Governor’s Association Says It Can Be a Catalyst For Grid Modernization

by | Dec 21, 2016

grid2When it comes to the expansion of the clean energy, it will eventually require an expansion of the transmission system. Until then, though, it will require grid modernization, or systematic updates to increase efficiencies and to improve reliabilities. With that, the National Governors Association just announced the selection of Kentucky, Oregon, Rhode Island, and Washington to participate in an NGA Center for Best Practices Policy Academy on Power Sector Modernization. 

According to the governor’s association, the goal of the project is to align market and policy incentives to grow wind and solar power while also making the grid more resilient. That is, the trend to go green is having have a multitude of effects, namely it is forcing grid operators to incorporate electrons onto their systems that they may not always be available; the sun doesn’t always shine and the wind doesn’t always blow. It is also prompting some companies to implement onsite facilities, which sometimes send electrons back to the utilities. And fewer customers leaves open the question as to how the upgrades get paid and what the future of electricity delivery will look like.

When commercial and industrial customers rely on uninterrupted power, the challenges can be daunting. What to do?

“Electric utilities are facing a fundamental challenge to their profitability and long-term viability as the business models shaped by state regulation and legislation have not kept pace with contemporary technologies, customer preferences and state policy goals …,” says the governor’s association. “The electricity sales growth rate has been declining over the past 60 years due to the transition toward less energy-intensive industries, slowing population growth and increased deployment of energy efficiency technologies. In addition, distributed energy resources and related technologies are becoming increasingly affordable.”

Upgrades make economic sense too, say industry analysts. For every $1 invested in the nation’s network, as much as $6 is returned, not to mention the 47,000 new jobs since 2012.

Just ask CenterPoint Energy Inc. and DTE Energy Co., which have invested hundreds of millions of dollars (with some federal help) to improve performance over their wires. Those who run electricity systems can now apply algorithms to tell operators which units to run and where to avoid congestion on the lines, all of which favors wind and solar energy that is variable in nature.

There are at least 7,000 power plants and 5 million miles of transmission and distribution wires that supply reliable power to 150 million customers. But state and federal policies are encouraging the use of more renewable power that is adding strain to the existing system. The governor’s association wants to be a resource to align the market forces and public incentives.

“A range of ideas, both evolutionary and revolutionary, can reorient utility revenue streams and business models,” says the governor’s association. “Governors can play an important role by convening stakeholders and encouraging thoughtful conversations and pilot programs to assess the options for managing the transitions underway in the electricity sector.”

And while those modernization efforts may suffice for a while, eventually it will require an expansion of the transmission grid. To meet the current clean energy goals — Trump may curtail them — it will mean more than just commercial and industrial facilities setting up their own distributed systems with microgrids. And it will ultimately mean high-voltage lines to move wind and solar electrons from their rural locations to the urban settings where they are consumed.

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