Monday, December 5, 2011

MITEI: With Changes, The [U.S. Power] Grid Can Take It

Via MIT News -

Over the next two decades, the U.S. electric grid will face unprecedented technological challenges stemming from the growth of distributed and intermittent new energy sources such as solar and wind power, as well as an expected influx of electric and hybrid vehicles that require frequent recharging. But a new MIT study concludes that — as long as some specific policy changes are made — the grid is most likely up to the challenge.

Study co-director Richard Schmalensee, the Howard W. Johnson Professor of Economics and Management at the MIT Sloan School of Management, says the two-year study came about “because a number of us were hearing two sorts of rhetoric” about the U.S. power grid: that it’s on the brink of widespread failure, or that simply installing some new technology could open up wonderful new opportunities.


The report was commissioned by the MIT Energy Initiative (MITEI) and carried out by a panel of 13 faculty members from MIT and one from Harvard University, along with 10 graduate students and an advisory panel of 19 leaders from academia, industry and government.

While the grid’s performance is adequate today, decisions made now will shape that grid over the next 20 years. The MIT report recommends a series of changes in the regulatory environment to facilitate and exploit technological innovation. Among the report’s specific recommended changes: To enable the grid of the future — one capable of handling intermittent renewables — the United States will need effective and enhanced federal authority over decisions on the routing of new interstate transmission lines. This is especially needed, the report says, in cases where power is produced by solar or wind farms located far from where that power is to be used, requiring long-distance transmission lines to be built across multiple regulatory jurisdictions.


The MITEI report recommends that the Federal Energy Regulatory Commission (FERC) either be given the authority to make decisions in such cases, or be designated as the “backstop” authority in cases where there are disputes.

The grid would also benefit from a restructuring of the way customers pay for its costs, the study found. Payment for electric distribution, like payment for generation, is currently calculated based on usage. But most of the costs involved are fixed; they don’t depend on usage. This gives utilities incentives to resist distributed generation, such as homeowners installing rooftop solar panels, and gives consumers excessive incentives to install such systems — and thereby to shift their share of fixed network costs to their neighbors. Fixed network costs, the reports says, should be recovered primarily through customer charges that don’t depend on electricity consumption.

In addition, while many utilities have begun to install “smart meters” for their customers, most of these are not yet being used to provide feedback to customers that could shift electricity usage to off-peak hours.


Another area that will require restructuring, the study concluded, is cybersecurity: The more thoroughly the grid is interconnected, and the more smart meters are added to gather data about usage patterns, the greater the risk of security breaches or cyberattacks on the system.

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