Innovation in Energy Production and Delivery

Several weeks ago my column focused on the emergence of a new technology to meet the increasing demands on our power infrastructure. Between massive data storage and retrieval systems and the growth in the use and application of Artificial Intelligence (AI) demand for reliable energy is outpacing the growth in available power on the national grid. While some areas like California are experiencing shortages now, the real problem is, like the grid itself, nationwide, It is made worse by the fact that the location of demand is increasingly in areas poorly served by the current grid. All of this is compounded by the fact that government (state and federal) regulation of power generation and distribution is burdensome, contradictory and unnecessarily expensive. Because it is the government, a whole host of unrelated items take precedence in the decision making – everything from worrying about some insect in a forgotten canyon of Arizona to the make up of the workforce and suppliers (diversity, equity, and inclusion), and/or the demand that costly and unreliable wind and solar energy be included in arbitrary amounts. The nation’s grid is based on antiquated assumptions about growth and demand. It’s a mess and made worse because of the interference of government.

But there is hope that comes in two distinct parts that are manifestly co-dependent. I wrote previously about the advent of small modular reactors (SMRs) that are scalable and are not dependent on the grid for location. And about Oregon State University’s role in innovation and development of this concept. The point is that these SMRs can bring significant amounts of power to virtually anywhere and that the capacity can grow as local demand, including user specific demands, requires. In its simplest terms that means if the ABC Storm Door Company wants to build a data center in Portal, North Dakota to take advantage of low real estate prices and the naturally cold climate, it can without concern as the proximity and capacity of existing electrical service.

But now a state governor has understood the importance of these small modular reactors as well as the impact on the national grid. And on a more retail level it heightens the ability to entice high tech businesses in rural states. Currently users are required to locate within the grids transmission network and as such share both the cost and the regulatory burden of state and federal bureaucrats. An opinion piece in the September 27 edition of the Wall Street Journal entitled New Hampshire Sparks a Revolution in Electricity Supply praised New Hampshire Governor Kelly Ayotte (R) for embracing the new technology of small modular reactors as a boon to economic development in New Hampshire:

“The global race for artificial intelligence and the inability of the U.S. electricity sector to keep pace have state policymakers scratching their heads. Some respond by restricting data centers’ use of local grids; others put existing customers and taxpayers on the hook for investments to accommodate the new demand. The electricity sector is in a state of crisis.

New Hampshire recently approved an elegant solution: Let anyone build. In August Gov. Kelly Ayotte signed HB 672, which minimizes red tape for electricity providers that don’t connect to the existing grid, thus bringing more competition, speed and innovation to the state. In the spirit of reducing bureaucracy, the bill itself fits neatly on one page.

Off-grid electricity providers in New Hampshire will no longer be subject to public-utility regulation. This means they are free to develop projects, operate or enter into commercial agreements without going hat in hand to state bureaucrats. ‘New Hampshire welcomes entrepreneurship and innovation in energy,’ says state Rep. Michael Vose, who sponsored HB 672. Recent analysis suggests regulatory hurdles can add anywhere from one to five years to projects.

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“For more than a century, government has regulated innovation in the electricity industry with a heavy hand. But visionaries like Thomas Edison and George Westinghouse, not regulators and technocrats, made the electricity sector great. A century ago, we mistakenly traded the ability of competitive businesses to tinker and experiment for the presumed logic and efficiency of monopoly utilities. Now New Hampshire has reversed that.

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“For years, leaders of the fast-growing data-center industry have expressed frustration with the slow expansion in the electricity sector. New Hampshire deserves credit for recognizing that the status quo wasn’t cutting it. HB 672 could re-create in the Granite State the fierce competition from the early decades of the electricity sector, when the growth and innovation were extremely fast.”

It is indeed an elegant solution. It keeps the bureaucrats – most of whom are simply political hacks – from interfering in a business decision that encourages economic growth. The trade off for this new solution is that it cannot connect to the grid and thus compete with the heavily regulated energy industry for general distribution to all consumers. Quite frankly I’d take that bargain any day of the week after having spend nearly thirty years dealing with utility regulators, lawyers and other mindless souls.