When Will the Lights Go Out?

Alternative energy that generates electricity (wind, solar, nuclear, geothermal, hydropower) depends on the electric grid, which is falling apart because of deregulation already.  In addition it’s also rusting apart at a time when there will be less energy to replace and maintain the broken pieces since we’ve been at peak oil production globally since 2005 and probably are at or will be at peak coal soon too.

Since transportation is 97% run on oil, electricity is not a solution to the energy crisis.

Jason Makansi. 2007. Lights Out: The Electricity Crisis, the Global Economy, and What It Means To You.

This is a well-written book that explains how our very complex electrical transmission system works, and the problems we face as the transmission grid falls apart from lack of investment and deregulation.   Electricity powers the infrastructure and machinery that keeps us alive, and our communication and digital systems.


The central theme of “Lights Out” is that the most important part of the electric grid, the transmission system, is being neglected.  It’s only ten percent of the “value chain”, but it’s the most essential component keeping the electricity flowing.  Transmission experts consider the United States grid “third-world”.


The electrical system is one huge machine.  If all of the parts aren’t connected and synchronized, the machine stops.  Over 75 percent of electricity is generated with fossil fuels and is the source of one-third of the green house gases in the USA.  Even the “cleaner and greener” natural gas plants release methane over their life cycle. Methane is over twenty times as powerful in its global warming effects as carbon dioxide.

Wind power doesn’t make this problem go away, because they have to be backed up by If combined cycle natural gas plants to compensate for when the wind dies down and to maintain stability.

Stability is incredibly important, just a tiny bit too much flowing through the lines, or too little, can ruin power equipment and the machines using electricity.  Ten percent of the electricity flowing never gets delivered – it’s just there to keep the grid stable.

Electricity is totally unpredictable. No one knows where it will go, all engineers know for sure is that it will take the path of least resistance.  A given circuit needs to be fed by multiple paths, so if one source of electricity fails, other paths can step in.  This is not easy to pull off, there’s a great risk of overloading the lines if it isn’t done correctly

Controlling the supply of electricity is especially difficult.  Demand fluctuates moment to moment as people turn on their air-conditioners, industries shut down at the end of the day and so on.  Utilities have to guess at demand to supply enough electricity.  They do this by having several types of power plants.

The most important ones run nearly all the time (typically coal or nuclear).  They have a high capacity, operating 70-90% of the time.  Next come the intermediate load plants that run during the heavy demand seasons of cold winters and hot summers.  They typically have capacity factors (up and running) 30-50% of the time.

Finally there are peaking power plants that can start up fast to meet peak demand in the morning and evening.  They’re usually wasteful of energy since starting and stopping all the time is hard on the equipment (thermal stress degrades metal).

Before deregulation, the transmission grid used to be “gold plated” – so robust and overly maintained that probabilities of massive failures were almost zero.  Reliability was a benchmark.  Now utilities scramble to provide reliable service as the transmission grid deteriorates.


Deregulation broke the incredibly complicated electric machine into bits and pieces run by different conductors, and this is one of the reasons we now have a third-world grid that’s no longer gold-plated.  Why maintain the grid when you can make a lot more money on other segments of electricity supply and demand?

Deregulation led to a situation where all that mattered was making money.  During the electricity crisis in California in 2000-2001, electricity contracts were trading up to 30 times before the electricity was actually delivered and each trade bumped up the final cost of electricity to the consumer.  The crisis in California was never an issue of supply and demand, it was due to a deregulated financial market that was designed without regard to the physical limitations of the grid.


Utilities now compete with each other, so when one gets in trouble, they no longer come to each others aid in emergencies

The transmission grid is falling apart, because it’s not being maintained adequately.

Therefore, we don’t have the infrastructure to bring wind energy from highest-wind areas in the North Dakota region to urban centers. The interconnections between regions are very weak, making it impossible to move large amounts of electricity across long distances.

And of course, with the financial crisis, the trillions needed to beef up the electric grid will be hard to find.

Even if you raised the money, it would be hard to figure out who to give it to.  The utilities own the poles, transformers, wires, etc, the Independent System Operator (ISO) actually operates the assets, NERC manages and reports on the flow of electricity among tie inter-connected regions to ensure reliability of the nation’s system, FERC establishes permits and rights-of-way for new ‘transmission corridors’.

“Lights Out”, makes it abundantly clear why it makes more sense for just one organization to keep this insanely complex system running, conducting what Makansi calls the “electricity grid orchestra”.

Who’s in charge?

The ISO might select a power station that is offering electricity at the cheapest price, but utilities have a different priority: they would rather select a power station that will help the grid function more reliably, or a power plant they own to maximize profits.

Which angers the independent power generators and energy marketers, who want their power used, not assets owned by the utility, even if the utility can make the case they chose their own assets for reliability.  Utilities have no control over optimal placement of new generation plants.  Forty percent of generation plants are privately owned. Utilities are required to buy expensive electricity from these independent power producers who may have built their plants less than optimal locations.

There are also conflicts between the state and federal levels.  State regulators would rather serve local consumers before wheeling power to other states.

Finally, there are all the customers, who want low-cost electricity in conflict with utilities and private generators who want a fair return on their investment.  But any expansion of the grid to provide cheaper power is seen as a threat to existing power generators, who anticipate lower revenues if this is done.

Energy markets and marketers only care about short-term gain, so long-term investment in electrical grid infrastructure suffers.  Far more money is made on Wall Street by people betting on electricity futures than the people who actually operate, maintain, and manage the electrical infrastructure to keep it safe and reliable.


There is still no cheap way to store massive amounts of electricity.  There’s no Strategic Electricity reserve like the Strategic Petroleum Reserve to draw on in an emergency.  Electricity is always just-in-time, there’s no inventory. Diesel backup generators can run out of fuel long before an emergency is over.

This is because electricity must be converted into another form, like the chemical energy in a battery, the mechanical energy of a flywheel, or pumping water back up to a reservoir so it can flow through the hydroelectric system again.

If a way to store electricity from wind and solar could be invented, these alternative sources would be must more valuable, since they could be injected when needed.


Wind is unpredictable, so grid operators have a hard time integrating more than ten percent of wind power into the existing electrical system, though new computer systems and so on are being designed to increase the amount of wind the grid can handle.

The electric grid system operates at a near constant of 60 Hertz. Really bad things happen when it doesn’t – that’s why we have to use some of the power generating capacity to maintain the grid itself.  To reach that constant frequency, the turbines at the power stations have to spin at near constant speeds.  Wind turbines can’t turn at a constant speed because they must follow the strength of the wind at any given moment.  Making wind devices behave properly when sequenced with the electric grid also adds costs.

Wind investors want their turbines in the highest wind areas, where the wind blows as much as possible at 40 to 60 mph.  North Dakota wind is our best wind resource, but without a tremendous expansion of the transmission grid, this wind can’t be shipped to other parts of the country.

But even if this wind could be delivered across the country, building long transmission lines to carry electricity from wind farms that may only operate one third of the time doesn’t make good investment sense.

If it’s hard to find investors for wind farms (which is also due to wind tower operating costs – they’re as vulnerable as their weakest part to failure), I believe it will be even harder to find private investors to do invest in the expanded electric grid needed to deliver wind (and solar) power.   Nor is it likely the federal government will come up with trillions needed – they seem more keen on giving on trillions to the financial institutions that brought the economic system down.


  • Over the next 20 years many states hope to import electricity from hundreds or even thousands of miles away at times, over supply lines are very fragile.  The fragility comes from the long supply chains of:
  • Coal. Fifty percent of electricity comes from coal, much of it delivered just-in-time by rail
  • LNG. Suppliers are not our “best friends(i.e.  Iran, Russia, Algeria, Indonesia, Libya, Nigeria)
  • 90% of our nuclear fuel is also imported


Powder River Basin (PRB)  coal is expensive to transport – two-thirds of the cost goes to the railroad, not the coal mining operations.  This coal is thirty percent water, resulting in a significant amount of diesel power being used to transport water.  The water in the coal ends up as water vapor when burned, and water vapor is also a global warming gas.  This coal is such low quality that it doesn’t generate the electricity output coal plants were designed to deliver.

Almost sixty percent of coal-fired power stations get all of their coal delivered by rail, and another roughly ten percent by rail and one other mode — truck or barge.  This dependence on railroads makes electrical generation very vulnerable.  Makansi argues that it would be better to generate the electricity in Wyoming where the coal is and send it through transmission lines to the east coast.


These cost from $300 to $1200, or ten to forty times as much as a typical utility earns in profit from the average residential ratepayer.


The electricity-sector workers are aging and getting ready to retire.  For every two about to retire, the industry has less than one to replace them with.  The nuclear power sector needs 90,000 trained workers and engineers soon.  A lack of specialized workers to maintain and operate the infrastructure will greatly impact affordable, reliable service — new employees don’t have a lifetime of knowledge. They’re bound to make catastrophic errors, which will increase rates for consumers.


Every time we add a coal or natural gas plant, we increase the greenhouse gases carbon dioxide and methane.


The likelihood of blackout is increasing due to aging infrastructure, lack of new technology and replacement components, and bad weather (storms, heat, ice, hurricanes, tornadoes, etc), which is only likely to increase with climate change.  As Matt Simmons has pointed out, energy infrastructure made of steel rusts from day one.


Substations key to the functioning of the grid are not defended and would be easy to take out by just a few terrorists.   After reading this book, it wouldn’t be hard to figure out which ones to hit


Electricity rates can be 10% of a large refineries cost of doing business, 50% for an aluminum smelter.


Makansi concludes his book wondering why we join book clubs to learn about the world and investment clubs to grow our retirement accounts, yet we don’t form energy conservation clubs.  He believes that “personal demand and personal accountability are truly the first way to avoid a lights out scenario.”

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