The United States should continue to pursue its commitment to reduce greenhouse gas emissions by 50–52% from 2005 levels by 2030 and achieve net-zero emissions by 2050. To reach these goals, the United States must rapidly increase renewable-energy production while simultaneously building the transmission capacity needed to carry power generated from new renewable sources. Such an investment requires transforming the American electricity grid at a never-before-seen speed and scale. For example, the 2024 DOE National Transmission Planning study estimates that the American transmission system will need to grow between 2.4 – 3.5 times its 2020 size by 2050 to achieve a 90% greenhouse gas emissions reduction from a 2005 baseline by 2035 and net-zero emissions in 2050. A promising way to achieve this ambitious transmission target is to create a national High Voltage Direct Current (HVDC) transmission network overlaid atop the existing alternating current (AC) grid. In addition to advancing America’s climate goals, such an effort would spur economic development in rural areas, improve the grid’s energy efficiency, and bolster grid stability and security. This memo proposes several policy options the Department of Energy (DOE) and Congress can pursue to incentivize private-sector efforts to construct a national HVDC transmission network while avoiding permitting issues that have doomed some previous HVDC projects.

Challenge and Opportunity

The current American electricity grid resembles the roadway system before the Eisenhower interstate system. Just as roads extended to most communities by the early 1950s, few areas are unelectrified today. However, the AC power lines that cross the United States today are tangled, congested, and ill-suited to quickly move large amounts of renewable power from energy-producing regions with lower demand (such as the Midwest and Southwest) directly to large population centers with high demand. Since HVDC transmission lines lose less power than AC lines at distances > 300 miles, HVDC technology is the best option to directly connect the renewable generation needed to achieve net-zero emissions by 2050 with consumers. 

There are few HVDC lines in the United States today. Those that do exist are scattered across the country and were not designed to facilitate renewable development. As a result, the United States is a long way from the integrated nationwide HVDC network needed to achieve net-zero emissions. Many recent attempts by the private sector to begin building long-distance HVDC transmission lines between renewable producing regions and consumers—such as Clean Line Energy’s proposal for an aboveground line that would have linked much of the Great Plains to the Southeast—have been unsuccessful due to a host of challenges. These challenges included negotiating leases with thousands of landowners with understandable concerns about how the project could alter their properties, negotiating with many local and state jurisdictions to secure project approval, and maintaining investor confidence throughout the complex and time-consuming permitting and leasing process. 
However, a new generation of private developers has proposed an innovative solution that bypasses these challenges: the construction of an underground nationwide HVDC network alongside existing rail corridors. Unlike aboveground transmission built through a mosaic of property owners’ holdings, this solution requires negotiation with only the seven major American rail companies. This approach also takes advantage of the proximity of these already-disturbed corridors to many areas with high renewable-energy potential (Figure 1), does not add visual pollution to the aboveground landscape, and would weatherproof grid infrastructure against natural disasters.

Figure 1

Areas with high potential for wind and solar generation in the Great Plains and Southwest overlap with existing rail routes. Clockwise from left to right, routes of all seven class 1 railways (Source: Federal Railway Administration), heat map of average annual wind speed 80 meters aboveground (an indicator of the potential for wind energy generation; Source: National Renewable Energy

Importantly, these benefits apply to co-location next to highways or existing transmission lines as well. While this memo focuses on rail co-location, co-location next to other infrastructure should be simultaneously pursued by first removing regulatory barriers as was recently enacted in Minnesota and promoting the efficiencies gained from all forms of infrastructure co-location to relevant stakeholders. 

In addition to the political considerations discussed above, several recent advances in HVDC technology have driven costs low enough to make HVDC installation cost-competitive with installing high voltage alternating current (HVAC) lines (see FAQ for more details). As a result, incentivizing HVDC makes sense from perspectives beyond addressing climate change. The U.S. electric grid must be modernized to address pressing challenges beyond climate, such as the need for improved grid reliability and stability. Because HVDC transmission, unlike AC transmission, can maintain consistent power, voltage, and frequency, constructing a HVDC transmission network is a promising way to support the large-scale incorporation of renewable sources into our nation’s energy mix while simultaneously bolstering grid stability and efficiency, and spurring economic growth in rural areas. 

A nationwide HVDC network would also increase grid stability by connecting the four large interconnections that make up the shared American and Canadian power grid (Figure 2). Currently, the two largest of these interconnections—the Eastern and Western interconnections—manage 700 and 250 GW of electricity respectively. Yet, these interconnections are connected by transfer stations with a capacity of only about 1 GW. A recent study led by NREL modeled the economics of building a nationwide HVDC macrogrid that would tie the Eastern and Western interconnections together. The study concluded that such an investment would have a net benefit-to-cost ratio of 1.36 due to the possible ability for a nationwide HVDC grid to (i) shuttle renewable energy across the country as different power sources begin and end generation capabilities each day, and (ii) respond more nimbly to power outages in regions affected by natural disasters.

Figure 2

The four interconnections comprising the American and Canadian electricity grid: the Western, Eastern, ERCOT (Texas), and Quebec interconnections. Colors within the Eastern interconnection represent the territories of non-profit entities established to promote and enhance grid reliability within the territories shown on the map. These grid-reliability non-profits should not be confused with independent system operators (ISOs). (Source: National Electricity Reliability Council (NERC)).

Many private companies are already starting to realize an upgraded U.S. grid via new co-located HVDC transmission lines. For example, Minneapolis-based Direct Connect, with financial backing from American and international investors, has begun the permitting process for SOO Green, a buried HVDC line along a low-use railway that will link the Iowa countryside to the Chicago area. Direct Connect estimates that the SOO Green HVDC link will spur $1.5 billion of new renewable-energy development, create $2.2 billion of economic output in Iowa and Illinois, and create thousands of construction, operation, and maintenance jobs. Although geographically short, the line is also significant because it will join the Midwest (MISO) and PJM Independent System Operators (ISOs), two of the seven regional bodies that manage much of the United States’ grid. The combined territory of the MISO and PJM ISOs stretches from the wind-rich Great Plains to demand centers like Chicago and the Northeast corridor. Facilitating HVDC transmission in this project will allow renewable power to be efficiently funneled from regions that produce lots of energy to the regions that need it. 

The Champlain Hudson Power Express joining NY-ISO and the Quebec interconnection is another example demonstrating the promise of buried, co-located HVDC transmission. The project is projected to save New York homes and businesses $17.3 billion over 30 years through wholesale electricity costs by supplying Quebec hydropower to New York City. The line is currently permitted and under construction and when finished will stretch 339 miles underneath Lake Champlain & the Hudson River and underground through New York State to a converter in Astoria, New York City. The terrestrial portions will be built alongside existing railroad and highway right of ways. 

While these two projects and the handful of other buried and  co-located HVDC lines currently in permitting, permitted, or under construction are important projects, far more transmission needs to be built to meet the U.S.’ climate goals.  As a result, scaling underground co-located HVDC rapidly enough to achieve the transmission required for net-zero emissions in 2050 requires federal action to make these types of lines a more attractive proposition. The policy options outlined below would encourage other privately backed HVDC projects with the potential to boost rural economies while advancing climate action.

Plan of Action

The following policy recommendations would accelerate the development of a national HVDC network by stimulating privately funded construction of underground HVDC transmission lines located alongside existing rail corridors. Recommendations one and two are easily actionable rule changes that can be enacted by the Federal Energy Regulatory Commission (FERC) under existing authority. Recommendation three proposes that the DOE Grid Deployment Office should consider rail co-location in its NIETC designation process. Recommendation four is a more ambitious proposal for federal tax credits which would require Congressional action.

Recommendation 1. FERC should issue a new order that requires ISOs to review new renewable generation and new transmission projects on separate tracks to decrease permitting time delays.

New merchant transmission projects (transmission lines developed by private companies and not by rate-regulated utilities) such as SOO Green and the Champlain Hudson Power Express are often reviewed by ISOs in the same interconnection queue as new generation projects. Due to the high volume backlog of new, often speculative, renewable generation project proposals, transmission projects can wait for years before they are reviewed. This then creates a vicious cycle holding back the clean-energy sector: a delayed review of the transmission capabilities required by new renewable-generation projects ultimately chills the market for generation projects as well.

FERC recently reformed its regulations for interconnection requests (FERC Order 2023). FERC’s  expectation is that switching to a first-ready, first-served system, clustering projects together in groups to be approved en masse, and increasing both submission deposits and withdrawal penalties should prevent speculative submissions and reduce approval times. Order 2023’s removal of the reasonable effects standard (i.e. hardening deadlines for transmission providers to complete impact and interconnection studies) as well as allowing multiple generation projects to share interconnections should also reduce wait times. 

FERC Order 2023 is a laudable first step to address interconnection backlogs; however there is a chance that reality may not match FERC’s expectations. Therefore, FERC should continue to improve the regulatory regime in this area by issuing a new order that requires ISOs to review new renewable generation and new transmission projects on separate tracks. Such a rule would greatly decrease the permitting time for co-located HVDC transmission projects. 

Recommendation 2. FERC should encourage ISOs to re-examine older transmission interconnection rules that are appropriate for AC transmission regulation but do not take into account the benefits of HVDC. External capacity rules, which govern the ability to trade power across ISO boundaries, are a specific area in need of action because they can create barriers to building HVDC transmission across ISO boundaries. 

One granular example is described in SOO Green’s complaint to FERC about the PJM ISO (FERC Docket EL21-103).  Under current rules set by the PJM ISO, energy generated outside of the PJM service area can participate in PJM’s energy marketplace only if grid operators can directly dispatch that energy. This rule was established because grid operators cannot otherwise control the free flow of power through cross-ISO AC transmission, but it results in the exclusion of external, non-dispatchable renewable energy resources from PJM’s market.  However, HVDC lines offer the capacity to schedule current flow at pre-agreed upon times, allowing PJM to directly control transmission and negating the need to control energy dispatch. PJM should look for solutions to this issue from ISO New England and NYISO’s external capacity rules, which have enabled them to import external capacity through HVDC lines into their territories. 

FERC should encourage PJM ISO to revise its external capacity rules to enable less burdensome pathways to market participation for external resources connecting through HVDC transmission. PJM can look to ISO New England and NYISO as examples.

Recommendation 3. As the DOE proposes possible National Interest Electric Transmission Corridors (NIETCs), it should pursue co-location with rail, highways, and existing transmission whenever possible.

Previous attempts by Congress to establish greater federal power over transmission siting and permitting have revolved around the DOE’s authority to designate areas as NIETCs. NIETCs are regions that the DOE identifies as particularly prone to grid congestion or transmission-capacity constraints. Creation of NIETCs was authorized by the Federal Power Act (Sec. 216), which also grants FERC the authority to supersede states’ permitting and siting decisions if the rejected transmission project is in a NIETC and meets certain conditions (including benefits to consumers (even those in other states), enhancement of energy independence, or if the project is “consistent with the public interest”). This “backstop” authority was created by the Energy Policy Act of 2005, was recently reformed in 2021’s Infrastructure Investment and Jobs Act, and was further clarified by FERC Order 1977 through the creation of a landowner bill of rights. 

While a laudable attempt to spur transmission investment and respect landowners, the revised authority in its current form is unlikely to lead to the sudden acceleration of transmission siting and permitting necessary to achieve the United States’ climate goals. This is because NIETC designation, as well as any FERC action under Section 216, (i) trigger the development of environmental impact statements under the National Environmental Policy Act (NEPA), and (ii) may still engender strong political opposition by states and landowners whose properties would be part of proposed routes but would not receive any benefits from transmission investments.

The DOE recently released a list of proposed NIETCs, which if designated would be the first corridors in the country.  Some of the NIETCs were designed with co-location in mind, for example the NY – NE ISO link is located alongside roadways and mid-Atlantic routes are co-located with already existing transmission. However, rail co-location was not mentioned, yet the DOE’s proposed NIETCs overlap with the nation’s class 1 railways in many locations, especially in the Southwest and Midwest. In order to speed up the NEPA review process and reduce NIETC opposition, the DOE should i) consider discussing rail co-location in addition to highway and transmission infrastructure during the upcoming public engagement process, and ii) promote the possibility of co-location to transmission developers in all relevant NIETCs after they are officially designated.

Recommendation 4. Create federal tax credits to stimulate domestic manufacturing and construction of HVDC transmission, including HVDC lines along rail corridors.

Congress should create two federal investment tax credits (ITCs) to stimulate a market for American HVDC lines. One tax credit should be directed to American manufacturers of cross-linked polyethylene (XLPE) which serves as the material for the liner in HVDC cables. Since most producers are based in Asia, such an incentive would help ensure a reliable domestic supply of this essential material. The second tax credit should be directed to HVDC line developers who propose new regionally significant transmission projects that join ISOs or the three interconnections together. Since the United States’ grid grew in an ad-hoc, decentralized way, a Congressional tax credit of this type would further build on FERC’s recent order 1920, which requires transmission providers to think more big picture, long-term and strategically by developing a long-term regional transmission plan that covers at least the next 20 years. 

Such a tax credit was recently introduced into Congress. In 2023, Sen. Martin Heinrich (D-NM) proposed a 30% ITC for “regionally significant” transmission projects which was also introduced in a companion bill by Rep. Steven Horsford, (D-Nev). Their Grid Resiliency Tax Credit Act would provide a 10-year credit for projects that begin building before 2033. The bill is currently under discussion by the Senate Finance committee and should be amended to also include a tax credit for XLPE manufacturers. The expiration of parts of the Tax Cuts and Jobs Act in 2025 will focus attention on tax legislation in the next Congress and offer a legislative window for transmission construction and component manufacturing tax credits. In the potentially acrimonious debate about the future of tax policy, transmission tax credits could be a rare point of agreement and an opportunity for both parties to invest in American manufacturing and infrastructure growth.

Conclusion

A significant increase in transmission capacity is needed to meet the United States’ efforts to achieve net-zero emissions by 2050. Creating a nationwide HVDC transmission network would not only greatly aid the United States’ efforts to address climate change, it would also improve grid stability and provide sustained economic development in rural areas. Direct Connect’s SOO Green project and the Champlain Hudson Power Express are examples of innovative solutions to legitimate stakeholder concerns over environmental impacts and individual property rights – concerns that have plagued previous failed efforts to construct long-distance HVDC transmission. The federal government can stimulate private development of HVDC  infrastructure via rule changes to the transmission interconnection process by FERC, promoting rail co-location in the NIETC design and designation process, and by passing new HVDC transmission-specific tax credits.

This idea was originally published on May 5, 2022; we’ve re-published this updated version on November 12, 2024.

This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.

Grid modernization should be a major part of a national infrastructure-investment initiative. Effectively and efficiently modernizing the U.S. electric grid requires rapid deployment of innovative grid technologies. The next administration should establish a Grid Resilience Innovation Demonstration (GRID) Network, run in partnership between the Department of Energy (DOE) and the Department of Defense (DoD), to test and accelerate deployment of such technologies. The GRID Network would integrate and build on existing microgrids on federal installations and other relevant facilities, resulting in a group of geographically distributed test beds that can be managed and operated as a national user facility. The distributed nature of the network would allow test beds to ensure that solutions are compatible with a variety of grid technologies and operational structures and would also insulate the network from security threats, and other risks. Prioritizing establishment of the GRID Network early in the next administration will enable our nation to quickly realize the benefits of a modern electric grid, including enhanced resilience to natural disasters, entrepreneurship opportunities, and job growth. Failure to act will leave our national grid vulnerable to hostile actors, rob the country of needed shovel-ready construction projects and manufacturing jobs, and undermine U.S. leadership in electric sector innovation and the resulting impacts to our economy.

Challenge and Opportunity

The U.S. electric grid is a critical backbone of our nation’s economy, national security, health, and social interactions. Yet the current grid is ill-suited to modern demands. Our nation’s grid contains many critical components that were originally constructed in the early 20th century. The grid as a whole is based on an outdated structure that was not designed for today’s varying power demand requirements, such as for the internet data centers, or for the widescale integration of intermittent sources of electricity such as wind turbines and solar panels. The grid is also poorly equipped to withstand the many cyber, physical, and electromagnetic threats that exist today. 

These problems can cause extensive and expensive blackouts, such as the widespread outages across the Northeast in 2003 that cost $6 billion in damages. The possibility of foreign interference presents a threat multiplier. In 2015, a Russian assault on the Ukrainian grid cut power for six hours in the dead of winter. A similar attack on the U.S. grid is possible. In fact, the same malware the triggered the Ukraine attack has been found in US-based critical infrastructure facilities. 

There is a clear need to make the U.S. electric grid much more secure to thwart attacks, robust to withstand physical threats, resilient to ensure rapid and full recovery from adverse impacts, stronger to accommodate greater demands, and flexible to enable a broader deployment of clean-energy technologies.

Yet grid modernization is easier said than done. The U.S. electric grid is a massive, complex system that comprises various technologies for electricity generation, transmission, and distribution as well as multiple operators, regulators, and markets to ensure the continual flow of electricity. Few incentives or financially-attractive opportunities exist for grid stakeholders to demonstrate and deploy innovative models and technologies. And finally, the national-security benefits of a secure, robust, and resilient grid do not deliver direct, sufficient financial gains, creating a market failure that leaves the grid vulnerable to interference.

Plan of Action

The next administration should establish the Grid Resilience Innovation Demonstration (GRID) Network, a national-scale test facility designed to propel the nation toward a more secure, robust, and resilient grid that can strengthen economic and national security while enabling a clean-energy future. The GRID Network should comprise multiple, geographically distributed test beds that are widely accessible to institutions and researchers seeking to demonstrate technologies in prototypical environments. These test beds would be user facilities similar to those owned by the National Science Foundation (NSF) and the Department of Energy (DOE).

The overall goal of the GRID Network would be to support development, demonstration, and deployment of innovations in grid operation and technology, which are needed to address the evolving energy needs and expanding risks. The types of innovations could run from small to large scale, and from technical to operations, for example, components for high-voltage transmission or distribution, smart meters and associated cyber controls, direct current connects and disconnects, and microgrid operations with a variety of sources, loads and sizes.

The GRID Network would focus on innovations at mid- to high technology-readiness levels, i.e., innovations that have already been demonstrated successful at a limited level and seem like promising candidates for scale-up and commercialization. GRID Network test beds would provide the capacity to test at all scales from individual components in situ up to full end-to-end tests from the electricity generator to the final use. As modernization of the grid continues to occur, the anticipated outcomes will continue to evolve, and this facility will enable more innovations to be developed rapidly and tested such that the decision and risk of implementation can be reduced, which in turn should facilitate deployment. After all, utilities and investors want proven technologies, not science projects. As a result, we will see a more resilient grid that is both more secure and more robust (i.e., less blackouts, more value, savings and/or avoided costs).

GRID Network test beds could serve as official sites for the government to validate and certify any concept or technology intended for use in national-security applications. Through partnerships with community colleges, test beds could also offer workforce-development opportunities and vocational training to prepare technicians to install and operate next-generation grid technologies.

Implicit in the proposed action is that there are innovative technologies and strategies for operation that could be tested and rapidly deployed. While this has not been demonstrated through a survey or collection of data, it is a reasonable assumption based on our knowledge of the research and development (R&D) that is being done in this area as well as some general issues that impact the rapid, successful advancement from R&D to demonstration and deployment (i.e., crossing the so-called “Valley of Death”). Having a user facility aimed at helping bridge that gap that is available to companies and researchers widely would encourage innovators and innovations to surface, as has been demonstrated to work well in the past in the DoD and DOE. A minimally viable prototype will be needed for testing, which focuses the role of the facility between “development” and “deployment.” The costs for testing would be covered by the government, and like the existing user facilities, access to apply for time on GRID would be open to all ideas through a merit-review process. As a result, innovators should be motivated to develop their ideas to a product or operations model that can be tested given the low or zero cost of testing because the value of a having a government-tested and demonstrated device or operating model will be very high.

As is typical for federally-funded user facilities, the GRID Network would be run by a private entity (e.g., an objective management organization) through a public-private partnership with government agencies: in this case, likely DoD and DOE. The partnership could be managed by either agency or by an external entity, such as the National Resilient Grid Authority (NRGA) conceptualized in a 2020 report from the National Commission on Grid Resilience. Existing microgrids and other assets at DoD and DOE sites could provide the foundation for the GRID Network. The GRID Network will also build on and enhance the grid-resilience and modernization efforts that were established and have been pursued at both agencies.

Establishing and managing the GRID Network would cost the Federal Government an estimated $25–50 million per year at the low end to $200–300 million per year at the high end. This funding range is consistent with the funding levels for similar research and development facilities that DOE and DoD have supported over the last 15 years. Funding at the high end would support more sophisticated, comprehensive testing equipment, would permit users to take more time to test ideas, and would permit testing of more high-risk, high-reward ideas. Funding at the high end would also support efforts beyond just testing, such as development of national standards and protocols for grid operations, pursuit of collaborative technologies that would benefit niche applications, such as defense resilience pilot projects, and technology certifications.

The U.S. electric grid must be modernized to enable more use of renewable energy, deploy storage, and assure we improve the resilience. A test facility, such as the GRID facility described above, could help with modernization and entice investments toward deployment of new technologies. As a result, federal investment in the GRID Network would pay off directly or indirectly in four key ways:

1. Modernizing the U.S. electric grid will create shovel-ready construction jobs across the country. Since the GRID facility would be oriented toward rapid development and deployment of innovations, the facility could help enable aggressive and comprehensive modernization of the electric grid, which would involve construction jobs.
2. Grid components that are critical to U.S. infrastructure and national security—ranging from sensors to transformers—must be made through a trusted U.S. supply chain. Investments in the GRID Network hence represent investments in American manufacturing.
3. The GRID Network will support user generation of intellectual property and associated small business start-ups because some of the innovations that are tested and deployed will be manufactured, distributed and installed by start-ups, which will strengthen the U.S. supply chain. This new wave of business activity will propel the U.S. economy for years to come.
4. Grid modernization is a huge effort that will cost at least $500 billion and likely $1–2 trillion. Investing in technologies that could facilitate modernization will retire risks for grid modernization as the decisions by the various grid operators will be based on testing at an applicable scale. As a result, the GRID facility should help ensure the costs for grid modernization are in the middle of the range rather than at the higher end or above.

Conclusion

The U.S. electric grid is a crucial piece of the nation’s infrastructure. If it fails, critical sectors such as finance, healthcare, transportation, defense, agriculture, and manufacturing are at risk of failure as well. Yet the grid remains unacceptably vulnerable to threats large and small. There is a real danger of attacks on the grid by adversarial nations, and natural disasters can wipe out large sections of the grid for hours, days, or longer. Even factors as seemingly trivial as mylar balloons, small arms fire, and broken tree branches can cause costly damage when they interfere with critical grid components. It is past time to create a more robust and resilient system. Creating a testing ground for innovative solutions in grid operations and technology is an important step: one that will not only shore up a glaring weakness in our national security, but will also boost our economy through shovel-ready construction projects, creation of new and good-paying jobs, and development of intellectual property.

The next administration should establish a national initiative built around ambitious goals to accelerate development and deployment of dramatically improved energy-storage technologies. Developing such technologies would help establish a strategic new domestic manufacturing sector. Deploying such technologies would expand the range of low-carbon pathways available to fight climate change—especially those relying on variable renewable energy resources, like wind and solar power. Deploying such technologies would also improve the performance of smartphones, drones, and other vital electronic tools of the 21st century.

Challenge and Opportunity

Electricity systems, no matter how big or small, must instantaneously balance supply and demand, generation and load—or suffer blackouts. This imperative has long motivated scientists and technologists to seek the holy grail of affordable, reliable, durable, and safe energy storage. Yet, despite many decades of efforts, batteries remain expensive, fickle, short-lived, and dangerous for many applications. Other forms of energy storage, like thermal and compressed-air storage, suffer from major drawbacks as well. 

Radically improved energy-storage technologies would help the nation and the world solve some of their most pressing problems. Most urgently, improved energy storage would expand the range of low-carbon pathways to fight climate change and reduce dependence on fossil fuels by allowing the electricity grid to accommodate higher levels of renewable energy. Improved energy storage would allow electric vehicles (EVs) to better meet drivers’ expectations for value and performance, thereby speeding up EV adoption and further helping to address the climate challenge. Better batteries would also let people stop worrying about whether their electronic devices are charged, improving security and strengthening the economy in a world where these and other connected devices are ubiquitous.

Given the importance and magnitude of these opportunities, energy storage has become a critical industry of the future—one that nations around the world seek to capture. China and the European Union, for instance, are making significant strategic investments to build domestic capabilities for development and manufacturing of energy storage technologies. These and other international competitors are challenging the U.S. energy innovation ecosystem—our research universities, national laboratories, start-up companies, and established technology firms to invent, commercialize, and scale-up next-generation energy-storage technologies.

Opportunities by sector

Electric power

The rapidly dropping cost of wind and solar power has opened major pathways to decarbonize electricity systems. But these power generation technologies are variable: that is, their output fluctuates by the hour, day, and season. As the renewable share of generation rises on a grid, such fluctuations make balancing supply and demand increasingly difficult, threatening brownouts and blackouts. Grid-scale energy storage has the potential to address this challenge. Although one energy-storage technology (lithium-ion batteries) has been improved to the point that it has begun to make a significant impact on the grid, major gaps remain. Fully solving the grid-storage problem requires technologies that are much cheaper and last much longer than current systems. Grid-storage technologies must be able to hold enough electricity to power a grid for a week or more at a cost of just a few cents per kilowatt-hour (kWh), while operating only a few times each year.

Transportation

Lithium-ion batteries are also kick-starting the electrification of transportation. Their declining cost is one of the key factors helping to bring EVs into the mainstream. EVs are cleaner than gasoline-powered cars if they are charged on low-carbon electricity grids. EVs are also easier to maintain and cheaper to operate. However, the ultimate triumph of EVs in the auto market is far from assured. Batteries that are safer, rely on more abundant materials, allow vehicles to go 500 miles or more on a charge, last for at least a decade, and are easily recharged and recycled would make the success of EVs more likely, with huge payoffs for the global climate.

Electronics

The suite of technologies sometimes lumped together as the “fourth industrial revolution” is another broad domain that would benefit from advances in energy storage. Robots, drones, sensors, and smartphones—and the systems by which they process and exchange information—have become essential tools in modern society.

Most of these electronics are more useful when they can operate without having to maintain a constant connection to the grid. Although batteries are becoming lighter and more efficient, the demands being placed on them are also rising, straining the limits of lithium-ion technology. An order-of-magnitude leap in the energy density of batteries— the amount of electricity stored in a given mass or volume—would unlock a diverse array of valuable new applications for a wide range of electronic devices. For instance, drones, whether they are being used by combat forces, farmers, or utility crews, would be able to stay aloft for days and carry more sophisticated payloads, such as weapons or sensors.

Domestic manufacturing

Paradigm-shifting improvements in energy storage technologies would also create opportunities to build domestic manufacturing capacity in a growing industry of the future. The supply chain for making lithium-ion batteries migrated to East Asia years ago. The largest battery factory for EVs in the United States, Tesla’s “giga-factory” in Reno, NV, is run by a joint venture with the Japanese-headquartered firm Panasonic. Tesla has been unable to fully master the finicky methods used to make battery cells. Other U.S.- based EV assembly plants rely on Asian-headquartered battery contractors as well. 

Nonetheless, the United States continues to generate new energy storage technologies, including some that could supplant the current generation of lithium-ion batteries. For example, Sila Nanotechnologies, founded in 2011 and based in the San Francisco Bay Area, raised $215 million in 2019 to scale up its manufacturing activity. A half-dozen other U.S.-based battery start-ups have also raised large funding rounds in the past year. Investors include not only venture-capital firms, but also big companies based in Europe and Asia as well as North America. It remains to be seen where the battery supply chain of the future will be located.

Plan of Action

The next administration, building on the Department of Energy’s (DOE) recently announced “Energy Storage Grand Challenge,” should establish a National Energy Storage Initiative (NESI) built around ambitious goals to accelerate development and deployment of dramatically improved energy-storage technologies. These goals should include widespread adoption of:

• Grid-scale systems that can provide at least 500 megawatts (MW) of power for a week at a cost of three cents per kWh or less.
• Vehicle-scale energy-storage systems with performance, safety, and cost characteristics as good as or better than internal-combustion systems (including lifespan and recharging speed).
• Batteries for small devices exhibiting energy density an order of magnitude greater than current lithium-ion batteries.

The NESI should also seek to achieve economic and international goals such as:

• A positive international trade balance in energy-storage technologies and components.
• Global adoption of energy-storage technologies invented and commercialized in the United States across major application domains.

The NESI will require deep collaboration among key federal agencies and with the private sector, academia, and states and localities. This initiative would galvanize the still-thriving energy-storage science and technology community in the United States, spurring the development of better energy-storage technologies and ensuring that the next generation of storage devices are built here. The case for the NESI is two-fold. First, expanded research, development, and demonstration (RD&D) funding is needed to address market failures in the energy-storage domain. Expanded funding would enable scientific and mission agencies to pursue a diverse array of promising opportunities that have gone un- or under-explored. The result would be new energy-storage materials and concepts, breaking through barriers that have limited current technologies. Second, federal resources and leadership—as well as deep engagement with the private industrial and financial sectors and with key states and localities—are crucial for domestic scale-up and manufacturing made possible by this expanded RD&D portfolio. International competition surrounding energy storage is already fierce. China, in particular, has made no secret of its plan to dominate the global battery and EV industries. The United States must assert leadership on energy storage or risk being left behind.

Implementation

The NESI should include four key components: (1) White House leadership and coordination, (2) a federal RD&D budget commitment, (3) increased agency participation and use of an array of policy tools, and (4) mobilization of non-federal actors to undertake aligned actions.

White House leadership and coordination

An Executive Order (EO) from the White House, implemented by the Office of Science and Technology Policy (OSTP) and the National Science and Technology Council (NSTC), would be the foundational action to launch the NESI. White House leadership and attention would catalyze implementing agencies to identify lead units and staff members for the interagency initiative and to undertake internal coordination among their component units (e.g., the science and applied energy offices within DOE). OSTP, NSTC, and agency staff would spearhead the initiative, driving its progress throughout the executive branch and mobilizing support in Congress, industry, science, and the public.

Budget

Delivering on the aforementioned goals would require, at a minimum, tripling current spending on energy storage RD&D programs over five years. The most comprehensive estimate of federal RD&D spending on energy storage comes from a 2015 OMB interagency “crosscut”: $300 million. Increasing spending to $900 million or more per year would allow participating agencies to take the following actions:

• Accelerate fundamental research on promising energy-storage materials and systems.
• Create and expand centers of excellence in RD&D on energy storage at universities and government laboratories.
• Build academic-government-industry partnerships to create energy-storage prototypes and pilot projects.
• Conduct large-scale energy-storage demonstration projects in collaboration with end users, such as urban and rural electricity systems and military bases.
• Establish regional manufacturing innovation centers that facilitate technology development, worker training, and small- and medium-enterprise (SME) engagement related to energy storage

Increased agency participation and use of other policy tools

In addition to DOE, the Departments of Agriculture (USDA), Commerce (DOC), Defense (DOD), Health and Human Services (HHS), Housing and Urban Development (HUD), and Transportation (DOT) as well as the National Science Foundation (NSF) and National Aeronautics and Space Administration (NASA) should be mobilized to accelerate innovation in energy storage. DOC, DOD, HHS, and NSF should collaborate with DOE in expanding the energy storage RD&D enterprise. The other agencies, along with DOE and DOD, should use policy tools such as procurement, regulation, and investment support (e.g., loan guarantees) to help “pull” nascent energy-storage technologies into markets and to assist in establishing domestic production capacity. Tax incentives, legislated by Congress and administered by executive agencies, may also be helpful to accelerate market growth and drive down costs for particular technologies.

Mobilization of non-federal actors

Academia and industry are critical to the success of energy-storage RD&D, manufacturing, and adoption. The vast scope of energy-storage applications amplifies the importance of engaging with a wide variety of end-user industries—especially power-system vendors, utilities, electronics manufacturers, and automakers—as well as producers of storage technology. States and localities, many of which have announced ambitious goals for grid-scale storage, should also be incorporated into the NESI. A few states could house federally supported manufacturing and innovation “clusters” for energy-storage solutions. All states could accelerate adoption of improved energystorage technologies by fostering receptive markets: for instance, by reforming electricity regulation.

Precedents

The proposed NESI is similar to successful efforts such as the Clinton administration’s nanotechnology initiative and the Obama administration’s advanced manufacturing initiative. Such initiatives mobilize and coordinate multiple agencies in pursuit of technological capabilities that will contribute significantly to a set of broadly agreed national goals. Success depends on strong presidential commitment at the start and cultivation of stakeholders across partisan, regional, and sectoral lines over time. Effective technology initiatives have major on-the-ground impacts and ultimately become self-sustaining. Two keys to success are (1) White House leadership and attention to foster interagency cooperation, and (2) increased agency budgets to limit resistance from incumbent programs.

Federal funding for energy-storage science and technology has a long track record, particularly with regard to basic research. The American Recovery and Reinvestment Act (ARRA) expanded federal energy-storage funding considerably in the 2010s. ARRA funding supported establishment of the Advanced Research Projects Agency—Energy (ARPA-E), which has become a major source of funding for applied research and prototype development in energy storage. ARRA funding also supported the Joint Center for Energy Storage Research (JCESR) at Argonne National Laboratory; a collaborative demonstration program within DOE’s Office of Electricity that worked with utilities, states, and local governments; and loan guarantees for battery manufacturing and grid-scale storage projects. 

Many of these investments have paid off handsomely. For instance, an evaluation by the National Academies found that ARPA-E’s funding of energy-storage technology has been “highly productive with respect to accelerating commercialization” and led to the formation of at least six new companies in the field. JCESR was renewed for an additional five years in 2018. However, the demonstration and manufacturing elements of the ARRA-funded push were not sustained, primarily due to ideological objections by the Congressional majority that came in after the 2010 midterm elections. 

The Department of Energy announced an Energy Storage Grand Challenge on January 8, 2020. This initiative is a welcome step toward the broader initiative outlined in this paper. It seeks ambitious advances in technology, rapid commercialization, and the creation of a domestic manufacturing supply chain. But it does not extend beyond DOE, and whether it will be implemented with the appropriate resources and presidential support is uncertain.

International context

Many countries have made energy storage a priority. The European Union has embarked on a multi-billion-dollar battery initiative that led to the establishment of Northvolt, a European-owned battery cell manufacturing start-up. Volkswagen bought 20% of Northvolt and is working with it to build a second cell factory. Energy storage and EVs are among the sectors targeted by China in its Made in China 2025 program. Massive subsidies from all levels of the Chinese government have flowed through a variety of channels to energy storage projects and companies to fulfill this program, helping China become the world’s largest EV market (with more than 50% market share). Korea, Japan, and India are among the other countries undertaking national energy storage initiatives.

Although the global race to advance energy-storage technology is intense, the United States possesses many strengths that would allow a domestic energy-storage effort to succeed. These strengths include outstanding research capabilities at universities and national laboratories, a vibrant start-up ecosystem, and a strong industrial sector. The NESI would provide the leadership, funding, and coordination needed to realize the full potential of these assets. It is also important for the United States to foster international cooperation around science underlying energy-storage technology. Scientific knowledge is a global public good that will be under-provided without the leadership of the world’s top scientific nation.

Stakeholder support

The NESI has a wide range of potential champions and advocates on both sides of the aisle. Congressional Republicans have expressed their support for energy storage through expanded RD&D funding and more ambitious authorizations. The administration’s new grand challenge taps into this legislative support. Environmental advocates on the left of the political spectrum are also supportive, perceiving limited energy storage as the biggest technological barrier to expanded deployment of renewables. Similar enthusiasm may be expected from the research community and investors, as well as from states seeking to build a domestic energy-storage industry. These interests have been frustrated by the “invent here, produce there” outcomes of past breakthroughs, such as lithium-ion batteries.

Technology end users may be less enthusiastic or indifferent. Low prices in the short term may be more important to them than innovation in the long run. They may also see the location and ownership of production facilities as irrelevant or argue that the current global division of labor, in which Asian factories built with cheap public-investment capital supply U.S. needs, is favorable for the United States. Other skeptics may argue that when it comes to supporting expanded deployment of renewables, investing in demand response, larger grids, or other forms of low-carbon electricity generation, such as nuclear power or natural gas plants with carbon capture systems, are better options than energy storage.

Goals and metrics

The overarching (e.g., within 10 years) goal of NESI is to make the United States a major center for energy storage innovation and production. 

One essential short-term step towards achieving this goal is establishing key organizational components of the NESI, such as an interagency working group and a mechanism to engage with non-federal stakeholders, including industry, academia, and states. A second critical step is expanding budgets for relevant federal agencies to put them on a pathway to triple federal funding for energy-storage RD&D. 

In the medium term, metrics such as growth in scientific publications and patents, formation of new energy-storage companies, equity and project investment, product introduction, and manufacturing-cost reduction will provide insights on progress. 

In the long term, success of the NESI should be assessed by the level of market penetration of new energy-storage storage products across application domains including electric power, transportation, and electronics in the context of a growing overall storage market. Success of the NESI should also be assessed through consideration of the international trade balance related to energy storage and adoption of U.S.-developed energy-storage technologies.

Proposed initial steps

The next president should sign an EO establishing the NESI and directing the White House Office of Science and Technology Policy to convene a federal interagency task force. The task force should prepare a strategic plan and develop a budget for the initiative in consultation with key stakeholders. The plan should identify technological needs and opportunities and set specific objectives, taking into account global competition and cooperation with respect to energy storage. Congress should support the NESI by appropriating funding needed to implement the strategic plan, and by providing additional authorization as required.

Implementing agencies should pursue energy-storage RD&D as it relates to their respective missions, while collaborating to manage overlaps and avoid gaps. RD&D activities should strengthen the intramural and extramural research and industrial communities. As innovative storage technologies reach maturity, DOC, DOD, and DOE should work with states and regional economic-development agencies to foster markets and develop manufacturing capabilities. Congress should provide tax incentives that help to pull these technologies into the market, thereby driving down cost and expanding deployment.

Conclusion

Energy-storage technologies in widespread use today are not good enough to meet fundamental 21st-century challenges, including climate change, economic growth, and international security. A national initiative to accelerate domestic development and deployment of dramatically improved energy-storage technologies would position the United States to lead the world in addressing these challenges while building its economy. Although global competition in energy storage is fierce, our nation has strong capabilities that—if used strategically—position the United States to catch up with and ultimately surpass its rivals in this vital emerging industry. The NESI provides a pathway for the next president to translate this vision into reality.