There is little doubt that the energy system is undergoing a time of rapid technological change, as well as changing attitudes about carbon and its role in the power sector. And, while these changes might not seem to be related, both grid modernization and carbon are parts of a broader discussion about the future of the power system. The Great Plains Institute (GPI) is helping to address the complexity of system planning in the face of these rapid changes, through a series of projects with utilities, states and other stakeholders.
With respect to grid modernization, the reasons for the changes are many and well-known. There have been huge technological advances, producing products that will enhance the customer experience; customers are also changing, increasingly seeking to exercise more control over when and how they use electricity, as well as from where their electricity is generated. Add to this, flat or decreased energy demand in many parts of the country, and it is clear that attention must be paid to how electricity is delivered to consumers.
Attitudes about carbon have also been changing. To many, carbon reduction is a central issue of our time; to others, even if they don’t believe in climate change or the need to make large reductions in carbon emissions, there is a growing recognition that the country and the world are likely to see greater decarbonization in the future, and they need to plan for that future.
As part of our portfolio of work, GPI is involved in a number of initiatives to address these changes. For example, GPI facilitates the Midcontinent Power Sector Collaborative, a group of stakeholders across the MISO footprint that focuses on environmental and energy issues. Since late 2016, the Collaborative has been developing a decarbonization roadmap for states and other policy makers.
In July 2018, the Collaborative released a “Roadmap to Decarbonization in the Midcontinent/Electricity Sector”, which examined policy choices and modeling to ascertain what types of carbon reductions were possible from the electricity sector with today’s readily available technologies. The report found that significant carbon reductions (80% to 95%) were achievable from the power sector by mid-century. The Collaborative followed this report with the release in December 2018 of the roadmap on transportation electrification. This report also explored policy options for states and other policy makers.
In this effort, the Collaborative was assisted by the Midcontinent Transportation Electrification Coalition (MTEC), a diverse group of transportation experts and stakeholders from across the MISO footprint. The Collaborative is now working on a piece on building electrification and other emission reductions tied to the building sector. This report is due to be released later in 2019.
But as described earlier, carbon reduction strategies are only one part of the equation, as these strategies need to be interfaced with the electricity grid. The changes to the grid are reflected in numerous proceedings around the country that are referred to as utility business model (UBM) or grids modernization initiatives.
The power distribution system has traditionally relied on large, centralized power sources that sent power onto a centralized, utility-owned or operated system of wires to homes and businesses. This business model was based on how much power was sold to customers, as well as a return on capital investments. But with demand flat or falling in many places and with customers installing more and more distributed generation (such as rooftop solar, wind or microgrids), the traditional business model may not necessarily work in many locations.
This provides an opportunity for states, utilities and stakeholders to examine the electric distribution system, especially as so much of the physical system is aging and in need of replacement. This examination is happening throughout the country with various goals, drivers, champions and formats, depending on the jurisdiction. And even where there may not be a formal process or state initiative, many utilities are exploring these issues, sometimes bringing in selected stakeholders.
The e21 initiative in Minnesota, convened by GPI and its partner, the Center for Energy and Environment, is an example of one of these processes. Remarkably, it began as an idea among Minnesota’s energy system stakeholders. There was no legislative, gubernatorial or regulatory commission mandate, but only a desire to plan for Minnesota’s energy future before it became necessary because of a crisis (Minnesotans are used to planning for winter). Beginning in 2014, the group—roughly 40 stakeholders who met at least monthly for two years—established guiding principles and undertook substantial educational efforts on a number of specific issues. Then in 2015, the group wrote action-oriented reports on grid modernization, integrated resource planning and performance-based utility compensation that sought to lay out key recommendations for regulators, policy makers and other actors.
Since then, e21 stakeholders have been working to implement those recommendations through a variety of projects, including new utility demand response offerings, integrated distribution planning, time-varying rates, utility electric vehicle pilot programs and the development of performance metrics to evaluate the need for utility business model reforms. The goal is to build on the stakeholder relationships that have been forged, craft proposals that are beneficial to the greatest number of stakeholders and fully vet those proposals before they go to the Public Utilities Commission. The process also provides better information to the PUC outside of the constraints of a normal rate case.
Using e21 as an example, it is easy to see how the UBM processes have synergy with the larger decarbonization projects. The grid will need to evolve to meet the needs of the consumer going forward, as well as to meet larger carbon goals. Together, the UBM and decarbonization initiatives help answer questions such as: What should our generation mix be going forward? How do we integrate the desired power mix into the grid, especially distributed resources? What are the best processes to help make this determination? Are there regulatory or legislative changes needed? What are the best rate designs to accomplish the goals?
By working on these issues now, and in as many places and with as many stakeholders as possible, we can help to design our energy future to be more customer-centric, flexible, lower in carbon emissions and more beneficial to the nation and the world, in advance of having to.
About the Great Plains Institute: The Great Plains Institute is a national, nonpartisan, non-profit organization based in Minneapolis, celebrating 20 years of working with diverse interests to find innovative energy solutions that benefit the economy and environment. Learn more at www.betterenergy.org.