The three prongs of sound energy policy Image By Dan Romito What good is a product if you can’t get it to customers? Distribution and transportation logistics are critical factors in any equation that involves production. Yet in discussions around energy, too often the focus is singularly fixed on the method and size of production: facilities that generate electricity from sources such as fossil fuels, renewables and nuclear power. However, two other components – transmission and distribution – are equally important and represent broader challenges within the energy landscape. They require the public’s attention, too. To fully address the complexities of modern energy demands, we must recognize generation, transmission and distribution collectively form the foundation of sound energy and infrastructure policy. Generation involves producing electricity from various sources. The United States has significantly expanded the generation of all energy sources, highlighting our nation is undergoing an energy expansion instead of a transition. Transmission transports electricity from power plants to demand centers. Distribution delivers it from substations to end users. Both transmission and distribution are equally vital but often overlooked. This must change to compete in the new wave of global economic opportunity. The challenges of meeting demand The growing demand for electricity, mainly from hyper-scale data centers, has highlighted the limitations of our current energy system in all three phases. Data centers require vast power to support digital infrastructure, artificial intelligence, and hyperscale computing. This surge in demand reveals a pressing issue: the challenge of efficiently connecting new electric generation and storage to the grid. In the U.S., there are about 2,600 gigawatts (GW) of new power generation and energy storage projects waiting for grid interconnection. To put this into perspective, 1 GW can power approximately 750,000 U.S. households. The magnitude of this backlog exposes a bottleneck in the transmission system, which has become a substantial obstacle to project development. In simple terms, having capacity to generate any power source is moot and ineffective if you cannot efficiently transmit and distribute it. While the United States has ambitious goals for increasing renewable energy capacity and reducing greenhouse gas emissions, these aspirations are hampered by the inability to connect new projects to the grid promptly and efficiently. How these delays impact us The growing interconnection backlog has real-world consequences: many proposed projects and interconnection requests are ultimately canceled or withdrawn due to delays and complexities. Over 70% of interconnection requests are withdrawn – a striking statistic highlighting the current system's inefficiencies. This high attrition rate wastes resources and investment, slowing the transition to a more sustainable energy future. More importantly, this adversely impacts those who can least afford it. What policymakers can do Addressing these challenges requires a comprehensive approach that prioritizes improvements in transmission and distribution alongside generation. Pragmatic investments in modernizing the grid, streamlining the interconnection process, and expanding transmission capacity are essential steps – and must be approached under the instruction of capital discipline. Without these measures, the promise of new renewable energy and storage technologies will remain unrealized as projects become mired in bureaucratic and logistical delays. The energy dilemma is not just about producing more power; it's about ensuring that power can be effectively transmitted and distributed where it is needed most. By expanding our focus beyond generation to include transmission and distribution, we can address the systemic bottlenecks that hinder progress and work toward building a more resilient and efficient energy system for the future. Dan Romito is managing director overseeing the Consulting & Advocacy practice at Pickering Energy Partners. He previously worked at Nasdaq, and his writing has been published in Harvard Business Review, Bloomberg and CNBC. *The opinions expressed in this column are those of the author and do not necessarily reflect the views of EnergyPlatform.News.
