As electricity prices have risen in recent months, the political response has been to demand near-term rate relief, pushing regulators and utilities to minimize costs today. But that approach inaccurately treats the grid like a commodity to be priced efficiently for today’s static demand. A near-term affordability focus risks compounding a decades-long deficit in transmission investment and firm generation, produced by fragmented planning authority, unresolved cost-allocation disputes, permitting and siting dysfunction, and utility incentives that reward small, local build-outs over large interregional lines. DOE’s 2026 National Transmission Needs Study draft confirms just how narrow the grid buildout has been: interregional transmission, which delivers the highest value of any investment, accounted for less than 2% of all transmission capital spending nationally between 2016 and 2024. An electricity strategy focused only on minimizing costs today does not fix that deficit, and could result in higher costs and a less reliable grid within the decade.
Policymakers should look at transmission more like a road network than a commodity, platform infrastructure whose value derives not just from what it costs, but what it enables.
Taking the grid’s platform character seriously shifts the focus to planning and building infrastructure ahead of demand and creating a system that can respond appropriately to shifts in power demand and energy supply. This requires federal or interregional planning authority to build the shared transmission lines that benefit from economies of scale, policies (including, but not exclusively, cost allocation) to ensure that large new loads pay their fair share, and siting, permitting, and interconnection reforms that match the pace and scale that a growing and electrifying economy requires. For the first time in decades, the private actors best positioned to support this agenda (hyperscalers spending billions on data centers that cannot function without a working grid) have a direct economic stake in getting this right—and a willingness to pay for it. The task for policymakers is to channel that capital and sense of urgency into building a shared grid that benefits us all.
The Grid is Platform Infrastructure and Requires Proactive Planning and Investment
Decisions about platform infrastructure, like the grid, should focus on what level and organization of investment creates the most enabling capacity for the economy that depends on it. Highways work because we have decided they should be ubiquitous, reliable, and capable of handling the load the economy demands. The value of the highway system—and the grid—is in the network effect and access, not in whether tolls on any single stretch of road cover its cost. Similarly, a transmission line’s value is not the electricity it carries at a given price, but everything that the connection enables elsewhere in the economy.
Three factors make platform logic especially important for transmission infrastructure:
- The risks of overbuild and underbuild are sharply asymmetric.
An overbuilt transmission line may sit mostly idle for a few years while demand catches up, which–all else equal–would generate a modest cost. An underbuilt grid, in contrast, means energy projects cannot connect to the system, demand growth goes unmet or is met with behind-the-meter generation, and reliability erodes. The downsides of getting this wrong by underbuilding are much larger than overbuilding.
- Transmission infrastructure often takes a decade or longer to get built.
Consequently, a decision to invest or not invest today determines what capacity is available in 2035, not next year. By the time demand growth materializes and makes the shortage apparent, it is too late to build your way out of the supply/demand imbalance.
- Proactive, systematic planning is more efficient.
When grid operators plan transmission over intermediate time horizons of 20+ years, they can harness the economies of scale inherent in the physics of electricity transmission; incremental increases in the voltage, heights, and rights-of-way for new transmission infrastructure can more than double carrying capacity. Today, transmission investments tend to flow to a disproportionate number of smaller, reactive projects: reliability fixes, aging-infrastructure replacement, and generation interconnection account for roughly 88% of new transmission miles built since 2016, while congestion relief and public policy goals each drive less than 1%.
The situation we are in now is the result of years of poor planning and underinvestment in transmission and interconnection infrastructure that has left the grid unable to support the rapid surge in data center load. The U.S. completed just 322 miles of high-voltage transmission in 2024, one of the slowest years of grid construction in 15 years. In turn, only 13% of projects entering the interconnection queue since 2000 reached commercial operation. Decades of fragmented planning authority, intractable cost allocation disputes, state siting dysfunction, and misaligned utility incentives resulted in systematic underbuilding of smart transmission infrastructure. Instead of efficient investments, utilities have overbuilt small scale, local grid infrastructure to compensate.
The national competitiveness cost of this failure is now apparent. A 2025 CSIS analysis found that electricity supply, not chips, land, or capital, is the most significant binding constraint on U.S. AI dominance. As a result, data centers are going off-grid entirely: xAI’s Memphis facility rented road-portable gas generators at a premium compared to purchasing electricity from the grid. This is not an efficient solution; it is a failure of platform infrastructure forcing private workarounds at greater expense, with greater emissions, and with no benefit to the shared grid upon which everyone else depends.
Short-term rate relief cannot fix this problem. Instead, policymakers should be focused on advancing structural reforms and long-term public investment. Addressing the symptom of high bills without addressing the cause of underbuilt infrastructure will leave us with both higher bills and a less reliable grid within the decade.
What an Alternative Paradigm Looks Like
Platform infrastructure should not be optimized for today’s demand but should be built to enable future growth. This was true for the national highway system and should be true for the grid. Policy frameworks should build enough excess capacity, fairly, such that the next wave of growth—from data centers to electrification to industrial reshoring—can be absorbed without harming existing ratepayers.
In a well-designed electricity system, new load can benefit existing ratepayers: when large new loads pay their fair share and the costs of shared infrastructure are spread out over a larger base, existing customers can come out ahead. Recent LBNL analysis found that states with the highest demand growth from 2019 to 2025 generally saw inflation-adjusted prices decline, as fixed infrastructure costs were spread over a larger consumption base. Nebraska and New Mexico absorbed large industrial and data center loads while reducing real prices. The difference between those states and the ones seeing price spikes is whether the grid was built ahead of demand growth or in reaction to it.
Fixing the structural drivers that got us into this mess requires several policy changes:
- A federal planning role that can see across regional boundaries and identify and prioritize the interregional investments no single utility or state has both the incentive and authority to build.
DOE’s Transmission Facilitation Program, which advanced capacity contracts for projects, its Coordinated Interagency Transmission Authorization and Permits Program, and FERC Order 1920 are useful steps in this direction, but ultimately much more robust interregional planning is required.
- Cost allocation frameworks that distinguish between investment that benefit the whole system and investment driven by specific new loads so that data centers and other large loads pay their fair share.
FERC Order 1920’s extension of “roughly commensurate” benefit-cost allocation to long-term interregional lines is, again, a useful start, and could be paired with minimum-take contracts and collateral requirements to ensure that speculative demand from large load centers that does not materialize does not strand costs on ratepayers.
- Siting, permitting, and interconnection processes that reflect the scale and urgency of the buildout.
This means, at minimum, pursuing reforms that include mandatory interregional transmission planning, binding review timelines, and reduced litigation exposure for federal permitting decisions.
None of this is cheap in the near term. Skeptics are right that building ahead of demand carries near-term costs. Failing to build carries costs, too: DOE estimates the transmission investment needed by 2050 at $270 billion to $490 billion and that every dollar spent on interregional capacity will return $1.60 to $1.80 in benefits. A grid built ahead of demand, at scale, with the physics of transmission taken advantage of, is the only path to electricity that is genuinely and durably affordable—for households, for industry, and for the next generation of economic growth.
We Have Done This Before
The federal government financed rural electrification in the 1930s by driving construction costs down, extending credit to wire homes, and coordinating the buildout of shared infrastructure. The result is that the share of farm homes with electricity doubled within five years, crop productivity rose significantly, and counties that got electricity early were still outperforming comparable counties 60 years later. The 20th century saw a fourfold expansion of electricity demand coincide with a more than 20% decline in inflation-adjusted electricity prices, because we addressed the upfront capital and coordination problems to build a system that had the room to absorb new load. Scarcity makes electricity expensive; abundance makes it cheap.
Texas is another useful example of this logic in practice. The Texas legislature authorized the Competitive Renewable Energy Zone (CREZ) in 2005 and spread the roughly $7 billion cost across all ERCOT ratepayers. Consequently, wind generation grew from 5 to 25 percent in the following decade, utility-scale solar grew to 12 percent on these newly built lines, wholesale prices fell, and the investment returned multiples of its cost in reduced fuel expenditure alone, while enabling industrial development (including the electrification of oil and gas operations). No private developer had an incentive to plan and build this infrastructure because the benefits were too diffuse. The most consequential grid investment of the past two decades happened because one of the most market-oriented states in the country recognized that platform infrastructure is what lets markets compete in the first place.
The Right Question
The question of what scale to build the grid to is fundamental to the success of the American economy. The highway system was built because policymakers understood that shared infrastructure is what makes a modern, competitive economy possible; that the cost of not building it was greater than the cost of building it. The same logic applies to the grid today, but the stakes are higher.
Luckily, a pro-grid agenda now has significant tailwinds, because for the first time in decades the largest and most capitalized private actors in the economy have a direct and urgent stake in fixing and building the grid. The challenge for policymakers is to channel hyperscaler interest into investment in the grid we all depend on, rather than private workarounds that push spending behind the meter at greater cost and with fewer benefits to everyone else.
Other countries competing for technological leadership and industrial capacity are already acting boldly. China’s State Grid just announced a $574 billion, five-year grid investment plan, a 40% increase from the prior period. Its chairman has stated that grid investment should be “moderately ahead of demand” to support strategic industrial goals. South Korea is a cautionary tale in the other direction, in that it underinvested in grid capacity relative to its industrial ambitions, and industrial electricity prices surged more than 75% between 2022 and 2024. The grid could not absorb growing industrial demand.
The U.S. grid, the lifeblood of our economy, is at risk due to the accumulated pressure of fragmented planning authority, intractable cost allocation disputes, and a political environment that is overly focused on the promise of lower bills today. What’s needed is a grid capable of delivering reliable, affordable power for decades to come. Now is the time to plan and build a grid for growth.
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