Electric utilities and power producers across the United States are developing new strategies to modernize the electric grid to address mounting risks from wildfires, ice storms, and other climate-related extreme weather.
Portland General Electric (PGE), a public utility based in Oregon, is responding to three straight years of devastating extreme weather. The company had to enforce its first-ever public safety power shutoff in 2020 after an uncommon cold front sparked the worst wildfires the state has seen. An ice storm in 2021 wiped out electric power for two-thirds of the utility’s customers, followed by a 116-degree heat dome in June 2022, triggering a 25 percent jump in peak demand.
More than 1,700 miles away in Texas, Bandera Electric Cooperative, a rural electric co-op near San Antonio, faced similar challenges; a deadly February 2021 winter storm that resulted in widespread power outages and brought the grid close to failure, and 11 record peak-demand days so far this year. Of course, these experiences are not unique to Oregon or Texas, as the costs of extreme weather keep climbing for utilities across the country.
In an Oct. 11 C2ES webinar, panelists from PGE, Bandera, and other utilities discussed how grid modernization can ensure that the electricity system can withstand increasingly intense conditions. Panelists also explored technology’s potential role in addressing climate challenges and barriers slowing near-term deployment.
They discussed technology-driven solutions that modernize the grid so that it can adapt to increasingly erratic climate conditions. These solutions include a broad array of advancements, including distributed energy (such as microgrids, virtual power plants, or solar arrays), demand response technologies (such as smart meters and smart appliances), forecasting and predictive analytics, and software that aids grid hardening.
These emerging tools allow utilities like PGE and Bandera to plan, predict, and respond to weather-driven demands for power or risks to the grid. They can also help ensure that critical resources maintain power during extreme weather. As the economy electrifies and decarbonizes, grid modernization technologies can also help utilities manage increasing loads and bring new decentralized generation and storage online.
The grid modernization discussion comes at a critical time. In 2021, we recommended that Congress substantially increase funding for grid resilience, and the bipartisan infrastructure law passed that year did just that. Through the Department of Energy’s new Grid Resilience and Innovation Partnerships program, the department is unleashing billions of dollars in loans and grants to modernize the grid, and new federal tax incentives are expected to reshape the country’s power sector in the coming decades. The resulting grid transformation will be dictated by investment decisions today, and decision-makers must quickly determine what role these technologies should play in the grid of the future.
Here are key points for stakeholders in the grid transformation:
The drivers for grid modernization are changing. Initial efforts focused on improving operational efficiencies and supporting utilities’ decarbonization goals. Today, grid modernization conversations are also driven by the need to prepare for climate impacts and an increasing load from new demand sources like electric vehicles.
A great deal of innovation is happening at the grid “edge.” The edge of the grid includes distributed generation and energy storage systems, as well as end-user technology, such as electric meters, smart appliances, and automation. With automation and increased system visibility from sensors and new software at the grid edge, utilities can achieve highly localized management of the grid which will be particularly helpful in managing it during extreme weather.
As the utility industry transforms, the set of key stakeholders and solutions providers for grid needs is expanding. Technology companies and car companies are all now firmly a part of the equation, taking keen interest in an evolving power grid. Electric vehicle (EV) manufacturers have a responsibility to ensure EVs have the appropriate vehicle to grid (V2G) technology to allow for bi-directional electricity flows and communication with the grid for optimized charging. Likewise, grid operators and utilities have a responsibility to be ready for EVs and their large demand for new electricity. These traditionally separate sectors will need to communicate and work together.
Utilities have commonly approached modernization initiatives through pilot projects, but the opportunities and demands for the technologies apply to entire systems. Utilities will need to finance and deploy innovative technologies across their distribution systems more quickly than in the past few decades. To support this, webinar presenters agreed that updating traditional utility approaches can help conservative utilities advance innovation and climate resilience at the pace needed.
The financing question presents challenges. The nature of the investments raises the question whether utilities should be able to earn a rate of return on grid modernization or whether the investments should be approached as operational expenses. And because grid modernization technologies are inherently fast-changing and may be outdated in several years, the cadence of new investments may increase. Challenges like these mean that utilities must explore new economic models and work to educate policymakers, regulators, and customers to build support for needed investments.
As we move from whether we modernize the grid to how we do it, a slate of interesting questions emerges:
From a strategic standpoint, how can these technologies be deployed to best ensure greater resilience of communities to extreme weather and prepare for the transition to a low-carbon economy?
In many places, there is lack of consistency between jurisdictions and across levels of government, so what policy changes (and at what level) create an environment where utilities can fully deploy technologies across the system?
What new federal programs and incentives present utilities with the greatest opportunities to advance grid modernization plans? How will utilities integrate these opportunities into their business?
As the various benefits of grid modernization and financing challenges come into clearer focus, what new stakeholders need to be at decision-making tables, and when? How can communities and customers be effectively engaged to support the advancements? Will federal resources be deployed to help ensure benefits are equitably felt, as we recommend in our 2021 Federal Policy Action Plan to Accelerate Local Climate Resilience?
C2ES is exploring these and other questions in our support of the transition to a just and resilient low-carbon economy. Among industry leaders, the conversation continues with forward-thinking events like GridCONNEXT and initiatives like the Electric Power Research Institute (EPRI)-led Climate Resilience and Adaptation Initiative (READi) effort.
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