Our big takeaway from SEIA’s latest Grid Modernization report: Utilities need to step up
The Solar Energy Industries Association (SEIA) continues its in-depth look at state-level efforts to modernize the electric utility grid with the fourth paper in the series, Getting More Granular: How Value of Location and Time May Change Compensation for Distributed Energy Resources. The focus in this one is ways in which utilities can more effectively operate on the grid.
“When states develop fair compensation mechanisms for distributed energy resources (DER), the result is a modern electric grid that better serves the needs of all its customers,” said Sean Gallagher, SEIA’s vice president of state affairs. “The case studies highlighted in our report can serve as a model for other states interested in grid modernization and the economic benefits that result.”
We recommend reading the whole thing, which you can access here: SEIA-GridMod-Series-4_2018-Jan-Final_0
Our two cents per kW
Our big takeaway is just how imperative it is for utilities to be more transparent with their data, forecasts and calculations. We need to get more voices in the room to offer solutions. What locations in an area need which specific upgrades? For what time of year? For what time of day?
We all already know utility transparency is an issue (improved so much through UtilityAPI), but when the possibilities for grid modernization are laid out as SEIA has done in this series, the lack of transparency seems more inexcusable than ever.
Our favorite concept from the report, as an example:
Locational value can be used to guide resources to high value locations. Utilities can create, and should publish maps showing the specific locations of any needs on the distribution system, the specific grid constraints to avoid the need (e.g., high loads during hot late summer afternoons), and the value of the avoidance in terms of dollars per amount of capacity. If a developer knows in advance that there will be a utility solicitation for the identified needs, it can begin seeking customers or project sites in anticipation of the opportunity to bid in its projects.
The report continues in that section to lay out a basis for compensation:
In addition to competitive utility solicitations, there are alternative means of providing targeted tariffs, programs or incentives to drive DER to locations to meet identified needs. If identified needs are too small or have too short of a lead time to be met through a competitive solicitation, the utility could have a tariff- or program-based mechanism that can step in on short notice.
For example, voltage issues are often very isolated and managed with small utility investments. However, smart inverters are increasingly being deployed widely and can be used to provide voltage management services in the locations where a utility has challenges managing voltage within an acceptable range.
In addition, tariffs enable customers of all stripes to adopt solar and other DER, which delivers the generalized grid benefits we discuss, but also ensures that a state’s clean energy market grows equitably in a manner that distributes the social, environmental, and economic benefits to all ratepayers. This is an emerging topic and it is expected that California’s Integrated Distributed Energy Resources proceeding will explore non-solicitation based sourcing mechanisms.
So, there needs to be more transparency for developers and engineers to jump in and propose solutions, but there also needs to be more general transparency for the public to better understand how electricity gets to their house, what exactly it costs, and what alternatives could look like. Each small decision is super complicated, but zooming back out and considering the broad strokes from the point of view of an actual home owner would be revealing. Jamal Homeowner, an outside observer, is plainly presented with plain insight into how exactly the grid functions and what the utility business model is, and also presented alternative plans for what it could be. Remember, this whole monopoly exists in his best interest, allegedly. What would he think?
Well, I can’t speak for Jamal, but I can’t help but be confused. Why we aren’t doing this already? How is what SEIA lays out in this report not the expectation? If you started the grid from scratch in 2018, knowing what we know, and with the technology we have, there is just no way you’d arrive at the current arrangement and business model. Having utilities prioritize DER with the same long-term, capital intensive strategizing that they apply to their current approach, could be the most impactful U.S. innovation this century.
Anyway, there is a ton more in that report and the series overall. Be sure to check it out.
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