The expansion of Texas’ economy and population has been impressive of late, currently maintaining a pace of nearly 500,000 new Texans and 300,000 jobs (in round numbers) per year. Additionally, emerging sectors that require large and reliable electricity supplies are booming. As a result, the need for production and transportation capacity is increasing at a rate much higher than expected a few years ago.

Left unchecked, insufficient power and the unreliability of the Texas power grid could hamper economic growth by becoming a barrier to entry and expansion for businesses seeking to establish a presence in the state. Existing businesses also cannot operate optimally with a lack of electricity.

Although ERCOT (which serves approximately 90% of the state’s electric load) is “involved,” it is important that these projects are prioritized and supported. Otherwise, the economic costs will be very high, not to mention the reduction in quality of life that we would all face.

To illustrate the potential losses, we recently quantified the economic cost of inadequate transmission based on conditions that could occur in Texas. We used studies from the U.S. Department of Energy as a partial basis for developing scenarios reflecting varying degrees of severity of the shortage. The levels of investment required to avoid these supply shortfalls have also been estimated based on current plans and associated costs.

The initial scenario reflects an underinvestment in electric transportation of $3.65 billion compared to currently anticipated needs. By 2040, the Texas economy would be smaller than it would otherwise be, with an estimated annual gross product of $9.7 billion and approximately 40,500 jobs (including multiplier effects).

If the shortages are more severe with underinvestment of $10.41 billion, the total projected decrease in 2040 will result in an estimated $22.3 billion increase in gross product and approximately 92,900 jobs. In the third scenario, underinvestment of $12.66 billion in electric transportation would result in even greater losses, estimated at $25.5 billion in gross product and about 106,100 jobs by 2040 (including the associated multiplier effects). Cumulative losses until 2040 would amount to nearly $160 billion, or more than 12 times the cost of the necessary investments. It would also result in billions of dollars in lost revenue for the state and various local governments.

The current location of data centers, blockchain, semiconductors, artificial intelligence and other energy-intensive sectors provides promising prospects for Texas to remain a leader in high-tech and providing local areas of the state with huge investment opportunities. However, for this potential to be fully realized, we must not only produce enough energy, but also move it from where it is to where it is needed. Transportation capacity is crucial but often overlooked, and necessary improvements should be prioritized. Be careful!

Editor’s Note: The above column was written by Dr. M. Ray Perryman, President and CEO of The Perryman Group (www.perrymangroup.com). The Perryman Group has served the needs of more than 3,000 clients over the past four decades. The above column appears in the Rio Grande Guardian International News Service with permission of the author. Perryman can be contacted by email via: [email protected].