By Kevin Frazzini
Electricity hasn’t changed, but the way we get it sure has.
Two energy experts spoke of industry changes large and small in “Building the 21st Century Electric Grid,” the Sunday session kicking off NCSL’s Energy Policy Summit at the Legislative Summit in Boston.
The industry is evolving away from a centralized model, with large coal-fired plants producing and transmitting electricity to regional customers, to a distributed model in which power is generated at more efficient gas-fired plants and by solar and wind sources located closer to the points where it’s consumed.
Driving the change are factors familiar to many at the well-attended session: Technology has lowered the cost of renewable energy sources, especially solar, and the price of natural gas has dropped to the point that more expensive coal-fired power plants can’t compete.
Less known is that consumers are better informed than ever about solar power and energy storage technologies. Increasingly, they want to be involved in making decisions about the power they use, said Bruce Evans with the Ohio-based utility American Electric Power.
“Ratepayers”—as consumers were once known in the industry—“are becoming collaborators,” he said.
And on the regulatory front, innovation is not limited to relatively large markets such as California and New York. Several states are working on ways to maintain reliability while allowing a growing number of energy sources to send power to the grid. Still others are watching developments closely and planning at a more deliberate pace.
Stability of the grid is a priority. “It’s about keeping the lights on,” said Paul Hibbard, a principal at the Boston consulting firm Analysis Group. A greater mix of sources feeding into the grid can enhance, rather than threaten, regional stability.
Among the challenges ahead are creating a pricing structure that ensures no consumers are unfairly burdened with the cost of new energy sources coming onto the grid. If the traditional model was to price energy based on kilowatt-hours used, a new model might be demand-based pricing, which gives consumers incentives to reduce both demand and consumption. Demand-based pricing has the support of clean-energy and environmental groups, along with utility trade associations and regulatory agencies. Finally, protecting the grid from cyberthreats will remain a priority as distribution becomes increasingly digitized.
For more on these topics, see the NCSL report “State Efforts to Protect the Electric Grid” and the State Legislatures magazine story “Ever-Ready Energy.”
Kevin Frazzini is the assistant editor of State Legislatures magazine.