The transformation of the nation's electric grid will be driven by a variety of factors, depending on where in the country you look. But according to GTM Research, the end result will look fairly consistent.
“This new ecosystem will leverage advanced infrastructure, new technology and a robust software and applications layer to facilitate a yet to be achieved level of integrated planning and intelligence,” GTM predicts in a white paper titled "Evolution of the Grid Edge: Pathways to Transformation."
That's a vision of the future which is, albeit slowly in some areas, gaining widespread acceptance. But just how California reaches that point – what regulatory regimes or customer demands push that grid edge – will be different from what happens in New York or Florida or Texas.
“As with any transformation, this change will not be linear and systematic,” GTM predicted.
So depending on where you are on the nation's distribution system, three broad pathways are pushing progress: Advanced energy consumers, innovative regulators, and proactive energy providers. Those three will play out in a variety of ways and at times will overlap, said Steve Propper, director of Grid Edge at Greentech Media and author of the paper. But they are the basic forces which will drive the adoption of grid edge technologies.
“We're still in the early stages of how the future distribution system is going to work,” said Propper. “This tends to be a slow-moving industry. It's widely known that this 100 year-old model is not going to last. That's been said for 10 years, but it's finally being addressed.”
A grid that accepts all resources
Distributed resources are perhaps the largest driver of grid edge technology. But while rooftop solar may be the face of customer-owned distributed resources, Propper said there is room in this paradigm for energy efficiency and demand response. The future of the grid will be one which allows a range of resources to integrate smoothly.
“In the markets where you see this moving more quickly, are places where utilities or regulators are coming up with innovative demand response programs,” Propper said. “And all the way through. The one area where demand response programs are really weak is the residential sector. Large C&I probably has a pretty good base to go from.”
Demand response “has always been something seen as interesting, and I think now people are saying it's essentially a leverageable distributed energy resource.”
GTM believes it will be the consumer – but more specifically, an “advanced” consumer focused on their type and amount of energy consumption – which will drive adoption in states like Hawaii, Arizona and Colorado. And the firm believes in those areas the technology will spread rapidly.
“In places where the customer is driving this, it's our conjecture that we'll get there faster,” Propper said. “The reason is, customer demand and putting more distributed energy resources behind the meter in places like Hawaii and Arizona, and to a certain extent California, the utilities and regulators are put in a position where they don't necessarily have a choice … They have to react to the demand of the market.”
Much of the consumer-driven cycle is based around the deployment of distributed resources, but that point is also just a first step. Customers acquire distributed resources, which puts pressure on existing utility incentive programs and resource planning to adapt. As the customer then demands more information to maximize their investment, it can trigger a re-evaluation of regulatory constructs, and a better alignment of utility incentive structures and infrastructure needs.
“Hawaii and Arizona are prime examples of this pattern of grid-edge deployment, as they both have
an abundance of renewable resources and are early leaders in the deployment of distributed solar,” the report notes.
Hawaii may be the most high-profile at the moment. There, Hawaiian Electric Co. ran into issues with the rapid proliferation of rooftop solar and halted installations. But the utility has a goal to triple the amount of distributed solar on its system and achieve 65% renewable use by 2030, and to these ends partnered with SolarCity and NREL last year to study grid interconnection issues. But the backlog in interconnection applications continued, and now regulators in the state have directed the utility to continue connecting customers.
In some states, like Washington, Oregon, New Jersey and Pennsylvania, the push to modernize grid technology will come from regulators. Perhaps nowhere is this more obvious than in New York, which has undertaken the Reforming the Energy Vision (REV), with an eye towards overhauling the industry. Last week, New York regulators issued a groundbreaking ruling on the REV docket directing utilities to be the Distribution System Platforms on the grid and barring them from owning distributed energy resources.
In this scenario of change, regulators direct utilities to develop overarching plans, and then utilities build around that directive while also “aligning the realities of the grid with customer needs.”
“This process of grid-edge adoption begins with an acknowledgment from regulators that the status
quo is not sustainable,” GTM said.
In New York, the REV concept is a regulatory package intended to reshape New York's power markets and grid infrastructure. Last year, state regulators took a step forward in implementing it when they approved five new initiatives, including raising the state's cap on net metering from 3% to 6% and approving a unique energy management program for Con Edison to deploy in Brooklyn and Queens.
But Propper notes that regulatory push may be the most deliberate route to adoption of grid technologies. “On the regulatory side of things, it's a bit up in the air,” he said, noting that it remains to be seen how widespread the adoption of New York's REV concepts will be proliferated beyond the largest utilities.
The Energy Provider
The final impetus towards a more modern grid comes from the utilities themselves. GTM said it expects to see this adoption cycle take place in states such as Texas, North Carolina, South Carolina and Illinois, among others. The upcoming filing of distribution plans by the three California investor-owned utilities could also spur this technology adoption cycle in that state.
In terms of how rapidly technology is pushed out, however, Propper said the utility-driven push sort of splits the difference.
“In places were you have a proactive utility there's going to be lots of pilot programs that happen over a period of time before you start to see mass roll-out of the different ways the distribution system will operate,” he said.
The report notes Duke Energy's work in North Carolina, “particularly the commitment of $500 million for solar power development, is a prime example of a utility-led gridedge change process.” Last year, the company announced it would buy three utility-scale solar projects totaling 128 MW of capacity, as well as sign five power purchasing agreements with solar developers totaling 150 MW of capacity.
How long until the future?
It's tough to say just how long this process will take, and there's really not a fixed destination.
Propper believes that in three to give years the industry will reach a point where pilot programs are winding down and broader deployment can take place. In some places utilities may wait for general rate cases, which makes an increase more palatable.
“As soon as it's clear how utilities will be incentened and transparent in terms of how how customers can participate, the market will mature very quickly after that,” said Propper. “The question that still remains, how long will it take to get there.”