November 14, 2014
State Efforts at Grid Modernization
By Todd Olinsky-Paul
Over the past year, we have seen a number of states initiate resilient power and microgrid initiatives. But in addition, a few states have begun a process of revisioning their electric grids. Notably, grid modernization initiatives are revving up in New York, Massachusetts, California and Hawaii. No longer limited to so-called “smart meters” and other minor upgrades, these initiatives are focusing on big, system-wide changes in the way electric grids function. There are a number of elements common to most grid revisioning efforts, including:
- Integration of more distributed clean generation/enhanced resource diversity
- Greater role for distribution utilities
- Smartgrid and microgrid development
- Peak shifting and reduction of grid overcapacity
- Reduced outages, greater reliability and resiliency
- Optimized demand/customer control of energy use
- Improved asset management
- Improved markets/grid services provision
- Enhanced system-wide efficiency
- Carbon reduction
The interesting thing about these goals is that each of them represents opportunities for solar + storage, a key resilient power technology. If grid modernization efforts value more clean distributed generation, PV provides that, and storage can help to integrate it. If peak shifting is a goal, solar + storage can achieve it. If microgrids are needed, solar + storage is a key technology. The same could be said for every bullet on the list above.
In many cases, these benefits will be provided by third-party or customer-owned solar + storage systems, rather than utility-owned systems. This is especially true in restructured electricity markets, where utilities may not be able to own generation (and storage is frequently lumped in with generation, although it doesn’t actually generate anything). In these markets, third party providers will play an important role. And, there is some evidence that many smaller, distributed systems will be more valuable to the future grid, in aggregate, than a few larger, centralized ones.
But, how will solar + storage vendors, developers and owners monetize the benefits their systems provide to the future grid? Recent FERC orders leveling the playing field for energy storage and distributed generators provide a partial answer, but in large portions of the country, these orders do not apply, or have not been fully implemented. Even where they have been fully implemented, these FERC orders address only a few of the many important benefits of solar + storage systems.
How will solar + storage providers obtain a return in exchange for enabling reductions in generation overcapacity, or avoided transmission and distribution system upgrades? What about resilient power benefits to communities? Or reduced pollution and carbon emissions resulting from decreased need for fossil fuel peaker plants? We know these benefits have value; what is not yet clear is how that value translates into markets that will support solar + storage deployment and technology development. These questions need to be answered if visions of grid modernization, including enhanced resiliency, are to come to fruition.
I recently read an article titled “Grid Wars,” that likened the current, centralized generation grid to mainframe computers, and a decentralized, distributed generation future grid to smartphones and the cloud. The author also noted that the current state regulatory framework was designed around a centralized grid, and is not sufficient to support the evolution of a distributed grid. At this point, the promise of technology has far outstripped the rules and markets that determine how electricity and grid services are delivered, and who gets paid for them.
The nascent state efforts at grid modernization are a good start, and should be applauded. But much more needs to be done.