The US electric grid is a gigantic and complex network of independently owned and operated power plants and transmission lines. Most of the infrastructure currently available came online during the 1950s and 1960s. Its great age is now earning comments like this, on NPR:

“The US power grid is often equated to a highway system, one that has been seriously neglected and is now being pushed to the limit with the demands of our growing and changing energy needs. As we see the increase in demand for renewable energy sources to combat the environmental ramifications of fossil fuels will continue to prove that the grid is antiquated and needs to be reinvented.”

The Department of Energy estimates that electricity demand has increased by about 25% since 1990, while the construction of transmission facilities has decreased by 30%. According to Media Company Red Herring Inc., energy demand in the US is likely to increase 32% by 2015.

The 2003 power grid failure that affected the lives of more than 50 million people is an example often cited to underscore the need to modernize the US power grid. This is not just to cope with growing demand , but also to accommodate the new focus on renewable energy sources such as wind, solar and hydroelectric: which are not easily interconnectable to the existing grid without significant renovation. The goal, of course, is to address long-term energy security. However, switching to renewable energy and establishing infrastructure such as “smart grids” requires considerable investment.

A key objective to reduce energy loss in the distribution process is the emergence of higher efficiency requirements for distribution and power transformers. Transformers are currently responsible for a significant amount of wasted power and this is where the DOE is introducing rules to increase efficiency. According to rules published by the DOE, the cost of liquid-immersed distribution transformers increases by up to 12%, but should decrease electrical losses by up to 23%. It could also increase the cost of medium voltage dry-type transformers by up to 13%, but should reduce electrical losses by up to 26%.

Although much of the energy efficient technology is a bit more expensive, private and government utilities have begun to invest in it for the reliability it ensures. In addition, the initial investment more than pays for itself in the long term, due to the reduction of energy loss in the transmission and distribution system.