EmilyHolbrook
ScottMadden, Inc., an energy consulting firm, recently released its Fall Energy Industry Update. Themed “Generation to Generation: An Energy Evolution,” this report examines the direction and magnitude of some of the industry changes and the forces in play for a renewable and distributed energy world, including grid development.
Illinois may be the best-kept secret in grid transformation. The state has laid an excellent foundation. It has modernized the grid through targeted infrastructure and customer-focused investments. This positions the state well for increasing penetration of distributed energy resources (DERs) and renewables. When DERs arrive at scale, the state will be ready.
“When we looked at Illinois, we saw the combination of legislative and regulatory support, along with the longer view of required grid capabilities, really enabled significant and durable modernization of the grid,” said Cristin Lyons, partner and grid transformation practice leader at ScottMadden. “And while more work and investment remain, the foundation has been laid. We’ll have to see when and where DERs come and at what scale.”
Highlights of the Energy Industry Update
Getting the Signals Right
The central station generation mix is changing, as solar, wind, and gas- red generation continue to be added, with significantly more expected. And distributed energy resources, while still a small proportion of overall generation, are growing very rapidly
- The fate of nuclear power is a big unknown, as some units have retired, more retirements have been announced, and construction of new nuclear units in the United States has hit a rough patch. But wholesale price formation is under review, recognition and compensation for their carbon-free emission characteristics are being discussed and implemented by some states, and small modular reactors are garnering interest
- Seeking to advance the renewables shift, communities in some jurisdictions (especially California) are aggregating load and buying their own power. The projections for growth of this are extremely high, but “stranded” costs are an unresolved issue
- FERC continues to seek an optimal balance between power generation characteristics in bid-based power markets, while seeking to preserve reliability and reasonable rates. At the same time, the Department of Energy has laid down a marker and an aggressive timeframe for market reform aimed at preserving baseload generation
Evolution Not Revolution
- New supply and demand options slowly begin to share the spotlight. Energy ef ciency, for example, has signi cant potential, enhanced by improved interactive, Internet-of-things technology, but program designers must still deal with behavioral responses to get the most savings possible
- An old storage technology—pumped hydroelectric storage—is gaining attention as new concepts get tested, improved turbines provide more exible operating options, and utility-scale renewables emerge as a potential energy resource for pumping
- The solar industry is raising awareness of increasing amounts of “ exible” solar power, which could provide grid services beyond energy and, when teamed with energy storage, could someday provide a trifecta of characteristics: good grid citizenship, energy when needed (not just when the sun shines), and cost competitiveness with gas- red generation
Preparing the Grid for a Multi-Generation Resource Mix
- As generations of resources begin to co-exist on the grid—both “old” and “young”—utilities continue to invest. But they are adapting grid architecture to provide a more exible backbone to enable two-way power ows and more variable supply and demand
- One example of a grid that is changing to accommodate distributed resources is that of Illinois, which has implemented grid modernization efforts as well as changing incentive mechanisms to encourage distributed energy resource development
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