The Third Decade
The obvious isn’t always obvious but when it is, it makes quite a difference. Some game changing models over the past three decades have given us strong footing as we move into a new era on how electricity is generated, where it’s generated and how it’s stored. Here’s a quick look back to bring us to now.
In the fall of 1991, an article on the diffusion model for the entry of photovoltaics into the electric utility framework was published in the Solar Industry Journal, authored by Carl Weinberg and Joe Iannucci who were then with PG&E, and Rick Sellers from SEIA. A series of concentric rings moved PV from early remote applications to providing grid support, then onto peak power and in the final ring, perhaps serving as bulk power energy. The premise was to start with cost-effective applications at one end of the spectrum and move into new markets as costs declined.
Sounds reasonable and not particularly groundbreaking from today’s perspective, but the brilliance of this model was its simplicity, and it became the set up for market and policy advances that we now take for granted.
Then in the fall of 2007, the then Solar Alliance, came out with the “Four Pillars of Cost-Effective Solar Policy.” This was another defining model that showed that all four pillars – utility rates, interconnection, net metering and incentives – were needed to make a significant solar market. Remove one or two of the pillars and the structural support for cost-effective solar would weaken.
Both of these models served to focus and motivate strategies, policies and applications that have led to where we are today. But, we are now at the intersection of an old and new grid system where new thinking, new onramps and next-generation innovation become necessities.
Enter IREC’s piece of the puzzle. Both of IREC’s new publications, Easing the Transition to a More Distributed Electricity System and Deploying Distributed Energy Storage, zero in on the challenges and ways to meet them so that distributed generation and distributed energy storage bring the most benefit to consumers, to the grid, and to the marketplace. The reports cut to the chase by articulating the issues on the table and offer regulatory considerations to address and enable local, two-way power flow.
Roles need to and are changing. Utility regulators are convening new deliberations. Board rooms are figuring out new strategies, products, services and ownership models. And, consumers are no longer simply paying just an electric bill; they’ll play in how their bills are calculated and to whom they write the check.
Rate design, rate structures and ratemaking approaches are common themes in both reports, as cost recovery mechanisms, price signals and the cost-benefit nexus are tackled. Additional core discussion points cover access to the grid and to data, and the integration of distributed resources and storage into utility distribution system planning. Both publications are well written and offer sound ideas as a redefined and more inclusive grid takes center stage.
I talked with two of the main authors of these reports. Erica Schroeder McConnell (Easing the Transition to a More Distributed Electricity System) points out that “utility regulators have the opportunity to recognize the changes to the electricity grid and facilitate an efficient transition to a more modern grid by revisiting the regulatory compact, and making sure this arrangement between utilities and their customers continues to meet customers’ needs and interests.”
Sky Stanfield (Deploying Distributed Energy Storage) weighs in remarking that “distributed energy storage has enormous technical potential to not only help smooth the integration of high penetrations of distributed renewable generation but also to help lower overall energy costs for consumers, while facilitating a more robust and resilient grid. Achieving this potential certainly requires further reductions in the cost of storage technologies, but it will also depend heavily on whether the right regulatory policies and market mechanisms are in place to enable wise deployment of energy storage on the distribution grid.”
There are a magnitude of complex challenges ahead. As the PV diffusion model and the four pillars structure provided extremely insightful guidance in the past, it is our hope that these IREC reports lead to thoughtful and mutual gains for utilities, customers, and regulators.