We’ve heard a lot about smart grid over the past decade, but to achieve a truly intelligent grid we need to do much more than switch out analog meters for their digital counterparts. We must also implement comprehensive new regulatory structures to make use of the data and functionality provided by these equipment upgrades. In other words, we need to modernize the grid in addition to our modes of interacting with it.
Many topics can fall under the umbrella of grid modernization. To name a few: data security, customer engagement, system reliability, distributed energy resources (DER), energy storage, rate design and infrastructure updates. It seems most states have taken on at least some of these challenges in a piecemeal fashion, depending on their immediate needs.
Several states have recently taken a far more comprehensive approach, however, embarking on grid modernization efforts and regulatory proceedings from a bird’s-eye view. IREC has been involved in several of these efforts, relying on our deep technical and regulatory experience to weigh in on critical DER issues, which many progressive states are starting to confront. The following highlight some ways in which forward-leaning states are leading the modernization charge.
The Massachusetts Department of Public Utilities (DPU) has been working on a grid modernization effort since October 2012. Months of stakeholder participation culminated in a December 2013 DPU straw proposal that identified four objectives: (1) to reduce the effects of outages; (2) to optimize demand, which includes reducing system and customer costs; (3) to integrate distributed resources; and (4) to improve workforce and asset management. Last month, on June 12, the DPU issued an order finalizing its mandate to the Massachusetts utilities to develop 10-year grid modernization plans (GMPs), which must include a short-term investment plan addressing incremental grid modernization capital expenditures over the next five years.
IREC has been participating in this proceeding to provide input regarding the components of the GMPs and the goals for grid modernization in the state, particularly regarding the integration of DER and energy storage. In its order, the DPU incorporated several of IREC’s suggestions, including a requirement to explore distribution grid mapping and integrated planning. IREC will continue to monitor the state’s grid modernization efforts over the coming months, particularly regarding the GMP development process.
New York’s Reforming the Energy Vision (REV) proceeding (Case 14-M-0101) is another wide-ranging and ambitious undertaking. Through a staff report, the Department of Public Service identified six core policy outcomes in the following areas.
- Customer knowledge
- Market animation
- System-wide efficiency
- Fuels and resource diversity
- System reliability and resiliency
- Carbon reduction
A public proceeding is now underway to examine and evaluate needed reforms and will advance along two tracks that examine: (1) the role of distribution utilities in enabling market-based deployment of distributed energy resources to promote load management and greater system efficiency; and (2) changes in current regulatory structures to better align utility interests with the state’s policy objectives. IREC has been participating in this effort and plans to offer our input and technical assistance as the proceeding moves forward.
The California Public Utilities Commission (CPUC) has been working on a broad range of issues that fall under the auspices of grid modernization, including distribution planning, net metering, demand response and interconnection. Notably, a recent Rule 21 decision will further refine a 2013 interconnection overhaul by adding a distribution group study process, applying necessary applications and agreements for different study tiers and implementing a new interconnection data reporting requirement. A Smart Inverter Working Group has also provided recommendations to the Rule 21 reform process, laying out the technical steps required for inverter-based DER to allow higher penetrations of localized electricity generation. IREC has been participating in these and other grid modernization related efforts in California by providing technical expertise and stakeholder coordination.
Over the past few years, Hawaii has been on the forefront of grid modernization to accommodate a massive influx of DER on its isolated grid. For a bit of background on some of Hawaii’s efforts, see IREC’s Integrated Distribution Planning Concept Paper. Hawaii recently enacted H.B. 1943, which served to establish guiding principles and outline a timely regulatory process to address the modernization of the state’s electric system. The five guiding principles are heavily focused on DER, including:
- Enabling a diverse portfolio of renewable energy resources;
- Expanding options for customers to manage their energy use;
- Maximizing DER interconnection on a cost-effective and reliable basis;
- Determining fair compensation for electric grid services and DER benefits;
- Maintaining or enhancing grid reliability and safety through grid modernization.
These states—MA, NY, CA and HI—are the usual suspects to lead DER policy trends, so we can expect many states to follow. We are already seeing movement in that direction. For example, South Carolina, with its still-nascent DER market, introduced some grid modernization language into a recently passed law. Senate Bill 1189, which implements statewide net metering in the Palmetto State, and also allows utilities to integrate some distribution planning measures into DER programs. The National Governor’s Association has also weighed in recently with its Governors’ Guide to Modernizing the Electric Power Grid report.
Considering this positive movement already and the promising near-term forecast for DER, we hope to induct more members into this new DER Mod Squad in the coming months and years.