How Maryland Tackles Grid Modernization Could Have Big Impact

15671323838_0aac227627_bThe need to plan for and design a more efficient, cleaner, and resilient electricity grid has never been greater. Our aging grid is ill-prepared to keep pace with rapid technological advances and an increasingly distributed, dynamic energy system. A greater number of customers are producing electricity themselves, demanding expanded energy choice and a more interactive relationship with their utilities. In the meantime, an increased number of severe storms in recent years keep pressing the need for resilience. In order to meet these challenges, we need to look beyond traditional planning solutions for how we make, use, and distribute electricity.

This year has seen a flurry of activity on grid modernization in states across the U.S. As 2016 comes to a close, the spotlight is on Maryland as it joins the ranks of states investigating how to transform our electric system.

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Environmental Defense Fund (EDF) recently noted that as President-elect Trump threatens to roll back federal environmental protections, state victories are more critical than ever. Regardless of future federal action, markets and technology are on our side: the U.S. is experiencing an unprecedented convergence of clean energy innovation and economic growth. As the Midwest has shown, states can work across the aisle to create policies that grow the economy and help people save money, while protecting the planet.

It’s still too early to gauge how bold Maryland’s foray into this grid modernization inquiry will be; the state’s Commission has made it clear this is a “targeted review” of specific topics – rate design, distributed energy resource valuation, smart meter benefits and costs, protection of low-income customers. But the scope of the topics suggests the state is thinking big. And if last week’s public hearing is any indication, key players are keeping an eye on the grid modernization newcomer.

The stakes

Maryland’s presence in the PJM Interconnection market (the largest wholesale electricity market in the U.S.) provides unique challenges to the state’s reform process and will have many states watching closely as it charts its own path.

Earlier this fall, Maryland’s Public Service Commission (PSC) requested comments on specific issues to kick off its grid modernization proceeding in an effort to “ensure that electric distribution systems in Maryland are customer-centered, affordable, reliable, and environmentally sustainable.”

The proceeding builds on two earlier technical conferences on rate design and distributed energy resources. It also reflects the 2015 approved merger of Exelon Corp. and Pepco Holdings LLC. The merger required the companies to file a plan for revamping the electricity distribution system. 

The proceeding signals the growing importance of, and action around, modernizing our outdated electric grid.

The proceeding has already drawn an impressive amount of attention ranging from utilities to system operators, to renewable energy companies, energy management service and technology providers, consumer advocates, and the environmental community. This signals the growing importance of, and action around, modernizing our outdated electric grid.

8 steps Maryland should consider

Bringing our outdated electric grid into the 21st century is an enormous task that can take many shapes and forms, as indicated by the Grid Modernization Index.  Hardware upgrades can only takes us so far. Tomorrow’s grid requires modernizing processes as well because utilities, regulators, and customers need new policies to support this new system and “encourage innovation and reward performance.”

Leveraging EDF’s experience with grid modernization efforts across the country, we offered a set of guidelines for Maryland regulators to consider as they begin to orchestrate grid modernization efforts:

  1. Create strong stakeholder engagement: Engage stakeholders to develop a shared understanding and pave the way for a comprehensive and transparent grid modernization process. Such collaboration can help ensure all the various decisions Maryland’s regulators make – potentially in separate forums (the Commission may decide rate design process and grid upgrades in separate proceedings for example) – work together.
  2. Use guiding priorities and principles: Assess state-specific guiding principles and priorities at the outset to serve as a foundation on which the reform process can be built. Distributed energy penetration, like encouraging growth of rooftop solar, is a hot topic these days. Action plans will vary greatly depending on whether distributed energy integration is a pressing issue in the state and where these resources will provide the most value to the grid.
  3. Develop solid rate design process: Good rate design process is just as important finding the right rate design. Carefully consider the pace of adoption, and apply data to use the opportunity to investigate, learn, and probe changes against policy goals.
  4. Value distributed energy resources with data: Utilize granular data to indicate when and where energy generation is most beneficial to the grid and the environment. This is essential to ensuring the societal benefits of distributed energy resources like solar are maximized.
  5. Ensure data access: Simply deploying smart technology does not equal value maximization. In order to unlock smart meter benefits, regulators, utilities, and energy service providers need to design and implement policies that deliver secure access to meaningful energy usage data to customers and authorized third-parties.
  6. Engage customers: Craft a broad customer engagement strategy that incorporates proactive customer education and outreach efforts; periodic customer surveys to gauge satisfaction; and awareness of benefits before, during, and after the roll out of smart grid technologies.
  7. Deploy voltage optimization: Voltage optimization is a cost-effective energy technology that represents a unique ability to more efficiently operate the grid by ensuring customers receive only the amount of voltage they need to power their homes and appliances. Additionally, it helps customers save energy and money while reducing pollution. Evaluate its capabilities and how smart meters can enhance this tool.
  8. Employ performance metrics: Using metrics to assess and incent utility investments, in a way that is transparent to all stakeholders, is key to defining and measuring outcomes. These measurable outcomes will be foundational to achieving desired policy objectives.

While it is too early to tell how successful Maryland will be in developing its own grid modernization roadmap that other states can follow, it is clear that states are exploring ways to build a smarter and more sustainable energy future. Here at EDF, along with the other interested parties, we will be watching Maryland regulators in hopes they move forward ambitiously to modernize the grid and become leaders in the process. In doing so, they would be doing their part to create a more flexible, efficient grid that is responsive to diverse customer needs, while protecting our communities.

Photo credit: joseph.gruber

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