NewEnergyNews: TODAY’S STUDY: The Action In Grid Modernization Right Now


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    Monday, May 29, 2017

    TODAY’S STUDY: The Action In Grid Modernization Right Now

    50 States of Grid Modernization; Q1 2017 Quarterly Report

    Autumn Proudlove, Brian Lips, David Sarkisian, Achyut Shrestha, May 2017 (North Carolina Clean Energy Technology Center)


    What Is Grid Modernization?

    Grid modernization is a broad term, lacking a universally accepted definition. In this report, the authors use the term grid modernization broadly to refer to actions making the electricity system more resilient, responsive, and interactive. Specifically, in this report grid modernization is intended to be inclusive of the following topics: (1) smart grid and advanced metering infrastructure, (2) utility business model reform, (3) regulatory reform, (4) utility rate reform, (5) energy storage, (6) microgrids, and (7) demand response…

    Actions Included

    This report focuses on cataloguing and describing important proposed and adopted policy changes related to grid modernization and distributed energy resources, excluding solar technologies. While some areas of overlap exist, actions related to distributed solar policy and rate design are tracked separately in the 50 States of Solar and are generally not included in this report.

    In general, this report considers an “action” to be a relevant (1) legislative bill that has been introduced or (2) a regulatory docket, utility rate case, or rulemaking proceeding. Only statewide actions and those related to investor-owned utilities are included in this report. Specifically, actions tracked in this issue include:

    Studies and Investigations

    Legislative or regulatory-led efforts to study energy storage, grid modernization, utility business model reform, or alternative rate designs, e.g., through a regulatory docket or a cost-benefit analysis.

    Planning and Market Access

    Changes to utility planning processes, including integrated resource planning, distribution system planning, and evaluation of non-wires alternatives, as well as changes to state and wholesale market regulations enabling market access.

    Utility Business Model and Rate Reform

    Proposed or adopted changes to utility regulation and rate design, including performancebased ratemaking, decoupling, time-varying rates, and residential demand charges. Time-varying rate and residential demand charge proposals are only documented if they are being implemented statewide, the default option for all residential customers of an investorowned utility, or a notable pilot program intended to soon become a default option. Actions related to inclining or declining block rates are not included in this report.

    Grid Modernization Policies

    New state policy proposals or changes to existing policies related to grid modernization, including energy storage targets, clean peak standards, and energy storage compensation policies.

    Financial Incentives for Energy Storage and Advanced Grid Technologies

    New statewide incentives or changes to existing incentives for energy storage, microgrids, and other advanced grid technologies.

    Deployment of Advanced Grid Technologies

    Utility-initiated requests, as well as proposed legislation, to implement demand response programs or to deploy advanced metering infrastructure, smart grid technologies, microgrids, or energy storage.

    Actions Excluded

    This report excludes utility proposals for grid investments without a modernization component, as outlined above, as well as projects that have already received legislative or regulatory approval. Actions related exclusively to pumped hydroelectric storage or electric vehicles are not covered by this report. While actions taken by municipal utilities and electric cooperatives are not comprehensively tracked in this report, particularly noteworthy or high-impact actions will be covered. The report also excludes changes to policies and rate design for distributed generation customers; these changes are covered in the 50 States of Solar quarterly report.

    The U.S. Electricity System In Transition

    The U.S. electricity grid is in a state of transition. The system has traditionally been a “one-way street”, with power flowing from utility-owned centralized generation, via utility-owned transmission and distribution lines, toward end-use customers. However, the electric system is increasingly becoming more of an interconnected web, with small but growing numbers of enduse customers also generating electricity with small-scale, distributed systems that are capable of providing various services to the grid.

    Technology is making rapid advancements, continuing to offer new benefits to the electric system. Policy, however, has not kept pace with the speed of technical energy advancements, with most U.S. electricity policy still focused primarily on the traditional one-way, centralized system model and its institutions. This is changing, though, with more and more states initiating investigations into advanced grid technologies and proposing policy and regulatory changes intended to enable the development of a modern electric system.

    Grid Modernization

    Grid modernization is an expansive topic, capturing the many individual pieces of the transition occurring in our nation’s energy system. A major element of this transition is the deployment of new technologies, such as advanced metering infrastructure and smart grid technologies, including communications and control technologies for managing distributed energy resources of all kinds. These technologies offer the opportunity to bring new benefits to both utilities and consumers, including economic, environmental, reliability, security, and consumer experience benefits.

    The deployment of advanced grid technologies is already underway. The market for distributed generation, namely solar photovoltaics, is already scaling rapidly, while the energy storage market is expected to grow from an expected 6 GW of annual installed capacity in 2017 to over 40 GW in 2022.1 Utilities had already deployed nearly 65 million smart meters by the end of 2015, covering over 50% of U.S. households, and more installations are underway.

    But before advanced grid technologies can be utilized to their fullest extent, regulatory structures must be reformed in order to remove existing barriers to deployment. By reexamining regulatory frameworks, business models, and rate designs, an energy system that allows for fair evaluation of technological options, greater market participation, and full and open compensation may be created.

    Over half of U.S. states are currently examining these regulatory frameworks or actively working to deploy advanced grid technologies. This activity is expected to continue, much like the ongoing evaluation of state solar policies, as states and utilities conduct studies, try new approaches, and learn from each other to achieve a more modern grid…

    Top Five State Grid Modernization Developments of Q1 2017

    Maryland Legislature Advances State Tax Credit for Energy Storage

    The Maryland State Senate passed a bill adopting a state tax credit for energy storage systems in March 2017, which the State House later passed in early April and the Governor signed into law in May. The credit would be equal to 25% of installed costs, up to $5,000 for residential systems and $500,000 for commercial systems.

    Illinois and Ohio Launch Grid Modernization Proceedings

    In March 2017, the Illinois Commerce Commission initiated a grid modernization proceeding – called NextGrid – aimed at creating a 21st century regulatory model that supports innovation, empowers customers and communities, drives economic development, and optimizes the electric utility industry. The Public Utilities Commission of Ohio also launched a grid modernization proceeding, called PowerForward, in March 2017. PowerForward is aimed at charting a path forward for grid modernization projects and innovative regulations to improve the consumer experience.

    New Hampshire Completes Multi-Year Grid Modernization Investigation

    In March 2017, New Hampshire’s Grid Modernization Working Group submitted its final report to the Public Utilities Commission. The report includes many areas of consensus among stakeholders, as well as distinct stakeholder viewpoints on areas of non-consensus. The proceeding covered distribution system planning, advanced metering functionality, rate design, customer data and education, and utility cost recovery and financial incentives.

    Washington Commission Issues Draft Policy Statement on Energy Storage in Integrated Resource Planning

    Washington’s Utilities and Transportation Commission issued a draft policy statement on the role of energy storage in the integrated resource planning process in March 2017. In the statement, the Commission noted that utilities will be required to fully evaluate the costs and benefits of energy storage as an alternative to new resource investments, and the state will move forward with a transition to sub-hourly modeling.

    New York Public Service Commission Issues Monumental Order on DER Compensation

    The New York Public Service Commission issued an order in its Value of Distributed Energy Resources (VDER) proceeding in March 2017, which includes examination of compensation for behind-the-meter energy storage systems that are paired with renewable generation. While these systems will not be compensated through the VDER tariff yet, the intent is for new installations at some point to be compensated with a value-based approach.

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