Utilities get little credit for their efforts to strengthen the sustainability of their businesses. But these efforts have paid dividends in stock performance, capital costs, regulatory...
Five Principles for Tomorrow’s Electricity Sector
The electricity sector faces the most dramatic transformation in its history. The entire system, from infrastructure to regulation, was designed to support predictable, unidirectional power flows from centralized generators through transmission and distribution systems to passive customers. But the emergence of distributed energy resources (DERs), combined with increased availability of granular data and communications, presents an unparalleled opportunity to enhance and in some cases reinvent one of the most important systems in our society. This potential for transformation carries enormous promise. Tomorrow's grid will be a platform interconnecting millions of devices - power plants, DERs, consumers, aggregators and more - to the ultimate benefit of all electricity consumers.
Achieving this aim will prove no small task. To match the promise of the next-generation grid, we will need updated infrastructure, regulation, business models, technologies, and markets. And all these changes must occur without sacrificing the reliability and affordability that is available to customers today.
To date, most attempts at such transformation have come as a piecemeal response to short-term trends, such as the growth of behind-the-meter electricity generation, or as hasty effort to upgrade technology without any strategic plan for effective utilization. This shortcoming has led to widespread disappointment among the rate-paying public with the 50 million smart meters already deployed in the U.S. 1 A few jurisdictions have adopted a broader approach. Yet the need remains for a set of guiding principles that can apply to all discussions that will emerge over the coming years.
In this paper, we offer a set of foundational principles that can scale with the evolving grid and inform policy and business decisions about its design and operations. These principles or tenets of "grid neutrality" relate to the more familiar recent discussions regarding net neutrality.
Just as net neutrality seeks to maintain a fair and open Internet, the concept of grid neutrality emphasizes a fair and open electricity network. Like the Internet, the modern electricity grid serves as the backbone upon which a generation of technologies, services, and economies will be built.
Unlike the political, business and technological interests influencing grid-design debates today, grid neutrality is based upon an inherent structural property of the grid itself - namely, that electricity grids are not mere conduits but rather are some of the largest, most dynamic networks in the world. We urge stakeholders to streamline decision-making in ongoing and future grid-design debates by benchmarking against the tenets that we propose here.
This transition promises a wealth of innovation, but we won't live to see it unless we as a nation provide for, as well as safeguard, the grid's neutrality.
A Changing Landscape