As feds focus on baseload, grid modernization is sweeping the nation
More than 30 states are considering far-reaching modernization and utility business model reforms, including new initiatives to integrate battery storage into grid planning processes.
As the Trump administration throws its weight behind legacy power assets, states and utilities are busy building the grid of the future.
The Department of Energy’s recent proposed rulemaking at the Federal Energy Regulatory Commission (FERC) would provide cost recovery to merchant coal and nuclear plants that keep 90 days of fuel supply onsite. The plan would provide support to many of the oldest generators in the country and observers worry it would unravel wholesale markets if enacted.
But the view from many states is much different. In the third quarter of 2017, there were 184 actions on grid modernization proposed, pending or enacted across 33 states and the District of Columbia, according to a new report. Those findings reflect an ongoing push for modernization nationwide. In Q2, there were 181 grid mod actions in 36 states, up from 148 actions in Q1.
Grid modernization actions make the power sector “more resilient, responsive, and interactive,” according to “50 States of Grid Modernization,” the new Q3 2017 policy update from the North Carolina Clean Energy Technology Center (NCCETC). “Actions” are legislation or regulation that addresses smart grid, advanced metering infrastructure, utility business model, or rate reforms, or ways to expand access to DER.
The clear trend this year has been in state-initiated investigations of grid modernization, said Autumn Proudlove, NCCETC Manager of Policy Research and lead author of the update.
“We are still at the beginning of grid modernization but more and more states are doing broad investigations to understand it better,” Proudlove said.
There were 40 actions to “tweak” existing policies and 38 actions to implement incipient programs or deploy “first-step” technologies in Q3, she said. But the real trend was in the 32 actions initiating studies or investigations on grid modernization, as well as 74 actions studying markets, planning, rate and business model reforms, and financial incentives, she added.
Also significant was the fact that 26 of the 33 states engaging with grid modernization “took actions on energy storage policies and deployment,” Proudlove said.
The emerging question asked by state investigations, Proudlove said, is what grid modernization should include to enable a 21st century power sector?
A well-developed grid modernization plan
The most common grid modernization action continues to be on advanced metering infrastructure (AMI), NCCETC reports. That is because AMI is a “foundational” infrastructure, Proudlove said.
Timothy Roughan, director of environment at Northeast utility National Grid, agreed with Proudlove.
“We see AMI as a foundational investment needed for time varying rates, as well as better planning, operational, and storm restoration needs,” he said by email.
In Massachusetts, National Grid has had the benefit of one of the few completed state grid modernization investigations, Proudlove said. That is important because there is no widely accepted “best practices” for grid modernization, she added.
The Massachusetts grid modernization investigation identified four objectives: Reducing outage impacts, optimizing demand and cutting costs, integrating DERs, and improving workforce and asset management. It also addressed the utility business model and rate design.
One of National Grid’s basic grid modernization premises is that DERs must be integrated into system planning and operations to enable customer-owned resources, Roughan said. Incentives and falling costs are also driving much higher DER penetrations, he said.
Without significant system investment in “new capabilities and equipment,” the underlying value of some of that DER will go untapped,” Roughan said. And without “a specific grid modernization plan with cost recovery” to deploy foundational technologies that enable DER would take “much longer,” he said.
A just-emerging grid modernization plan
In Missouri, Ameren began working in late 2016 for legislation to support its $1 billion, 5-year grid modernization proposal, Legislative and Regulatory Affairs Vice President Warren Wood told Utility Dive.
The traditional power system based on central station generation is evolving into “the integrated grid,” according to Ameren’s 2017 integrated resource plan (IRP). Higher penetrations of DERs, variable renewables and connected homes with smart meters and other communications technologies will require a “coordinated, bi-directional” grid to reliably balance distributed resources and customer demand.
Deployment of AMI and DER-enabling energy policies were “key objectives” of the Ameren-backed Senate Bill 190, which did not get through Missouri’s General Assembly this year, Wood said. The IRP objectives and the objectives of Ameren’s grid modernization plan are very much connected, he added.
Investments in grid modernization, along with constructive regulatory and energy policies, are “key enablers” for realizing the integrated grid’s benefits for Ameren customers, the IRP reported.
The successful deployment of AMI in Illinois proved grid modernization “is not a science fair project anymore and can deliver new customer options,” Wood said. “Missouri is behind other states. Moving forward on this is Ameren’s single highest priority there.”
Some stakeholders “do not see the benefit-cost advantage and are taking a prove-it-to-me attitude,” he added. “But we anticipate a benefit of about $2.40 from every dollar invested.”
Testimony on behalf of ReNew Missouri in a Missouri Public Service Commission proceeding investigating DER issues showed the utility and the advocacy group aligned in support of grid modernization. And Karl Rabago, executive director for the Pace Center for Climate and Energy Center, told the commission “comprehensive” utility planning for grid modernization is critical. It is the first step in “a deliberate shift in a utility’s approach to infrastructure, services, and engagement with customers and markets,” he said.
Grid modernization supports increased DER deployment and operation,” Rabago, a former Texas utilities commissioner and DOE Deputy Assistant Secretary, testified. That allows DER to become “a cost-effective alternative” and “empower customers to manage and reduce their energy costs.”
Ameren, Rabago and the Massachusetts investigation listed similar grid modernization objectives. They include reduced outage impacts, optimized demand and demand costs, the integration of DERs, and improved workforce and asset management.
Planning should emphasize the growth of renewables and DER, more intelligent and self-healing networks, and greater customer empowerment, Rabago argued. There should also be long-range, customer-focused planning and metrics to measure progress.
