Congress Must Create a Strategic Power Equipment Reserve

Increasingly, Russia has turned the targeting of civilian energy infrastructure into a pillar of its war effort, leaving millions of Ukrainians without electricity, heat, and water during the winter. At the same time, Russia’s invasion has strengthened U.S. and EU resolve to move toward an electrified, clean future and away from fossil fuels.

But such a future will necessitate new energy security measures to ensure that grids can operate in even the most difficult of conditions. To this end, the Biden administration should work with Congress to establish what we call a strategic power equipment reserve (SPER) to address both immediate and evolving threats to energy security at home and abroad.

In recent months, Russia has stepped up coordinated and repeated attacks on Ukraine’s power system, causing massive blackouts and leaving as much as 25 percent of the country’s population without power as temperatures routinely drop below freezing. Some Russian leaders have even gone so far as to admit that the attacks are aimed at everyday Ukrainians rather than at tactical military targets. Russia has adopted this strategy precisely because of its failure—rather than success—on the battlefield.

Simultaneously, a series of attacks on the U.S. domestic grid infrastructure has revealed that the vulnerability of transmission systems extends beyond the front line of a hot war. In early December 2022, a coordinated attack by unknown perpetrators on only two substations triggered a dayslong outage affecting around 35,000 customers in Moore County, North Carolina. This incident and others even more recently represent a larger and disturbing trend: The United States is facing a decade-high surge in attacks on the U.S. power system, with federal authorities warning of “credible, specific plans” for physical attacks against electrical infrastructure and the prospect of increasing coordination and sophistication among both domestic and foreign hostile actors, ranging from extremists to cybercriminals.

While much can and should be done to harden the physical security and cybersecurity of the U.S. transmission network, no surefire way exists to secure these assets in place given the scale and complexity of the grid. The United States alone is home to 12,000 large-scale power plants spread across the country, with roughly 80,000 power substations and hundreds of thousands of miles of high-voltage transmission lines serviced by 3,000 different companies. Creating a strategic reserve for grid equipment can enable a rapid response to disruptions when they occur and make it harder for adversaries to achieve their intended goals—whether in North Carolina or Kyiv.

Establishing a reserve for critical grid components is not a novel concept either. Previous legislation and federal studies have teed up the issue. Yet it remains theoretical despite the current global economic transformation in which electricity is becoming a more important part of the world’s energy mix. On balance, this shift will increase flexibility and allow the world to rely on a broader range of resources to cleanly meet growing demand, but it will also inevitably swap current concerns over the stability of oil and gas flows with vulnerabilities to grid reliability and access.

By taking the concept behind the SPR and applying it to the power sector, the United States can better address emerging threats to its own energy security as well as assist allies and partners in moments of crisis, enabling a stronger and more unified response to events like Russia’s invasion of Ukraine and the future weaponization of energy in global conflict.

As with the SPR, the United States could work with other countries to coordinate stockpiles and mobilization. Power equipment is not as universal as liquid fuels, with national and regional grids operating at different voltages. For example, some power equipment used for high-voltage transmission in the United States may be fit for Ukraine, whereas comparable equipment used in some neighboring European systems may not be owing to differing frequency and voltage standards.

Coordinated reserves among like-minded countries would help ensure that stocks of critical equipment that otherwise take six months or longer to build could be mobilized rapidly and deployed where needed. With supply chain bottlenecks and the flight of manufacturing overseas, the lead time for orders of large-power transformers, one of the most urgent needs in Ukraine, has jumped from 38 weeks to 38 months.

The core function of an SPER would be to ensure the operational stability of the underlying system rather than manage price volatility and address structural imbalances in supply and demand. The availability and affordability of power is impacted more by the ability to generate and deliver electricity in real time at a local level than by the global market dynamics and conditions that affect fossil fuels. Because it wouldn’t be linked to a single underlying and heavily traded commodity, many of the financial tools the government relies on to stock and draw on the SPR—such as direct purchases, deferrals, and exchanges; royalty-in-kind transfers; and releases—could not be used to maintain an SPER.

Further, because the SPER would exist to address the security of hard infrastructure, the complex and varied nature of the grid equipment involved would make it challenging to administer a publicly owned and centrally maintained stockpile. In practice, the SPER could function as a joint enterprise between government and private sector partners. Federal authorities and system operators could put in place policy guidance, regulations, market structures, and incentives to bolster industry-led efforts.

This approach would require close coordination and partnership among government, grid operators, and other industrial players, including utilities and component manufacturers—with each playing a role in managing and operationalizing an effective SPER. This sort of robust public-private sector collaboration to address power sector reliability and security of supply is not hard to envision as it already takes place via the Electricity Subsector Coordinating Council and engagement between the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation.

An expanded approach could include federal financial support for maintaining reserves paired with some kind of federal backstop authority for nationalizing and redirecting stockpiles for international purposes. The United States is already working to send grid components to Ukraine, and G-7 countries have established a coordination mechanism for the same purpose. Federal authority to draw on and stock a reserve would enable more rapid deployment of resources through these and other channels.

An SPER would have the added benefit of boosting domestic manufacturing capacity for critical grid equipment and upstream materials while demonstrating that U.S. efforts to onshore and strengthen critical supply chains can serve the security interests of allies and partners. Bolstering the order book of power equipment manufacturers could also help address the climate crisis. The energy transition requires a larger, more complex grid: U.S. transmission capacity alone must expand 60 percent by 2030 and triple by 2050 to meet Washington’s clean energy and decarbonization goals. Increasing market pull for necessary, innovative technologies—such as smart controls and long-duration energy storage, even if small at first—will prove helpful by providing economies of scale and driving investment in much-needed grid modernization.

The U.S. Congress should legislate in a way that provides future administrations sufficient flexibility to keep pace with evolving challenges and opportunities in the energy sector. Both Democrats and Republicans have found common ground at the intersection of energy security, grid resilience, and U.S. clean energy leadership. This is reflected in much of what was included in both the Infrastructure Investment and Jobs Act and the CHIPS and Science Act.

The SPER we propose is a concrete and tangible policy proposal that would advance all of these goals. Similar ideas earned bipartisan support this Congress, but efforts to include it in both the CHIPS and Science Act and the fiscal year 2023 National Defense Authorization Act came up short. Creating a full-fledged power equipment reserve should remain a priority for the new Congress—in the interest of U.S. energy and economic security as well as Washington’s ability to support its allies and diminish the effectiveness of Russia’s war efforts.