JPMorgan Sees US Grid Failures Hitting Poorest Families Hardest
(Bloomberg) -- America’s aging grid infrastructure is disproportionately hurting the country’s most vulnerable citizens, according to JPMorgan Chase & Co.
“When new generation and transmission take years longer than necessary to connect, it adds further strain to a system already under stress,” Heather Zichal, the bank’s global head of sustainability, and Michael Johnson, its security and resiliency initiative lead for energy and the US government, said in a note to clients seen by Bloomberg.
The costs of such delays “land hardest on the families least able to absorb them,” they said.
JPMorgan is stepping up its warnings on risks associated with America’s ailing grid, as bottlenecks caused by aging infrastructure, changing sources of energy and accelerating demand growth push up power prices. In March, the bank said poorly maintained grid infrastructure now poses a national security risk for the world’s largest economy.
JPMorgan, which collects fees advising utilities and energy clients on grid-related deals, unveiled a $1.5 trillion, 10-year plan last year to ensure enough money moves into areas deemed strategically important for US economic security, such as data centers, medicines and critical minerals.
When it comes to grids, “the need for investment is enormous,” Zichal and Johnson wrote. “But the barriers to putting money to work are not mainly financial. They are structural.”
In order for more capital to flow into grid infrastructure, investors need a more predictable regulatory and policy environment, the JPMorgan executives wrote. Examples of jurisdictions moving in the right direction include the European Union, they said.
“Recent reforms, such as the EU’s Grids Package, have shown what predictability could look like, with time-bound, digitized processes that make timelines more dependable,” Zichal and Johnson said. Such legislative packages help steer investments by “establishing clear steps, enforcing decision timelines and allocating scarce grid capacity transparently,” they said.
The European Commission unveiled its grids package in December, with measures including a proposal to accelerate the granting of permits and ensuring existing infrastructure is made more efficient and resilient.
Without clear guidelines in the US, financing costs will be unnecessarily high, procurement will slow down and much needed investment will be discouraged, Zichal and Johnson said.
Addressing such issues is growing in urgency, they said, noting that the latest increases in energy prices have coincided with 21 million US families now being behind on their bills.
“Speed matters for a reason that deserves more attention: affordability,” they said.
What BNEF Says:
Cyber threats are a growing risk to the world’s power grids. Coordinated attacks can now target both physical infrastructure and digital systems, and the rise of distributed energy resources has expanded the attack surface. Nearly every state in the US has faced such disruptions, and the consequences extend beyond power loss to economic and public safety risks.
(Updates with BNEF content.)
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