Energy report provides guidance for evolving electric power sector

December 15, 2016 by Emily Dahl, Massachusetts Institute of Technology
Credit: Christine Daniloff/MIT

Distributed energy resources—relatively small-scale power technologies such as solar, wind, energy storage, and power electronics and control devices—are being deployed rapidly in the global shift toward a low-carbon energy future. To ensure that both distributed and centralized energy resources are integrated efficiently, however, electric power systems in the U.S., Europe, and other parts of the world need major regulatory, policy, and market overhauls, says an in-depth report, "Utility of the Future," released today by the MIT Energy Initiative (MITEI). The report was developed in collaboration with the Institute for Research in Technology at Comillas Pontifical University (IIT-Comillas).

"There are great opportunities to deploy distributed energy resources where they will be most cost-effective and impactful, and also to scale up new information and communications technologies that can provide greater flexibility, control, and cost savings for power businesses and consumers alike," says Robert C. Armstrong, MITEI's director and the Chevron Professor in Chemical Engineering at MIT. "Our study does not try to predict the future or prescribe which technologies should prevail; instead, it provides a toolkit for businesses, policymakers, and regulators to navigate the unfolding changes in the system and develop a more robust, efficient system for the future."

Today's electric power systems were designed, built, and regulated well before distributed energy resources—small- and medium-sized technologies that can provide electricity services and are sited in local distribution networks—had come onto the horizon as viable options for widespread use. Now, the businesses and regulatory bodies that determine how power is distributed need a path forward to incorporate these rapidly proliferating technologies. They also need to evolve to meet changing consumer preferences and increase efficiency across the system to achieve cost savings and carbon emissions reductions.

"The study's two overarching recommendations are to establish a comprehensive system of prices and regulated charges that applies to all network users, and to remove inefficient barriers that impede the integration and competition of both distributed resources and centralized resources, such as power sector structures that prevent fair competition and wholesale electricity market design flaws," says one of the study's principal investigators, Ignacio Pérez-Arriaga, who is a visiting professor at MIT and professor of electrical engineering at IIT-Comillas. "Our framework of recommended proactive reforms can enable the efficient evolution of electric power systems into the next decade and beyond."

Among the study's recommendations is a set of measures to improve tariff and rate structures for electricity services. For example, electricity services should be priced in a "technology-agnostic" manner that is based solely on how consumers use these services. Making use of "peak-coincident capacity charges," which increase prices when electricity networks are under stress or generating capacity is scarce, can discourage consumers from drawing on the grid during these times. Prices and charges should also better reflect how the value of services changes at different times of day or at different locations in the grid. Such cost-reflective pricing can open up opportunities for distributed resources—many of which already exist but are not responding to current economic signals—and enable significant .

Another finding is that for technologies such as solar photovoltaics and , which can be connected at different voltage levels and various sizes, understanding tradeoffs between locational value and incremental unit costs due to economies of unit scale can help planners identify the ideal locations and applications for these resources.

Additional recommendations include improvements to the way distribution network companies are compensated and incentivized to incorporate distributed resources efficiently, re-evaluation of the structure of the electricity industry to allow the creation of new business models, and implementation of robust cybersecurity standards for interconnected and appliances. Improvements to wholesale market design could also better integrate distributed resources and reward greater flexibility while creating a level playing field for all technologies.

The report emphasizes the urgency of proactive reforms. Electricity users now face unprecedented choices regarding how they get their power and manage their electricity consumption; they need improved economic signals—prices, charges, and other economic incentives—in the near term to guide these decisions.

"The risk of continuing business as usual is immense in terms of system reliability and costs associated with inefficiencies—which many stakeholders in the electric power sector recognize and want to avoid," adds Pérez-Arriaga.

"This report is the result of a multiyear, comprehensive, and rigorous research study in which authors conducted extensive primary research, including data gathering and modeling, and interviews with regulators and business leaders in the electric power sector—including the study consortium members," says the study's executive director, Raanan Miller of MITEI. "We hope that regulators, policymakers, and industry stakeholders find it a useful source of information that helps them weigh decisions and take actions to guide the evolution of the electric power sector."

Research and findings from the "Utility of the Future" study will inform research taking place through MITEI's new Low-Carbon Energy Center for Electric Power Systems, one of eight MITEI low-carbon energy centers, each of which focuses on advancing key technology areas for addressing climate change.

This report is the first in a new series of MIT consortium research studies focused at the system level and intended to inform industry stakeholders and regulators. The other report currently under way in this new series is the "Mobility of the Future" study on the evolution of the transportation sector. The consortium members of "Utility of the Future" are a diverse set of leading international companies with expertise in various aspects of services and technologies. Members provided support, gave regular feedback, shared insights in a series of workshops, and participated in the external advisory committee.

Explore further: Innovative reports to help utility regulators, policymakers and electric industry

More information: Utility of the Future: energy.mit.edu/research/utility-future-study/

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17 comments

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gkam
1.9 / 5 (9) Dec 15, 2016
It's a new world. No nukes or coal required.

We are going to be clean now.
TheGhostofOtto1923
3.3 / 5 (7) Dec 15, 2016
It's a new world. No nukes or coal required.

We are going to be clean now.
-Clean... what you really wish for... all this talk about environment and filthy republicans and all the 'killing' and manure dust in the skies above the central valley...

More insight into the true nature of the real george kamburoff.

"One very interesting aspect of the psychopath is his "hidden life" that is sometimes not too well hidden. It seems that the psychopath has a regular need to take a "vacation into filth and degradation" the same way normal people may take a vacation to a resort where they enjoy beautiful surroundings and culture. To get a full feeling for this strange "need" of the psychopath - a need that seems to be evidence that "acting human" is very stressful to the psychopath - read more of The Mask of Sanity, chapters 25 and 26."

-Really- how often do you wash your hands?
gkam
1.4 / 5 (8) Dec 15, 2016
Otto, . . otto, . . wake up. You are describing your own behavior.

Really.

Read your own stuff.
TheGhostofOtto1923
3.7 / 5 (6) Dec 15, 2016
Otto, . . otto, . . wake up. You are describing your own behavior.

Really.

Read your own stuff.
Jeez george slow down. Thats 1 post every 10 minutes. 30 posts before lunch. I cant keep up.

You smokin this stuff today?
http://www.medica...ergetic/

Must be good 'shit' nudgenudge
Zzzzzzzz
5 / 5 (6) Dec 15, 2016
Now let's consider commenting on the subject matter....The situation as described is accelerating. Utilities are not investing a lot in new generation capacity, mainly due to uncertainties of the development of distributed energy resources. Independent Power Producers (IPPs) are filling the gaps, in the USA much of this is concentrated near unused capped shale gas wells. This produces the distribution landscape described in the article.
On the climate change front, old coal plants are being retired, and new generation is taking the form of renewables (much of this is distributed energy resources) and IPP's building much cleaner (but still fossil fueled) gas fired generation. All in all, the trend is positive, but not global yet.
WillieWard
2.6 / 5 (5) Dec 15, 2016
We are going to be clean now.
you are going to be clean now real-time.
"You think Germany and Denmark are the clean energy leaders in Europe? Find out the truth here in real time"
https://electrici...mrow.co/
gkam
1.5 / 5 (8) Dec 15, 2016
Zzzzz,if you want to keep up, go to powerengineering.com and utilitydive.
WillieWard
2.3 / 5 (3) Dec 17, 2016
It's a new world. No nukes or coal required.

We are going to be clean now.
"Nuclear energy has been a threat to the oil industry for decades. Why do you think oil companies secretly funded anti-nuclear protests during the so-called "environmentalist" movement in the 1970s? They continue to invest in renewable technology not only to diversify but also because they know that intermittent renewables are create dependency on fossil fuels."
http://www.nuclea...ctitious
gkam
1 / 5 (8) Dec 17, 2016
Now the nukers are paranoid?

I would be too, if I were inflicting that dangerous technology on people.
WillieWard
3 / 5 (4) Dec 17, 2016
..dangerous technology..
dangerous technology ironically safer than renewables.
"Nuclear power is not the bogey that anti-nuclear groups have led us to believe. It has the lowest death rate per kilowatt hour of any generating technology including wind and solar."
http://mothersfor...ne-brook
death/TWh: coal 161.00, oil 36.00, solar 0.44 , wind 0.15, hydro 0.10, nuclear 0.04
gkam
1.5 / 5 (8) Dec 17, 2016
Did Willie look up Chernobyl Children and include those in his statistics?

How about the miscarriages because of Chernobyl?

We cannot afford nukes, Willie, not financially, not environmentally, not morally.
Da Schneib
5 / 5 (2) Dec 17, 2016
What's really important here:

Among the study's recommendations is a set of measures to improve tariff and rate structures for electricity services. For example, electricity services should be priced in a "technology-agnostic" manner that is based solely on how consumers use these services. Making use of "peak-coincident capacity charges," which increase prices when electricity networks are under stress or generating capacity is scarce, can discourage consumers from drawing on the grid during these times.
By eliminating extra costs for energy when the infrastructure is stressed, these recommendations require a build-out of infrastructure to avoid the stress. And the obvious economic question is, who pays for the build-out?

Later in the piece:
Additional recommendations include improvements to the way distribution network companies are compensated and incentivized to incorporate distributed resources efficiently
<- Not an answer.
gkam
1 / 5 (7) Dec 17, 2016
So far, it is us, those who have PV and/or wind or hydro, the little guys, who inject their power right into distribution lines for local efficient use, . . and the community solar, taking off in many states.

I was hoping electric utilities such as PG&E would eventually replace ground transformer sites with solid oxide fuel cells running on natural gas, producing power right where it is needed.

PEM cells cannot be used because of the sulfur mercaptans put into the methane blend for odorization and the need for reforming the methane.
TheGhostofOtto1923
4.2 / 5 (5) Dec 17, 2016
Hey there loser
So far, it is us, those who have PV and/or wind or hydro, the little guys, who inject their power right into distribution lines for local efficient use, . . and the community solar, taking off in many states.

I was hoping electric utilities such as PG&E would eventually replace ground transformer sites with solid oxide fuel cells running on natural gas, producing power right where it is needed.

PEM cells cannot be used because of the sulfur mercaptans put into the methane blend for odorization and the need for reforming the methane.
Another trick of posturing psychopaths is to interject unrelated technical info from wiki into an argument in order to reinforce the illusion that they are proficient in the topic.

People here know better.
WillieWard
3.7 / 5 (3) Dec 17, 2016
I was hoping electric utilities such as PG&E would eventually replace ground transformer sites with solid oxide fuel cells running on natural gas, producing power right where it is needed.
natural gas/fracking, when used symbiotically with intermittent renewables, is carbon-free and good for the environment, according to self-entitled engineers like gskam.
https://scontent-...589BC936
https://scontent-...58C76065
https://scontent-...58D0B8C8
gkam
1 / 5 (5) Dec 19, 2016
I'm afraid this is what we have to look forward to in conservative power and politics.

http://www.utilit.../432614/
gkam
1 / 5 (5) Dec 19, 2016
Here is a factor to consider for future planning:

https://www.japan...-reactor

Well at least this failure was cheaper than Fukushima.

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