America's Power Plan

a guest post by Ken Whiteside, Director of Business Development at ONTILITY, LLC.

America's Power Plan

Much has been written lately about the U.S. electricity system and the fact that it is undergoing a rapid transformation. Customer demand for cleaner, more efficient energy, and a steady stream of technological innovations are redefining how we produce and use electricity. Subsequently, how the electricity system is configured and how utility businesses are structured are being affected deeply.

To begin addressing key issues and concerns, more than 150 energy experts representing a broad cross-section of experience and perspective joined America's Power Plan, to help policymakers at the state and local levels to address challenges posed by the radical changes in the electricity industry.

Electricity markets, regulatory structures, and utility business models vary greatly across America, so there is no one-size-fits-all approach to good policy. America’s Power Plan presents some very sound, state-of-the-art thinking and makes solid recommendations about policies, and although the Plan is aimed primarily at policymakers, it is important for all of us in the energy industry to understand the issues and participate in energy policy decision making whenever we can – this is vital to our businesses.

The plan addresses seven key areas: power markets, utility business models, finance policy, distributed energy resources, distributed generation policy, transmission policy and siting of new power infrastructure. Let's take a look at the first of these.

Power markets come in many shapes and sizes, from traditional monopolies to broadly competitive systems. These markets support and reflect traditional, one-way production, distribution and consumption models: large centralized power plants supplying kilowatts as a commodity to unregulated loads. Rapidly-growing technologies like price-competitive solar power, and new opportunities like demand response, energy efficiency and distributed power generation, don’t fit the traditional model. Old market designs are hindering innovation and must be changed.

Markets needs to adapt in three key ways:

  • Update grid operations to enhance flexibility in the short term
  • Recognize and capitalize on the full value of efficiency as a resource
  • Update investment incentives to drive flexibility in the long term.

In terms of grid operations, there need to be fewer and larger balancing areas, better use of weather forecasts, and more frequent dispatch decisions. Markets must reward flexibility, and match demand and supply dynamically. New load-side technologies and initiatives like demand response, energy efficiency measures, distributed generation and smart grid services need to be allowed to compete toe-to-toe with traditional generators.

To drive investment, markets need to encourage new entrants, like third-party aggregators of demand-side resources. Markets need to reflect the true value of all the services more flexible resource investments can provide, sending better price signals in energy, services and forward capacity markets. Market administrators need to be more proactive in anticipating developments in variable generation, demand response, distributed production and energy efficiency when developing markets for resource investment.

Why is any of this important to wholesalers and electrical contractors? New relationships are being forged with energy companies (our own included perhaps) up and down the electricity supply chain. Old market rules and policies will be upgraded to support those new relationships. These policy changes will impact how electricity producers, wholesalers and retailers operate, and that ultimately will impact what gets built and what gets bought.

In the coming weeks, I'll be writing about the other parts of America’s Power Plan...

Ken Whiteside photo Ken Whiteside has been a fan of solar energy for decades. His first hands-on experience was installing solar on off-grid houses around Telluride, Colorado in the 1990’s (summer in the San Juan Mtns. - somebody had to do it). From his home in Austin, Ken writes and works for widespread adoption of solar electricity, smart energy production and use, and sustainability.

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