Smart Grid Policy Trends to Watch in 2013
The large-scale rollouts of smart meters heralded one of the first noticeable machine to machine (M2M) communications deployments. It also launched a series of conversations about safety and privacy concerns, which will continue to play out in many other M2M applications. DOE ARPA-E funding jumpstarted an interesting array of technologies that will shape grid modernization – particularly in renewables and energy storage. The ongoing IT/OT convergence will continue to influence utility operations and consumer interactions.
So what will be the most influential Smart Grid trends in 2013? There’s always the potential for technology breakthroughs – particularly in fixed and mobile energy storage. However, we’re well overdue for gamechanging policies, because the current practice of applying technology innovations within existing utility business models is akin to pouring new wine into old wineskins. Something’s gotta give.
Here are four policy trends that will gain momentum in 2013:
- Industry attention will focus on transactive energy, which conceptualizes the impacts of widely distributed energy resources on utility business models, technologies/services, markets, and consumers. Organized as peer-based energy grids, this concept would revolutionize the electricity grid by enabling massive integration of renewable energy sources into the grid, and “democratizing” the energy marketplace by allowing prosumers producing relatively small amounts of kilowatts or negawatts (via demand response) to participate in the market. The GridWise® Architecture Council is already at work on the metaconcept.
- Forward-thinking regulators will consider how to influence utilities to act as distribution grid load controllers to accommodate new sources of kilowatts or negawatts without detriments to grid reliability and resiliency. Managers of wholesale energy markets will continue to plan and experiment with programs that incorporate distribution grid participants into the bulk power grid. PJM has made the most progress in expanding market participation, but CAISO is also actively engaged here.
- The energy/water nexus will become a more dominant part of project and technology conversations. While the extremely synergistic relationship between energy and water has been publicized by many organizations, it hasn’t achieved critical mass in the minds of policy makers or the general public. But that’s changing in the USA and around the globe. Large water projects for desalinization and water transport often use significant amounts of energy to support pumps and treatment. These infrastructure projects will be weighed not only on their overall public costs versus benefits, but also from the perspectives of how their energy loads impact local grids. Funded projects and selected technologies may be the ones that are the most energy-frugal. Natural gas fracking technologies will come under greater scrutiny in terms of the impacts of drilling fluids and practices to the purity of ground and underground water supplies.
- In a rare show of bipartisanship, Congress will allow Master Limited Partnerships (MLPs) for renewable energy, which are currently limited to oil and gas investments. MLPs are taxed like partnerships, but owned like stock. This financing mechanism has been quite successfully used to organize funding of large infrastructure projects with lower costs and reduced risks for investors. It also allows for a greater range of participation in investments. This website provides an excellent description of how MLPs work. Leveling the playing field for renewables via MLPs will accelerate projects across the many states that have Renewable Portfolio Standards (RPS), despite efforts by fossil fuel industry groups to weaken or eliminate these standards.
Policy changes won’t happen overnight, but these trends are worth watching to understand the evolution of the Smart Grid across the entire value chain from generation to consumption.
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