer the case. The electric grid may once have been an engine of economic efficiency, but these days it looks more like an albatross hanging like a noose around our economy’s future prospects. To make matters worse, it appears to be tightening.

Over the past half of a decade or so, the cost of generating electricity has plunged as the result of sluggish economic growth and a glut of dirt cheap natural gas. Unfortunately, the decline of wholesale power prices has been offset and, in some places like southern California and downstate New York, eclipsed entirely by escalating transmission and distribution costs.

The bottom line: electrons are cheap to generate and expensive to deliver.

via Perverse Economics of the Electric Grid: As Generation Gets Cheaper, Transmission Costs Soar – Forbes.

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