The days are getting longer, and the weather is getting hotter. With them come all the joys of summer.
From hot dogs and hamburgers to days at the beach and vacations, summer often means getting out and doing what you love. Of course, summer also means more air conditioning, electronics turned on all day, and added strain on the nation’s power system.
Every year we see electrical usage spike during the summer months as people across the United States turn on their air conditioning to beat the heat, and this year is no different. The North American Electric Reliability Corporation (NERC) recently issued its annual Summer Reliability Assessment with dire warnings for North America’s electric utilities.
To combat the issue and keep the lights on for everyone, utilities throughout the U.S. have made plans to upgrade their systems, replace/add more transmission lines, or take on new renewable energy projects like solar and wind. Those projects are in danger of further delays because of situations that are out of their control.
Whether it’s the weather, ongoing COVID recovery, or the threat of a cyberattack crippling power plants and disrupting service to manufacturers, ongoing threats are putting the brakes on electrical grid projects.
In the report, the NERC projects that above-normal temperatures will affect electric utilities. Drought conditions are expected to continue in some regions alongside the ongoing threat of late-season wildfires complicating energy production and distribution for millions of Americans.
Meanwhile, the global supply chain is dealing with its own problems, including slow manufacturing recovery, a labor shortage throughout the transportation chain, and rising prices across every industry. Some supply chain managers are struggling to source raw materials, navigate unseen delays, and get finished products pushed out to the market.
As a result, delays are inevitable, even for power producers nationwide. The West and Southwest regions currently have a backlog of power projects, but delays for critical components like solar panels could push start dates back by months or even years.
Combine these factors, and it’s easy to see why the supply chain’s slow recovery puts the entire electrical grid in a jam just as the summer season begins.
The supply chain faces several problems that make it harder to ship and find finished products, and delays caused by COVID-19 are still wreaking havoc on manufacturers here and abroad. Combine these factors with an ongoing labor shortage, and we’re well on our way toward a perfect storm.
In addition, there are several factors impacting the electrical grid, forcing power plants to play catch-up to keep the electricity flowing for millions of Americans. There are millions of miles of power lines crisscrossing the U.S., linking thousands of power plants and utilities to the grid. Together, these energy producers keep the lights on for homeowners, office buildings, and manufacturers, many of which rely on a constant supply of power to keep production going.
Although some supply chain strains can be addressed with some creativity (and a little bit of technology), others are outside our control.
Production is dependent on supply and demand. In the months following March 2020, production in some industries came to a standstill as people were told to stay home.
The resulting demand far surpassed the supply, leading to shortages of everything from cleaning supplies and food staples to microchips and specialty products. In many cases, production has begun to return to 2019 levels, but some experts suggest constraints will last through 2022.
Drastic cost increases to ship raw materials and finished goods are also adding fuel to the fire. Manufacturers rely on truck drivers to move products long distances, but there aren’t enough available.
The entire supply chain has been hampered by delays, shortcomings, and scarcity. Every industry has been hit by issues, leaving manufacturers pressed for raw materials and struggling to ship finished goods.
Ports are backed up with products because there aren’t enough dock workers to unload ships. Unfortunately, once the materials are offloaded, they still can’t go anywhere quickly because there aren’t enough truck drivers to haul them away.
China has been instituting a Zero COVID Program in its country to control the spread of the coronavirus and get the country back to business.
The program, which includes lockdowns, has been bumpy so far. However, China has recently lifted many of its lockdowns and is beginning to ramp up production again. It will take some time to return to pre-COVID production levels anytime soon, leaving multiple industries, including those relying on materials like computer chips, strained.
While there is optimism that the country has turned a corner and is finally distancing itself from further lockdowns, there is still the potential risk of a future outbreak causing shutdowns in major Chinese manufacturing cities like Shanghai and Hong Kong.
If you’ve filled up your car over the last two months, you’ve felt the brunt of high gas prices. Gas prices have soared past $6 per gallon in several states, mainly along the west coast, but every state is feeling the pressure.
States have tried to fight back by reducing taxes paid at the pump. For example, New York recently suspended its state gas tax through the end of the year to stave off $5/gallon prices. Unfortunately, gas and diesel prices are likely to remain high this summer as people make the most of the summer season. The U.S. Energy Information Administration (EIA) recently pegged the average price for a gallon of gas at $4.70/gallon, with diesel coming in at a whopping $5.57/gallon.
Soaring prices will keep costs high throughout the supply chain. Someone has to pay for price increases along the way, and manufacturers, distributors, and users are doing a delicate dance to take on their share of the costs.
The reeling supply chain is already affecting the electrical grid, and not in a good way.
The ongoing Russian invasion of Ukraine is hurting gas prices, which are driving up prices for many other products and services, including copper wire. Combine higher costs with longer lead times throughout the industry, and it will be harder to get copper products manufactured and shipped quickly.
We’re already seeing projects, especially those related to solar and other renewables, getting delayed or pushed back until the fall or next year. In other cases, it may take longer to perform critical repairs to damaged parts of the grid caused by natural disasters or simply old age. The lifespan of an electrical grid hovers around 50 years, but some are well past that.
Other external factors, including widespread drought conditions, are keeping utilities on high alert. In California, the threat of drought has gotten so bad that under one forecast, the state’s share of hydroelectric power generation could fall from 15% to only 8%. The drop in production could force the state to buy power from surrounding states to meet demand.
The supply chain is like a spider web. It’s an incredibly efficient and well-designed series of pieces that has the potential to work flawlessly but can quickly fall apart in the face of adversity.
Manufacturers, suppliers, distributors, and end users are trying to work together to reduce stress brought on by the supply chain and keep prices manageable. Utilities are also searching for ways to keep the lights on this summer, though some reports have predicted brownouts, blackouts, and other power disruptions during high-use days.
Gas prices will likely stay high through Labor Day, which will keep the cost of raw and finished goods high in the short term. There is hope that increased oil production in the Middle East will slow the rise of surging energy costs.
More relief could be on the horizon as China gets back on its feet, boosting production. The Biden administration is also easing its stance on solar imports by not imposing tariffs on those products for two years. Both actions could reduce solar project delays utilities have been navigating recently.
The supply chain is only one of several concerns for the electrical grid right now but is one of the most critical pieces that needs to be in place for the grid to continue functioning reliably. Until it improves, everyone from copper manufacturers and distributors to end users will feel the brunt.