Last Tuesday more than 600 million Indians were left without power following the collapse of the Indian electricity grid.  The proximate cause of the outage is still unclear.  Investigations and recriminations will likely continue for some time.  But the fundamental problem that led to the collapse is not in dispute:  An aging, fragmented electricity grid was simply overwhelmed by the growing demands of a modern society for electricity.

The “Great Power Outage” that struck India this week could never happen in the United States for a very simple reason:  There are only 300 million people in the United States.  Beyond that, the differences between the Indian grid and the U.S. grid offer cold comfort.  Although its resources are greater and its stress less extreme, the U.S. power grid is also aging, fragmented and increasingly unable to handle the demands of the new post-modern electricity age.  India may be a more relevant warning of problems ahead than many would like to believe.

The need for a major overhaul of the U.S. power grid is clear; the uncertainty is how it will be paid for.  According to the Edison Electric Institute, the U.S. electric utility industry will require total infrastructure investment on the order of $1.5 to $2.0 trillion by 2030.  Increasingly stringent environmental regulations that accelerate replacement of generation assets could add substantially to that cost.

Since raising electricity prices to fund grid upgrades will always be politically unpalatable, improving the efficiency of the grid will become increasingly important as the bills for grid upgrades come due.  Properly understood, electricity storage and “Smart Grid” technologies are simply ways of rebuilding the grid more efficiently, so that the total cost of necessary upgrades will be closer to $1.5 trillion than $2.0 trillion.

Advanced battery suppliers will be major beneficiaries of the rebuilding of the U.S. electricity grid over the next 20 years.  Although many worry whether governments will have the political courage to invest in power infrastructure, those worries are misplaced.  Although politicians will find increasing electricity prices unpalatable, far less palatable is the Indian scenario—a career-ending event for any politician seen to be responsible for failing to prevent a catastrophic (or even less than catastrophic) outage.  This is a message that we, as an industry, need continuously to hammer home.