America’s electric grid is facing growing pressure as artificial intelligence, data centers, domestic manufacturing, and industrial electrification drive a sharp increase in electricity demand after nearly two decades of relatively flat growth. At the same time, severe weather events, rising equipment costs, and transmission bottlenecks are increasing expenses and creating concerns over grid reliability.
According to the Clean Tomorrow report, grid congestion cost the United States more than $12 billion in 2024. The report said the rising costs highlight the need to modernize the country’s power infrastructure and improve the ability of the existing grid to handle increasing electricity demand.
The report identifies regulatory and business-model constraints as a major barrier to faster grid modernization. Under the traditional cost-of-service regulatory model, utilities generally earn returns based on large capital investments in infrastructure. As a result, technologies that reduce the need for new construction can provide limited financial benefits to utilities, even when they lower costs for consumers.
This incentive structure has also contributed to relatively low research and development spending in the utility sector. The report estimates that utilities invest only about 0.1% of their revenue in R&D, compared with an average of 5.1% across other industries.
Several advanced technologies are already available and could improve grid capacity without relying exclusively on new transmission construction. Advanced conductors can increase the capacity of existing transmission lines by 1.5 to three times at less than half the cost of building new lines, according to the report.
Dynamic line rating technology can also increase the efficiency of existing transmission infrastructure by around 10% to 30%. The technology adjusts line capacity based on actual weather conditions, allowing operators to make better use of available transmission capacity.
Other solutions identified in the report include topology optimization, advanced power flow controls, high-voltage direct current systems, virtual power plants, and advanced distribution management systems. These technologies can improve the movement and management of electricity while potentially reducing costs for consumers and strengthening grid reliability.
The report calls for federal policy measures to accelerate the deployment of these technologies. One recommendation is to expand programs such as the Department of Energy’s SPARK initiative and introduce a 30% investment tax credit for advanced grid technologies. It also proposes increasing annual funding for the DOE Office of Electricity to $800 million and the Office of Cybersecurity, Energy Security, and Emergency Response to $300 million.
The report further recommends that federal power entities, including the Tennessee Valley Authority and Power Marketing Administrations, become early adopters of advanced grid technologies. Their deployment could generate operational data and reduce the risks faced by private utilities considering similar investments.
Strengthening domestic manufacturing is another priority. The report recommends using the Defense Production Act to increase production of critical components such as transformers and expanding the 45X Advanced Manufacturing Production Credit to cover advanced grid technologies.
The report also recommends greater use of artificial intelligence, neural networks, and quantum computing for grid planning, real-time operations, and cybersecurity through the White House and DOE Genesis Mission.
Finally, Clean Tomorrow proposes reforms to utility incentives, including systematic reporting on grid congestion, independent transmission monitoring, additional funding for state public utility commissions, and shared-savings mechanisms that would allow utilities to benefit financially from deploying cost-saving technologies.
The report concludes that modernizing the grid is essential to maintaining affordable electricity, economic competitiveness, national security, reliability, and progress toward decarbonization.
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