‘Made in America’ – An analogous policy that needs to go digital

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The following is a contributed article by Tom Deitrich, president and CEO of Itron.

It has been more than five months since the $ 1.2 trillion bipartisan infrastructure bill was signed, and many projects across America are just waiting for the green light. The package envisioned a new national smart grid, with $ 65 billion for modernization and $ 15 billion for a massive network of electric vehicle (EV) charging stations. We now have the technology, the political will, and the funding – if legal provisions don’t stall these projects before they start.

These investments could not come soon enough. Our grid is in vital need of modernization and upgrades, as we face more extreme weather, increased cybersecurity threats, and escalating climate disruption. These projects are not only shovel-ready, but shovel-worthy – lowering carbon emissions, creating jobs, and spurring economic growth.

The Infrastructure Investment and Jobs Act has many worthy aims, but also some of the most stringent domestic content requirements. With more than half a million high-skilled jobs tied to the delivery of water and energy to American households, our sector strongly supports Buy America. Domestic content requirements boost American manufacturing and in the long run make supply chains more resilient and enable broader economic growth.

But in the near term, most infrastructure projects will include some foreign components. American industry is still recovering from the post-COVID global supply chain crisis. Lead times for production materials are averaging nearly 26 weeks, with times for many other inputs running in excess of 100 days. Given enough time, the 55% domestic content requirement written into the IIJA is an achievable goal. And yet, the way it is interpreted by federal agencies could delay critical infrastructure upgrades for years – while jeopardizing our carbon reduction aims and threatening existing factory jobs in the USA.

For want of a nail…

Most smart grid systems are made in America. This complex equipment is made from smaller sub-assemblies, like circuit boards, and those are made of thousands of smaller components, such as resistors, capacitors, analog components, and semiconductor microchips.

We can make anything in America. But we don’t make everything. American utilities – and their suppliers – take these components and sub-assemblies to produce smart meters, EV chargers, and other grid technologies. The deeper and deeper we go into the value chain, the more likely it is that not all components are made in America.

For example, a modern smart electric meter to a medium-sized apartment building might be made by a company in Minnesota. It includes advanced circuit boards and power gauges all manufactured in America. But those circuit boards contain tiny resistors – essentially ceramic beads wrapped in a tiny copper wire. Those resistors cost less than one cent each and are predominantly made in the Asia Pacific region.

It’s not hard to imagine an American factory pivoting to make resistors, but imagine doing that for every individual component, especially in this heavily supply-constrained environment. It just doesn’t scale, and it certainly won’t be quick.

Supply chains depend on many global sources. Of course, building American factories and hiring American workers is vital. But waiting for American companies to build new factories or recreate their entire supply chain would take many years. And it’s unlikely to be economically viable, with already record-low unemployment and raw materials scattered across the globe.

While we wait for factories to come online for relatively cheap components, we won’t be building the advanced smart grid technology America’s growing renewable base and EV fleet desperately need. Without additional investment, our utility infrastructure will continue to age past its useful life. High-skilled jobs upgrading the grid won’t be created, while carbon emissions keep rising and broader growth lags.

American products are more than the sum of their parts

We should make more components in America, but American ingenuity is a hundred years more advanced than the most common electrical components. Fortunately, there are already federal regulations on the books that recognize this point and address what – exactly – it means to be “Made in America.”

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