The revolution in energy technologies has the potential to deliver incredible benefits to consumers. These technologies promise to make our electric system cleaner, cheaper and more reliable. However, the deployment of those technologies is likely to be uneven – both geographically and demographically – without a societal commitment to ensuring that the benefits are shared broadly. Broadbased benefits require regulators to commit to both getting the maximum value out of the new technologies and to ensuring that the value is available to all consumers.
The only way to achieve this equitable outcome is for regulators to make a commitment to “integrated innovation”. Without a regulatory commitment to sharing the benefits of innovation across all customers, they will continue to be deployed unevenly. Regulators can change this, though, by ensuring that utility operations are set up to capture the full benefits of innovative technology and by including the benefits of innovation in a modern definition of universal service. In this short article, we’ll describe why using the regulated utility model is the only viable way to provide “integrated innovation”.
Universal service-DER nexus
The nexus between universal service and distributed energy resources (DERs) — a term that can include anything at the edge of the grid from demand response to storage to distributed generation — lies in integrated innovation. Integrated innovation aims to ensure that DERs are a core part of both the energy system’s operations and the mission of the grid managers and owners.
Let’s consider operational integration first. Again, integrated innovation is based on the premise of maximizing the value of new technologies, so that investment in new technologies provides value to all users of the electric system, not just those who install the technologies. For DERs, integrated innovation requires an updated distribution system, with communications and controls that allow real-time operations in response to price signals, along with a regulatory regime that incorporates the full value of innovative technologies into the grid.
This type of system is not a foregone conclusion. It’s easy to imagine two legitimate paths for DERs: 1) self-sufficient off-grid or micro-grid applications, and 2) integrated innovation where DERs become trusted sources that benefit the grid (this could include the ability to island if needed), and all electric customers, as a whole. We focus here on integrating DERs, where myriad edge-of-grid technologies become as trusted and valuable as central station generation and improve the utility’s ability to provide reliable, affordable, universal service better and cleaner.