By - Jim Vess

States and utilities across the country are moving on grid modernization, survey finds

Energize Weekly, June 7, 2017

Actions to modernize the nation’s electric grid—some small, some sweeping—are underway this year by utilities, state regulators and legislators in 37 states and the District of Columbia, according to a new survey by the NC Clean Technology Center.

“We are still at an early stage,” said Autumn Proudlove, a senior policy analyst with the center. “Every state is at a different stage of the process and going about it in a different way.”

There are two basic catalysts for grid modernization, according to Proudlove. There is the “reliability issue,” for states such as Connecticut, New Jersey and New York, which suffered grid failures during Hurricane Sandy. Then there are states such as California and Hawaii pushing to get more distributed renewable energy on the grid.

New York, Hawaii, California and Massachusetts are the states most actively pursuing grid-modernization politics and initiatives, according to the survey.

The most common initiative was the deployment or planned deployment of advanced metering infrastructure (AMI), or so-called smart meters, which tracks energy usage and communicates with utilities and consumers in real time.

The survey, 50 States of Grid Modernization, breaks down activities taken in the first quarter of 2017 into six categories. The center plans to issue an update quarterly.

Studies or investigations into grid and rate issues were undertaken by 16 states and the District of Columbia.

In March, the Illinois Commerce Commission began a grid modernization proceeding called NextGrid. It is an 18-month study of “ways to leverage the state’s restructured energy market, investment in smart grid technology and significant expansion of renewables and energy efficiency as a result of the Future Energy Jobs Act.” The act, which became law in December 2016, bolsters energy efficiency and renewable energy programs in the state, provides for a low-income energy programs and job training, and a subsidy to the state’s nuclear plants.

The Public Utilities Commission of Ohio launched a grid modernization proceeding, called PowerForward, in March 2017. PowerForward will review the latest technological and regulatory innovations to chart a path for grid modernization.

Also in March, a New Hampshire Public Utilities Commission (PUC) working group submitted a report on grid modernization to the PUC. The report recommends each utility develop grid modernization plans with a stakeholder engagement process.

Action to explore changes to the utility planning process and market access were undertaken by 12 states. New Mexico started a rulemaking in early 2017 to amend its integrated resource planning process—through which utilities determine their generation needs—to ensure storage is evaluated on a comparable and consistent basis. In Maine, a bill filed in the legislature would enable municipalities to work with utilities on developing microgrids.

Sixteen states took action on grid modernization policies, including energy storage targets, clean peak standards and state rules regarding advanced metering infrastructure, the survey said.

Bills proposed in three states—New York, Vermont and Nevada—would create energy storage mandates. California legislation would create a “clean peak standard,” which would require a percentage of the electricity used to meet peak load come from renewable sources.

Deployment of advanced grid technologies is another category. There were 36 pending or decided proposals from state legislators or utilities in 19 states to deploy advanced grid technologies, such as AMI, smart grid components, microgrids and energy storage projects, the survey said.

For example, Entergy has filed proposals to install AMI in four of its service territories: Arkansas, Louisiana, Mississippi and New Orleans. Utilities in Indiana, Iowa, Kentucky, Massachusetts, New Mexico, New York, North Carolina, Ohio and Utah have also filed requests to deploy AMI.

Massachusetts already has a law requiring the installation of AMI, and smart meters are part of New York State’s major overhaul of the energy sector called Reforming the Energy Vision.

“New York, Maryland and D.C. have already done their AMI pilot projects,” said Achyut Shrestha, a senior analyst at the center. “All the New York utilities will soon be rolling out the meters.”

In Colorado, Xcel Energy has a $612 million grid modernization plan, including AMI and grid voltage management pending before the state utility commission.

To make the smart meter effective will require another set of actions in utility business model and rate reform. “There has been a lot of emphasis on technology when you talk about grid modernization, but you won’t get the technology fully deployed without the price signals. So rates are very important,” Proudlove said.

Thirteen states took 18 actions to reform rate design, regulatory structures or utility business models, including nine states that took action on time-of-use rates (TOU). The time-of-use rates charge more for kilowatt-hours when demand is high and less when demand is low, variations the smart meters can track.

In California, commercial customers are already on TOU, and investor-owned utilities are shifting residential customers to TOU. The Colorado Public Utilities Commission has approved a TOU pilot for Xcel Energy, the state’s largest electricity provider.

The final category in the survey is financial incentives. While 11 states had actions looking at incentives for advanced grid technologies, only Maryland has implemented an incentive—a state tax credit for energy storage systems. The credit is equal to 25 percent of installed costs up to $5,000 for a residential system and $500,000 for a commercial system.

Underlying the activity to modernize the nation’s grid—a $476 billion project, according the Electric Power Research Institute—are the questions of paying for and valuing the upgrades.

“How do you value grid modernization?” Shrestha asked. Utilities are seeking increased rates to pay for it. “The utilities’ argument is someone has to pay for grid modernization,” he said. But advocates say that a simple cost benefit can be misleading. “The advocates argue grid modernization saves you a lot of money—avoids costs, efficiency and environmental benefits… It is a question that hasn’t been answered yet.”

The center plans to put out a quarterly report on grid modernization comparable to its quarterly “The 50 States of Solar Report,” which tracks solar policy in the U.S.

Leave a Reply

By clicking Accept or closing this message, you consent to our cookies on this device in accordance with our cookie policy unless you have disabled them. more information

By clicking Accept or closing this message, you consent to our cookies on this device in accordance with our cookie policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them. We use cookies during the registration process and to remember member settings.