Can the U.S. Revitalize its Infrastructure?

June 18, 2012
Pushing the limits of an aging infrastructure, U.S. manufacturers face a future of increasing costs and instability unless new technologies and new investments can rejuvenate the system.

On Sept. 8, 2011, an Arizona Public Service field technician was sent out to a North Gila, Ariz., substation to switch a capacitor bank -- a routine job the technician had performed a dozen or so times before.

This time, however, he missed a step in the process, which knocked out the entire 500-kilovolt transmission line running through the substation.

Under normal circumstances, this wouldn't be a big deal. With a solid infrastructure operating within standard guidelines, this should have resulted in a brief, isolated outage.

But in our overstressed and under-maintained grid, that single transmission line was all that connected the region. Losing it sent a cascade of outages down the system, blacking out enormous swathes of Arizona, Mexico and Southern California, including all of San Diego and its 1.5 million customers.

Andrew Herrmann:
"By making investments, you are actually saving money."

In total, the outage left about 2.7 million customers without power -- the second-most significant outage of the year next to the one resulting from Hurricane Irene.

For the hundreds of manufacturers scattered throughout the region, the outage was costly. According to the U.S. Department of Energy, these kinds of power failures cost companies between $20,000 and $2 million.

This was not a rare occurrence. In 2011, California led the country in outages with 371 -- more than double that of second place New York.

Such events confound an already-difficult environment for manufacturers trying to stay ahead in the United States today. Maintaining a profitable, competitive business with an infrastructure this shaky is increasingly difficult, and manufacturers are left largely unarmed in the fight to bring in the kind of investments necessary to change it.

So the question must be asked: Can the United States revitalize its infrastructure to provide manufacturers and businesses a competitive environment in which to operate and prosper?

State of the Infrastructure

The U.S. infrastructure was in bad shape coming into this decade. Rated "D" for overall performance by the American Society of Civil Engineers (ASCE) in 2009, the entire system proved in dire need of some much overdue investment to catch up with global competitors.

"There is a real sense of urgency right now within the United States," says John McDonald, director of Technical Strategy and Policy Development for the Digital Energy division of General Electric Co. (IW 500/4). "We have an infrastructure that wasn't maintained very well for a long period of time. It's getting older, so the chances of catastrophic failure are now greater than they have been."

Catching the system up after such neglect to prevent this kind of failure will require an investment of $2.2 trillion over the next five years, says ASCE President Andrew Herrmann. And that is just to make a "B" on the next infrastructure report card.

Failure to make this investment, he says, will cost the United States hundreds of thousands of jobs and hundreds of billions from the GDP.

For the electric infrastructure alone, interrupted operation due to blackouts, brownouts and unstable supply could cost business an estimated $126 billion or more annually. To prevent this, the federal government, states or utilities would have to invest $11 billion per year, Herrmann says.

Though costly, "this would protect about 529,000 jobs, $656 billion in personal income, about $500 billion in gross domestic product and $10 billion in exports," he explains.

With manufacturers consuming one-third of the nation's total energy per year and total energy consumption expected to increase as much as 39% this decade in some regions, according to the World Resources Institute, the electrical grid becomes a critical piece of infrastructure to protect and maintain for U.S. manufacturers to remain competitive. It is critical for them even to stay solvent in today's environment.

With this kind of threat hanging over U.S. manufacturing, there is an increased need now to double-down on infrastructure investment on every level to help keep the United States in a competitive position, says Herrmann.

"We have an infrastructure in the United States that was essentially investments from the 1950s and 1960s. It's getting old," he explains. "If you don't maintain it, if you cut back on those maintenance budgets or the rehab budgets, it just gets older, and by not doing anything, the life actually gets shorter."

For the past few years, investment toward rehabilitating the aging infrastructure has been directed at a new technology that promises to help improve efficiency and productivity all through the system: the smart grid.

Smart Grid

The smart grid refers to a class of technology used to help bring utility electricity delivery systems into the 21st century, via computer-based remote control and automation, according to the Energy Department.

These systems help eliminate the labor-intensive meter reading and maintenance required of the old-fashioned (or "dumb") grid for the past century -- possibly including the kind of work that caused the 2011 Southwest outage.

Though still in its infancy in many respects, boosted by heavy investment from the federal stimulus, smart-grid devices are beginning to be used on electricity networks all the way from the power plants to the consumers .

With the automation this technology provides, "instead of building a new substation or buying new lines or purchasing more power, what utilities are doing is making better use of their existing infrastructure by improving efficiency," says GE's McDonald.

Distributed Generation

One way the smart grid is enabling improved efficiency is through distributed generation.

Capturing energy collected by solar arrays on private businesses and residences across the system and feeding it back into the grid, distributed generation works to help reduce energy strain by providing increased supply to every user during hot, sunny days when they need it the most.

With 3,360 solar panels installed atop its Chino-Calif. facility, Diamond Wipes International is able to produce twice the energy it consumes, which may save the company as much as $135,000 this year in energy costs while also contributing heavily to the overall power supply, says Tom Hill, vice president of marketing and sales at Diamond Wipes.

"We are a net benefit to the level of power in the overall grid at any point in time. That energy we are sending back is not really being stored, it is being used by other users of the power grid," he explains. "We are drinking from the great fount, and we are contributing daily into the overall system, which is being used by others."

On its face, distributed generation sounds as neat and beneficial as Hill describes it -- businesses work with the power companies to lower the strain on the grid, offsetting high-demand peak hours with green-energy supply, thus meeting the state's low-emissions requirements. But as Gregg Turner, director, Utility Segment at Eaton Corp. (IW 500/72) points out, the equipment on the utility side may not be ready for it.

The grid, he says, is still primarily designed to carry power only one way -- from the power plants to the customers. As power gets injected at the ends from distributed generation systems, he says, something as benign as a patch of clouds can spike and ultimately crash the system.

"What happens is, utilities are faced with periods where power is injected back into the substation on one leg while other legs are trying to feed out their normal loads," says Turner. "[This] causes a level of unbalance that, if not properly managed, results in the substation going entirely offline."

Power flowing intermittently in different directions to and from manufacturers, he says, actually increases the operational stress on the system and can result in increased instability -- exactly what the system was designed to prevent.

The Solution

The key to making this technology work -- and really the key to revitalizing infrastructure in general -- is investment. Traditionally, this has meant cash injections from the federal level, but in the current political environment, there is little hope of this coming through.

"Right now, we have limited power in DC," explains Herrmann. "We have discussions between the two parties, but they aren't agreeing to too much of anything. It seems to be a standstill at this point."

"Basically," he argues, "politicians are afraid. They are living on two-year life cycles, four-year life cycles." For leaders worrying about re-election, raising taxes for infrastructure improvements is simply not an option.

"Getting them to actually make the investment and realize that they'll save money by making the investments, that's the hard part," he says. "That's why we're trying to educate the public. They're the ones that elect them. When a politician says, 'I can't raise the gas tax because I won't get re-elected,' if the public starts saying, 'I want these better things, and you're going to have to do something,' maybe things will start changing."

This kind of public awareness is critical for change, he says. To keep U.S. manufacturing growing, the nation must bring infrastructure back to the forefront to help make these investments make sense in our difficult economic environments. Revitalizing the infrastructure means getting projects through and matching new technologies with a well-maintained system.

As Herrmann explains, "By making investments, you are actually saving money. You're saving sitting in traffic, you're saving brownouts, you're saving loss of jobs and costs to the gross domestic product and industry. These are things that are going to be coming up. If you make the investment, you're going to be saving dollars."

About the Author

Travis M. Hessman | Editor-in-Chief

Travis Hessman is the editor-in-chief and senior content director for IndustryWeek and New Equipment Digest. He began his career as an intern at IndustryWeek in 2001 and later served as IW's technology and innovation editor. Today, he combines his experience as an educator, a writer, and a journalist to help address some of the most significant challenges in the manufacturing industry, with a particular focus on leadership, training, and the technologies of smart manufacturing.

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