reliability standards

The potential for a federal renewable energy standard (RES) and carbon regulation, considered with the effect of state-imposed renewable energy standards, is fueling a strong, but challenging, market for renewable energy. Utilities are competing to sign up the best new projects, the types of renewable technologies available are increasing, and there are various government stimulus programs for energy; yet, the financial markets still are hesitant. Against this backdrop, how should contracts for power from new renewable resources be shaped so that those deals will look as good five, 10 and 15 years after execution as on the day the ink dries?

Lawyers get a bad rap in this country, and in some cases it’s well earned. However, during the month of October I enjoyed the distinct privilege of interviewing nearly a dozen of the industry’s most insightful, informed and hard-working people—all of them law-firm lawyers serving energy companies, regulatory agencies and customer groups.

Building upon last month’s installment, more is revealed on how, after 10 years of incentive regulation, reliability has declined in Ontario.

A new grid efficiency framework will bring a new understanding between regulators and utilities that allows the industry to advance in cutting carbon emissions and improving system efficiencies, while maintaining reliability.

When the applause dies down, the smart grid may turn out to be its own worst enemy. The California Independent System Operator (CAISO) explained this irony in comments it filed in May, after the FERC asked the industry for policy ideas on the smart grid.

After 10 years of incentive regulation, reliability has declined in Ontario. Regulators failed to enforce service-quality standards, and consumers are suffering as a result.

Who will oversee the industry’s cyber standards? Effective security calls for a single organization to set standards that will protect the smart grid. The industry is struggling to reach consensus over authority, scope and funding for its new security apparatus.

While much has been written about the intelligent grid of late, little attention has been focused on the role of energy storage in achieving its expected benefits. Energy storage is an essential component of the intelligent grid. Energy storage provides greater grid integration of variable renewable energy resource output (e.g., wind, solar); improved system reliability via the provision of grid regulation services; and peak demand reductions and, in turn, deferred capital spending on new and upgraded transmission and distribution assets.

The American Recovery and Restructuring Act (ARRA, or the Recovery Act), signed into law in February, provides $4.5 billion in stimulus funding for programs aimed at “electricity delivery and energy reliability activities to modernize the electric grid.” This funding commitment, and swirl of industry and lawmaker activities since, has helped lift the smart-grid agenda out of the shadows of utility engineering departments and into the public’s broader view.