The Energy Optimist Episode 5: A Tale of Two Grids (Distribution vs. Transmission System)

Episode Show Notes

1. Today’s guest, Lorraine Akiba, is President/CEO of LHA Ventures. Lorraine is a recognized thought leader with technical expertise and knowledge in the development of Hawaii’s renewable and clean energy policy and regulatory framework. Previously, she was Commissioner at the Hawaii Public Utilities Commission, which presides over all regulated public utility matters in the state. Prior to this appointment, she was a partner at McCorriston Miller Mukai MacKinnon LLP and at Cades Schutte LLP, and led the environmental practice teams at both firms. Lorraine co-chairs the Low Income Consumer Solar Working Group of the Low Income Energy Issues Forum, a diverse national consortium focused on innovations that make utility service more affordable. Specifically, the solar working group is addressing actions and recommendations for successful integration of community solar. She is also a member of the Resiliency Strategy Steering Committee for the City and County of Honolulu and is a member of the U.S.-Japan Council. Lorraine holds a JD from the University of California, Hastings College of the Law and graduated with honors from the University of California at Berkeley with a BA in political science.
2. For a more in-depth background on how the traditional U.S. electric grid works, see the Energy Information Administration’s Electricity Explained: How Electricity is Delivered to Consumers. For more on how the system is changing with grid modernization and the integration of distributed energy resources, see the Interstate Renewable Energy Council’s A Playbook for Modernizing the Distribution Grid.
3. For an in-depth primer on how the energy system is regulated in the U.S., read the Regulatory Assistance Project’s Electricity Regulation in the United States.
4. The episode touches on microgrids, which are “a group of interconnected loads and distributed energy resources that acts as a single controllable entity with respect to the grid. It can connect and disconnect from the grid to operate in grid-connected or island mode” (from the National Renewable Energy Laboratory). Put simply, a microgrid connects one or more customers to a local energy resource (which could be renewable, like solar or storage, or fossil-fired) and can be operated independently from the grid.
5. The episode walks broadly through:
   • what the electric distribution system is;
   • what the electric transmission system is; 
   • and how they intersect and why it’s important to operate them in coordination with one another.

Key Takeaways

1. We need closer coordination between the transmission and distribution systems
   • “Both the transmission and the distribution system have to work in concert with each other in order to ensure a safe and reliable energy system. That synergy is becoming increasingly complex as distributed energy resources, like local solar and storage, grow. But this is also one of the most exciting areas of policy and technical innovation…”
2. Climate change and extreme weather events make it even more imperative to have better coordination between the distribution and transmission systems:
   • “As we can see, just this month across our country, extreme weather climate change impacts are wreaking havoc on the energy system. From a management perspective, to be able to deal with outages or to be able to bring power back up again, there needs to be that integration. There needs to be some redundancy and to be able to have resilience to address these challenges.
   • That’s why I’m a firm believer that it is important to really be able to utilize the distributed energy resources, the distribution system, which is closer to where the demand is, so the supply actually can meet the demand. But with more climate impacts—whether it’s wildfires, or hurricanes, or typhoons, or what have you, floods—it is more important to be able to keep communities and smaller areas energized. We have the technology to do it, if we can make sure to coordinate between the two systems of delivery of energy.”
3. DERs and microgrids can serve as resilience and reliability resources:
   • “There has to be enough reliability, resilience, should something like a hurricane occur, an earthquake occur that disrupts that system. You can make better usage of the distributed energy resources. And in fact, they can actually be the means to have resilience. If something’s happening climate-wise or a storm comes in, you could maybe power stuff locally through a microgrid and isolate off pockets of a larger transmission system so that the whole system doesn’t go down. That’s kind of the concept in Hawaii.”

Episode Transcript

Radina Valova, IREC Regulatory Vice President and podcast host: Hello, and welcome to the Energy Optimist, where we start with the bad news and end with what increasingly feels like a radical idea: that there are reasons for optimism. I’m your host Radina Valova, Regulatory Vice President with the Interstate Renewable Energy Council (or IREC), an independent nonprofit that’s been building the foundation for the rapid adoption of clean energy and energy efficiency for more than 40 years. Each episode, we tackle a thorny energy policy challenge in bite-sized interviews with leading experts.

If you’re totally new to energy policy, we’ll demystify it for you. If you’re a seasoned practitioner, we’ll hopefully leave you with renewed optimism to keep doing the work to improve our energy system—because hope is the fuel for change.

We often take electricity for granted. We flip on the lights, plug in our devices, put on a pot of coffee, all while expecting that the power will be there when we need it. And it almost always is, thanks to a complex interwoven network of distribution and transmission infrastructure that stretches from coast to coast and into Canada. Today we’re going to dive into this complex system.

The transmission system can broadly be defined as high-voltage infrastructure run by transmission operators and coordinated by regional transmission organizations or independent system operators. It transports electricity from power plants to local distribution utilities. When you transport electricity along wires, some will inevitably be lost as heat. And because high-voltage lines are more efficient than low-voltage lines, they transport electricity over long distances. As such, the transmission system includes the metal towers you see when driving down the highway, as well as equipment that steps up the voltage of electricity in order to transport it more efficiently across hundreds of miles. 

The distribution system, broadly speaking, is lower voltage infrastructure operated by the local distribution utility which delivers electricity from the transmission system to end use customers. It includes the poles and wires you see in your neighborhood, or don’t see if you’re in a city like New York where most of the infrastructure is underground, as well as equipment that steps down electricity to lower voltages to deliver it safely to customers.

There are some jurisdictional intricacies here as well. In some states, utilities can own and operate both transmission and distribution assets. In other deregulated states, utilities are limited to owning and operating distribution infrastructure. Also, while regional transmission organizations and the Federal Energy Regulatory Commission govern the management of the transmission system, state public utility commissions govern the distribution system. Jurisdictional lines are sometimes blurry, and coordinating between the various governing bodies can be challenging, especially given that effective energy system planning requires viewing all of the disparate parts as a comprehensive whole.

Both the transmission and the distribution system have to work in concert with each other in order to ensure a safe and reliable energy system. That synergy is becoming increasingly complex as distributed energy resources, like local solar and storage, grow. But this is also one of the most exciting areas of policy and technical innovation, as we’ll hear from today’s guest.

Today’s episode touches on the potential for local solar, storage, and microgrids to create a more resilient energy system—in particular, in Hawaii, where the electric grid faces unique challenges. The episode was recorded prior to the wildfire that devastated Lahaina. Our guest today, Lorraine Akiba, and the IREC team’s hearts go out to those impacted by the fire.

Radina: I am very excited to have with us for today’s episode, A Story of Two Grids, Lorraine Akiba, who will walk us through the complex interplay between the transmission and distribution systems. Welcome Lorraine. It’s so great to have you join us.

Lorraine Akiba: Thank you, Radina. Aloha from Hawaii. With the wonders of modern technology, we’re able to chat and have this great dialogue and conversation. I’m excited about it.

Radina: Me, too. 

Well, let’s start with an introduction. Would you mind introducing yourself to our listeners?

Lorraine: Sure.

The reason I’m on this wonderful blog is because I also am on the Board of the Interstate Renewable Energy Council, and I proudly serve along with many other colleagues. But I am currently a senior policy advisor and consultant in Energy and Regulatory Policy, a CEO of my own consultancy firm, LHA Ventures.

Just prior to this, I was a commissioner with the Hawaii Public Utilities Commission and dealing with all the complex issues of transmission and distribution, the transition to clean energy, grid modernization, and all the exciting things that we’ll probably talk about today.

Radina: Wonderful. Well, thank you so much for that introduction. 

Let’s jump into the questions. Our first question for you is, as a former public utility commissioner, what is your view on effective transmission and distribution system management and planning? When I say effective, I mean, what do we need in order to get it right? Are there any examples of states or regions that are doing it well or headed in the right direction?

Lorraine: Yes, well, I think it’s really important, especially in this time of transition and decarbonization of our energy system, and the use of technology tools as well, and that we’re really trying to modernize our grids—not just at the distribution level but also the transmission infrastructure. Now, under the Biden administration, there’s all these infrastructure funds available and under the Inflation Reduction Act as well, to make investments, long-term investments, as well as to prioritize needs. So I think it’s really even more important for integrated planning between transmission and distribution systems.

Before, it used to be under the old model of energy delivery, where it was a central plant model sending energy out to the hinterlands in a service territory. That’s all changed now with more distributed energy resources, whether that’s customer side of resources like rooftop PV, or behind the meter energy storage, or control systems that allow customers—whether they’d be residential or commercial customers—to participate in grid management and grid support through demand side management, technology tools, and programs.

Radina: I would like to break that down a little bit. Can you describe in a little bit more detail why it’s important for the two systems to integrate and coordinate?

Lorraine: Well, yes, I think it’s because there’s more of what we would call intermittent sources of energy, renewable energy, whether that’s wind or solar are much more intermittent, in terms of not being like the old conventional thermal base load when plants were run with either oil or coal. We are getting away from that and decarbonizing that energy system.

But then, in reliance on more intermittent clean energy, that requires a much more, I think, robust sight into what’s happening at the distribution circuit. What happens at the distribution level can really impact what happens at the transmission level. So the operators of the system—whether it’s at the regional level or at the distribution level—have eyes into the system, eyes into the neighborhoods, into the communities, and the infrastructure.

And as well because of the impacts from climate change and extreme weather. As we can see, just this month across our country, extreme weather climate change impacts are wreaking havoc on the energy system. From a management perspective, to be able to deal with outages or to be able to bring power back up again, there needs to be that integration. There needs to be some redundancy and to be able to have resilience to address these challenges.

That’s why I’m a firm believer that it is important to really be able to utilize the distributed energy resources, the distribution system, which is closer to where the demand is, so the supply actually can meet the demand. In the past, that wasn’t as much a concern because you could send energy 1,000 miles or at long distances. But with more climate impacts—whether it’s wildfires, or hurricanes, or typhoons, or what have you, floods—it is more important to be able to keep communities and smaller areas energized. We have the technology to do it, if we can make sure to coordinate between the two systems of delivery of energy.

Radina: As we’re talking about the need for the transmission and distribution system to work better together, it’s making me think how when you look at the systems, for example, in a graphic that represents them or a map, they appear to be pretty clearly delineated. You’ve got your large-scale power plants and your transmission lines, and there’s your transmission system. Then you have your distribution poles and wires going into homes and businesses. There’s your distribution system. 

But I think in reality, the demarcation between the two is a little bit more complicated and determining which entity, like you mentioned, the Federal Energy Regulatory Commission or state public service commissions, determining which entity has jurisdiction over specific infrastructure can often be blurry. Can you explain for our listeners, what some of the major distinguishing factors are between the two systems?

Lorraine: Surely, and I think that’s probably a more science-based distinction. The transmission system really is more of the bulk power system, the high-voltage infrastructure, the 138 kV lines that you see on those huge metal towers many times. So it is carrying higher voltage and it’s bulk power. It’s transmitting a lot of energy, and the concept being very efficiently, across hundreds if not thousands of miles. Of course, there are some losses in doing that. Energy is always lost. If you talk to an electrical engineer and the principles of energy, even if you’ve got a modern transmission system, there’s still some energy loss from getting from point A to point B in a long radial system.

But that was the traditional way back in the ’50s, ’60s, ’70s, even ’80s, until we had the introduction of more distributed energy resources and the technology that allows the local utilities and the distribution system to play more of a critical role in generation of energy. Because now the use of intermittent renewables, whether that’s rooftop solar, or wind, or large-scale utility solar, closer to the source of demand and closer to homes, closer to businesses. Sometimes many customers obviously are self-generating and feeding that into the distribution grid.

Usually, the distribution level is the lower-level voltage infrastructure. Like you said, the local utility pole that you probably see in the neighborhood or the local utility pole that might be delivering energy after the transmission system, the substation. It converts that into energy that then can be delivered at a lower level to the business. Although, there are some large, huge industrial customers that probably take more directly from the transmission system, and they might have a different arrangement. But the distribution, broadly speaking, is a lower-level voltage infrastructure operated by the local utility. It includes the poles and the wires that a lot of state utility commissioners deal with.

There is law. As we know, the regulatory framework that’s historically been developed around those distinct, I guess, voltage or distinct structures. So you have certain jurisdiction at the federal level, regional level, which the federal regulatory commission oversees and monitors, the interstate markets, and the regional transmission organizations, and the independent system operators to make sure there’s no market manipulation, or monopolization, or price manipulation in that market when they’re selling power across state lines.

Some utilities own all three: transmission, distribution, and generation. It just depends on what jurisdiction you’re in. I’m in a jurisdiction in Hawaii where the utility on most of the islands owns transmission and distribution, as well as some generation. So in that sense, Hawaii is very unique. Maybe Texas and Alaska might be similar. We don’t have any FERC jurisdiction here. So the state public utility commissioner in these types of jurisdictions have oversight over both transmission and distribution, as well as generation. That’s unique.

Radina: That is a lot to take in. I love how earlier you called it a complex orchestra. I think that’s a really wonderfully descriptive term for how these systems work together. 

I am wondering if you can provide an example or some examples of how the transmission and distribution systems now need to work together more than they have before?

Lorraine: Surely. I think I’ll just take more from the western states which I’m very familiar with. I think you can see that in terms of what’s recently happened in California, in some of the western states, Washington, Oregon, in terms of trying to plan together for capacity.

Because of the impacts from climate, there’s more severe weather or higher temperatures across regions which we probably didn’t have before. I mean, whoever thought you would have the scorching heat that you have in certain areas in Boulder, Colorado, for instance, the wildfires, or the need for air conditioning and the drawdown, like an East Coast summer would be, in certain areas in the north west which are usually very cool. Washington State, Oregon, they’ve never faced those kinds of temperatures. And even in certain parts of Northern California. So all at once, there was that drawdown on needing to have energy to cool during the summer. Then, of course, more extreme weather in the winter time which would disrupt the traditional sharing of power across the region, whether that’s California ISO or other regional transmission entities in that region.

So I think there’s a dialogue that’s going on between those states—Washington, Oregon, California, Nevada, all those Western states—to see how they can better coordinate or maybe figure out a better way to have capacity when these kinds of things happen.

Same in Hawaii, for a different reason: because we’re so isolated. I mean, it’s all the more critical on each of our islands—which are not connected, there’s no interconnection between the islands—that there has to be planning. There has to be enough reliability, resilience, should something like a hurricane occur, an earthquake occur that disrupts that system. You can make better usage of the distributed energy resources. And in fact, they can actually be the means to have resilience. If something’s happening climate-wise or a storm comes in, you could maybe power stuff locally through a microgrid and isolate off pockets of a larger transmission system so that the whole system doesn’t go down. That’s kind of the concept in Hawaii.

I’m seeing that maybe in places like California, with the wildfires. They are talking about more of these types of strategies: to use microgrids in very isolated rural areas that previously before were dependent on that transmission line.

Radina: We’ve covered a lot of ground in terms of the details of how the two systems work together, the transmission and distribution system, what some of the challenges are, and also how distributed energy resources like microgrids can serve as resources.

If you now had to name the biggest challenge with managing the energy system overall, looking at that complex orchestra that you described, what would that challenge be?

Lorraine: I think in some ways, the biggest challenge is posed by the current regulatory framework, in that there are clear jurisdictional lines. When somebody oversteps what’s perceived to be a jurisdictional line, then it becomes either controversy or conflict. So I think there has to be more dialogue about, not necessarily blurring those lines, but where there can be more collaboration or coordination even though this area is more primarily under the jurisdiction of, let’s say, FERC or the regional transmission organization. That there’s more input and more coordinated planning and input from the local level or from the state regulatory entities and from the customers served in that region.

I think that’s the greatest challenge. Because there are so many issues, and there are needs to be met. You can’t change the entire system. So it’s like working within that structure to make it clear as to how better to address the immediate challenges, whether that’s providing more energy and capacity to regions that are energy constrained, whether that’s dealing with resilience and reliability in areas that are really being hammered every month, every year, by climate impacts, wildfire, drought, storms, earthquakes, you name it.

I mean, who ever thought there’d be tornadoes in Alabama and Mississippi? We’re just seeing… it’s frightening actually seeing these things that we can’t necessarily control—but we can plan for in order to mitigate and respond to. But it takes a lot of coordination. I think that’s the biggest challenge. It’s, how do we deal with the existing regulatory framework to make it better, so we can respond quicker, so we can plan together adequately and address the challenges that are ahead, knowing that these are going to continue to increase if not more frequently, more intensely?

Radina: That really gives us a lot to think about. I love that you have brought up climate change a number of times, and severe weather events, and other natural disasters. It really is so important for us to think about how we need to operate the systems differently in order to face those current and coming challenges.

On that note of having that kind of coordination between jurisdictional lines, where would that work be done? Is that something that would happen at a state public utility commission? Is that something that would happen, for example, in a working group at the regional transmission operator? Where would that be as a procedural matter?

Lorraine: Well, I think it should be a technical working group that is probably at the regional level if you’re particularly on the mainland, where you’ve got contiguous states next to each other, sharing some resource adequacy challenges. So I would think it would be at that level. Whether the transmission or regional transmission organization convenes that is another thing. But I would think that there would be that type of framework there, because they know what’s happening in terms of the region. A state commissioner may not have a whole picture in terms of the region. 

But state commissioners in that region—I used the example of what’s happening in the west, with California, Washington, Oregon, and Nevada, Arizona, some of those states are together discussing this. You do need active input from the state level and the local level. I mean, some of the largest customers are municipalities and municipal utilities as well. So it’s having stakeholder input at the local level. But my view is that it should really happen on a regional basis with all the stakeholders present because you won’t have a view if it’s just at the state level, then it’s just kind of like, “What’s happening in my little neighborhood, in my corner of the energy ecosystem?”

Perhaps maybe [the] U.S. Department of Energy, the energy and policy entity for the federal government, could convene something like that and help moderate the dialogue, especially in energy-constrained areas where you’ve got either rural populations that are not being served adequately, or you’ve got just a lot happening in a very concentrated metropolitan and urbanized area. Many states are like that, as we have more and more people convening in certain areas for jobs and opportunities.

Radina: However, what if, as you mentioned, the regional transmission operator doesn’t end up initiating this kind of process? Is there anything that state regulators can do?

Lorraine: Well, I would think state regulators would want to bring it up to their—I mean, I look at it as really their allies—to the regional transmission organizations, independent system operators. Although, what’s happening at the distribution level, as we said, can significantly impact. And we’ve seen it. I think Cal ISO was one of the first. I know some of the other regional transmission organizations and independent system operators, they’ve even gone to FERC to ask for more support and more resources coming into the capacity markets from the distribution level. More DERs, right? You see that on some of the FERC dockets. And they said that’s okay, if that’s what you want in your jurisdiction.

I think that it’s a two-way street, I always look at it. If you feel that somebody is not opening up the dialogue, then it’s up to oneself to open up the dialogue. So this is going to be an issue for state commissions regardless. At the end of the day, the customers are going to come to the state commissioners and to their dockets and complain or the local distribution utilities at the state level or local level, are going to have to deal with the consequences of that. So I think it is incumbent on the state and local level stakeholders to raise those issues if the regional entities are not adequately addressing it from their point of view. It’s dialogue. Everybody has a shared responsibility. As we saw in Hawaii, everybody needs to row in that canoe.

Radina: That is a wonderful expression.

Lorraine: You can’t go forward if everybody’s not rowing in the canoe. We’ll just go in circles. You’re not rowing together.

Radina: Hear, hear. Well said. Well, we’ve come to our last question now which is, what gives you hope?

Lorraine: I think what gives me hope is just a shared awareness among all the community in the energy ecosystem. Just a real awareness of the importance of clean energy, the importance of decarbonization, as we see the impacts of climate change. And the ability to do this in a rapid way that was not possible before because of the innovation that’s coming from grid edge technology.

The fact that you now have inverters that provide voltage support or grid support, that was never a possibility even 10 years ago. That you have these intelligent smart systems that can help prosumer customers support the grid, individual residential or commercial customers can help to support the grid. We can use the resources behind the meter. So we’re having more of an ecosystem and a holistic approach. That gives me a lot of hope.

It takes a village to raise a child, right? It takes everybody, and it takes all the resources in the toolkit. And now we have a lot of technology tools to do that. But I think it gives me hope that most everyone has awareness and I think we have a shared sense of urgency. In that sense, in the middle of every crisis lies an opportunity. I think that’s a famous quote. That is how I look at it. That’s what gives me positive pause: that we can address these challenges, and we can dialogue. We can improve integrated resource planning at the transmission and distribution level. We can have better coordination. It’s the urgency and the call to action.

Radina: Thank you so much for that wonderful close to a great conversation. I feel like everything you just said has left me personally with so much hope, and I hope that it has for our listeners as well. Thank you again for taking the time to talk with me, Lorraine. It’s been great having you on, and I look forward to seeing all of the great work you’ll continue to do.

Lorraine: Thank you. Thank you. It was a pleasure. Always good talking to you. I’m glad that we have this opportunity. Keep looking at Hawaii. As I always said, Hawaii sends postcards from the future. So I have to give a shout out to our Hawaii stakeholders and our Hawaii utilities that are continuing to try to achieve 100% renewable energy by 2045 and 100% decarbonization. That’s not an easy lift. So kudos to them to continue forward. As we say in Hawaii, “imua.” Move forward. Thank you.

Radina: And that’s it for today’s episode. A huge thank you to you for tuning in. Yours truly, with optimism, Radina.

This episode of The Energy Optimist was produced and recorded by Radina Valova, edited by Mari Hernandez, Gwen Brown, and the team at Podcast Engineers. Graphic design was provided by Nicole Wilson. If you enjoyed this episode of The Energy Optimist, subscribe to our email announcements about new episodes by visiting IRECusa.org/TheEnergyOptimist. Or you can find us on your favorite podcast streaming service.