Image: NASA |
Over
the next two decades, the United
States 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 Massachusetts Institute of Technology (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
most important broad finding was that both of these are false,” Schmalensee
says. While the grid is not in any imminent danger, he says, “the current
regulatory framework, largely established in the 1930s, is mismatched to
today’s grid.” Moreover, he adds, today’s regulations are “highly unlikely [to]
give us the grid of the future—a grid that by 2030 will support a range of new
technologies and consumer services that will be essential for a strong and
competitive U.S.
economy.”
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.
“It
is a real issue, a chicken-and-egg problem,” says John Kassakian, a professor
of electrical engineering at MIT and the study’s other co-chair. “Nobody’s
going to build these new renewable energy plants unless they know there will be
transmission lines to get the power to load centers. And nobody’s going to
build transmission lines unless the difficulty of siting lines across multiple
jurisdictions is eased.”
Currently,
when new transmission lines cross state boundaries, each state involved—and
federal agencies as well, if federal lands are crossed—can make its own
decisions about permission for the siting of these lines, with no centralized
authority.
“There
are many people who can say no, and nobody who can say yes,” Schmalensee
explains. “That’s strategically untenable, especially since some of these
authorities would have little incentive ever to say yes.”
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.
“We
haven’t done as much as we could to develop this capability, to learn how to do
this,” Schmalensee says. “It could save everybody money, by cutting down the
need to build new generators.” While overall growth in demand is expected to be
modest and easily accommodated, without new policies peak demand will rise much
faster, requiring new generating capacity. “We continue to build capacity
that’s only used a few hours a year,” he says. Providing consumers with better
price signals and the ability to play a more active role in managing their
demand could significantly improve this imbalance, the report says.
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.
At
the moment, no agency has responsibility and authority for the entire grid. The
report strongly recommends that some agency—perhaps the U.S. Department of
Homeland Security—be given such responsibility and authority, but thorny issues
related to authority over local distribution systems would need to be resolved.
In addition, the report notes, it will be important to develop rules and
systems to maintain the privacy of data on customers’ electricity usage.
Requiring
the sharing of data, especially data collected as a result of federal
investments through the American Recovery and Reinvestment Act of 2009, should
be a significant priority, the report says. The government “spent a lot of
money on pilot programs and experiments, and installations of a lot of new
equipment that can improve the efficiency and reliability of the grid and the
management of demand,” Kassakian says. But there needs to be more cooperation
and communication about the results of those programs “in order to get the
benefits,” he says.
In
fact, widespread sharing of data from real-time monitoring of the grid could
help prevent some failures before they happen, Kassakian says: “If you’re aware
of what’s happening at the same time everywhere, you can observe trends, and
see what might be an incipient failure. That’s very useful to know, and allows
better control of the system.”
The
MITEI study found that growth in the number of electric vehicles (EVs) on the
road is likely to be slow enough, and widely distributed enough, that it
shouldn’t create significant strain on the grid—although there may be a few
locations where a particularly high penetration of such vehicles could require
extra generating capacity. Some other effects could be subtle: For example, in
some hot regions of the Southwest, grid components such as transformers are
designed to cool off overnight when demand is ordinarily low. But a sudden
influx of EVs charging at night could necessitate bigger transformers or
cooling systems, while charging them at the end of the work day could significantly
increase peak demand and thus the need for new capacity.
Utilities
now spend very little on research, the study found, because regulators provide
little incentive for them to do so. The report recommends that utilities put
more money into research and development—both to make effective use of new
technologies for monitoring and controlling the grid, and on customer response
to pricing policies or incentives.
