A Novel Method that Would Surge Electricity Expenditures in a Warming World

Climate changes is likely to enhance U.S. electricity costs over the next century by billions of dollars more than economists previously forecast, according to a novel research involving a University of Michigan researcher.

The study reveals how higher temperatures will raise not just the average annual electricity demand, but more essentially, the peak demand. And to avoid brownout and absorb these surges, utilities will require spending between $70 billion and $180 billion in grip upgrades – futuristic energy and power plants storage systems for which ratepayers would eventually foot the bill.

“If you look at you own bill across the year, you will usually see that your usage is biggest in the summer, when you are running the air conditioning,” says Catherine Hausman, an assistant lecturer at U-M’s Gerald R. Ford School of Public Policy. “Climate change scientists know that when we consider out over the next 100 years, things will get warmer and on a per-person basis, use of air-conditioning will rise. The question we considered was on the hottest day of the year, when people are preparing out on that, can the grid handle it? We build the grid for the hottest hour of the year.”

Colleagues and Hausman urge electric grid planners to keep their estimations in mind as they draft 20-year procurement plans. They also have a message for policymakers. “This implies that climate change adaptation is going to be more expensive than we thought. And so mitigation efforts become more valuable, more worthwhile, as they can prevent such costs,” says Hausman, who is the co-author of the research. “Our findings should inform the cost-benefit calculations of climate change policy.”

The requirement varies by region. The scientists examined separately each of the 166 load balancing authorities. These are regions that regulators use when they are examining the reliability of the grid. To generate their cost figures, the scientists estimated the mathematical relationship between electricity and air temperature in each region. Then they plugged that into simulations that look into account climate models and two varying carbon emissions scenarios identified by the Intergovernmental panel on Climate Change.

One scenario showcases, “business as usual,” under which carbon emissions would persist to enhance. The other is a condition which we stabilize emissions. Under both conditions, if the nation were to experience temperatures such as ones expected 100 years from now with today’s infrastructure, the grid would be overtaxed. Under the stabilization condition, demand on an average day would increase 3% and on peak day 7%. They estimate a 152% change in the total number of days experiencing the 95th percentile or above of demand. Absorbing this would need an investment of $70 billion.

The scientists caution that this is not a prediction for numerous reasons. Yes, increasing temperatures may spur greater adoption of air conditioners, and hence, greater temperature impacts, but they could also hasten development of more effective air conditioners. “We are attempting to say this is the future scenario,” says Hausman.