What is Grid Modernization?
The term grid modernization is used frequently to describe the changing electric grid but lacks a universally accepted definition. It commonly refers to actions making the electricity system more resilient, responsive, and interactive including: (1) smart grid and advanced metering infrastructure (AMI), (2) utility business model reform, (3) regulatory reform, (4) utility rate reform, (5) energy storage, (6) microgrids, and (7) demand response.
A recent report, “50 States of Grid Modernization,” by the North Carolina Clean Energy Technology Center discusses the top trends and policy developments of 2019.
As utilities request approval to deploy AMI, several state utility commissions believe the functionality of the meters needs to be used more in order to justify their expenditures.
- The Virginia Corporation Commission rejected Dominion Energy’s AMI deployment proposal in January 2019 citing that the utility did not provide a plan to maximize the potential of AMI.
- Appalachian Power also requested approval for AMI deployment in Virginia, filed supplemental testimony in order to address the AMI concerns cited in Dominion’s case, but later withdrew its plan with an intent to refile after addressing the commission’s standards.
- In Hawaii, regulators approved Hawaiian Electric Co.'s (HECO) request to deploy AMI, but directed the utility to develop an advanced rate design strategy to help maximize the benefits of AMI.
- National Grid filed its proposed AMI implementation plan in New York, following a 2018 settlement that included a stakeholder process to develop the plan.
Several states took actions to incorporate energy storage into existing policies during Q1 2019.
- Some states, including Arkansas, California, New Hampshire, and South Carolina, considered the net metering eligibility of distributed generation systems paired with energy storage.
- North Carolina, Oregon, and South Carolina are addressing how PURPA applies to energy storage facilities, while several states considered legislation allowing renewable energy projects paired with energy storage to be eligible for renewable portfolio standard compliance.
- Other policy areas states are investigating are: updating interconnection rules to include energy storage systems and advanced inverter capabilities; considering requirements for evaluation of energy storage options in integrated resource planning; and extending solar energy incentives to apply to energy storage projects.
An increasing number of states are working to increase access to customer energy usage data for customers, third-party designees with customer permission, and aggregated data. Legislation to expand customer data access was under consideration in at least nine states in 2019.
- The Montana State Legislature passed legislation requiring data access for customers, customer designees and authorizes utilities to disclose anonymous and aggregated data.
- Utah lawmakers passed legislation requiring utilities to provide non-residential customers with access to their own usage data, but also authorized fees for accessing the data.
- The North Carolina Utilities Commission opened a proceeding to develop data access rules.
- The Vermont Public Utility Commission (PUC) approved a data access standard advocated by Green Mountain Power and Efficiency Vermont.
- Data access legislation also advanced in New Hampshire.
Top Five Grid Modernization Policy Developments of 2019
1. New Hampshire PUC staff released its final grid modernization report: The New Hampshire PUC staff released its grid modernization report in February 2019. The report recommended that utilities file integrated distribution plans that include both grid modernization initiatives and least-cost integrated resource plans.
2. Oregon PUC opened distribution system planning proceeding: Oregon regulators opened a docket on distribution system planning in Q1 2019, following the commission staff’s recommendation that the commission undertake an investigation on distribution system planning and develop a transparent, robust, and holistic planning process.
3. Hawaii PUC staff filed performance-based regulation recommendations: The Hawaii PUC staff filed its performance-based regulation recommendations in February 2019. The staff recommended new performance incentive mechanisms based on interconnection experience, customer engagement, and distributed energy resource (DER) asset effectiveness. The staff’s proposal also includes a five-year multi-year rate plan period and a revised earnings sharing mechanism.
4. Ameren Missouri proposed US$6.3 billion Smart Energy Plan: Ameren Missouri filed for approval of its US$6.3 billion Smart Energy Plan in February 2019. The five-year plan includes investments in AMI, distribution automation, cybersecurity, and distributed solar paired with energy storage, as well as grid reliability and wind energy investments.
5. Virginia regulators directed Dominion Energy to refile grid modernization plan and Appalachian Power withdrew plan: In January 2019, Virginia regulators issued an order rejecting the majority of Dominion Energy’s grid modernization plan (approving US$154.5 million of the proposed US$1.5 billion in Phase I investments) and directing the utility to refile the plan. Following this decision, Appalachian Power withdrew its proposed grid modernization plan to revise it based on the commission’s guidance to Dominion.