Maximizing Distributed Energy Resources: Global Insight On Distribution Grid Regulations
Fast-falling renewable energy costs are rapidly decarbonizing electricity grids across the world, but higher renewables penetrations requires better balancing of power supplies and demand – so how can governments create policy and regulation for a complex multi-way energy tech system to fast-track emissions reduction and reduce consumer costs?
New research by Dr. Gabrielle Kuiper shows that international regulators are exploring many of the same policies U.S. states are using to maximize cheap but variable renewables, harness demand flexibility, and reshape utility business models away from capital intensity toward system optimization.
Dr. Kuiper, the recipient of a Churchill Fellowship from Australia, interviewed dozens of experts and regulators from leading regions around the world, including New York, California, the United Kingdom, Canada, France, the European Union, Germany, and Norway to find answers to this question – especially on distribution network regulation.
For example, the report finds the UK, EU, and Norway are exploring models to optimize demand-side resources through a distribution system operator model, similar to (and in cases inspired by) New York’s Reforming the Energy Vision (REV) process.
Energy Innovation’s Director of Electricity Policy Mike O’Boyle interviewed Dr. Kuiper to share her insights and learn what U.S. electricity-sector policymakers and utilities can learn from international regulators and experts:
Mike O’Boyle: Regulators and utilities in different countries may disagree on the appropriate role of government in steering power sector transformation. What did your research reveal?
Gabrielle Kuiper: An inescapable conclusion from my research is that government leadership and vision are vital for timely development of clean, smart, customer-centric electricity systems. This was an obvious but frustrating conclusion because the courage to make change cannot be manufactured and yet, we will not address dangerous climate change without it.
This requires policymakers create a vision for the future energy system providing the ‘connective tissue’ aligning agencies, policy, and programs with a clear focus. Decarbonization targets need to be enshrined in legislation; without legislation, multi-sector clean energy policies flow without consistent direction.
In California, New York, the UK, and the EU, governments have set policy, funding and direction for energy markets through the transition, with climate change at the forefront of the mission.
MO: How does revising the distribution utility’s role into a distribution system operator (DSO) play into this concept?
GK: New York State’s Public Service Commission (NY-PSC) provides the clearest articulation of what’s being proposed in most jurisdictions with three roles for the DSO:
- Managing the network using Distributed Energy Resources (DERs)
- Managing a ‘local’ market platform trading capacity, ancillary services and grid support (such as fault response) using DERs
- Planning using DERs as ‘non wires’ alternatives, which could include a ‘flexibility’ platform where DERs can bid in alternatives to network replacement or upgrades