We need a different type of power grid

Utility incentives need to align with public interest

FOR MANY NEW ENGLANDERS, last winter highlighted the drawbacks of our existing energy system. We are tired of cold seeping in around windows, power outages and work stoppages from storm-damaged lines and wires, cars reluctant to start before the commute, high heating costs, and increased electricity bills.

It doesn’t have to be like this. There is a way for consumers to have more control over energy use and utility bills, to use energy more efficiently, and to utilize new technology and renewables, all while reducing carbon emissions. It will take a cultural shift in our thinking about the energy system. The existing grid is designed for a previous era and is a one-way route from power plants to homes and businesses. No longer should energy dollars be poured only into massive power stations and miles of wire. The modern grid should be a multi-directional system that uses an array of technologies to meet our energy needs more cleanly and affordably.

In this modern grid system, our homes and businesses will become the centerpieces of the energy system. Consumers will have greater control over energy use within and around their buildings through technologies such as rooftop solar water heating, photovoltaic systems, and advanced meters and appliances that help consumers control and monitor power usage.

Community energy systems—local wind power, solar arrays, and combined heat and power—will also contribute to a decentralized power grid. A truly modern grid will support and encourage electric transportation to minimize fuel costs, and reduce noise and diesel pollution in our neighborhoods. Imported fossil fuels will be replaced by renewable heating sources such as heat pumps. Energy efficiency solutions will be geographically targeted to reduce the strain on the electric grid and avoid construction of expensive poles and wires to supply additional power.

In order to make this energy future possible, we need to change the policies and financial incentives that motivate utilities and drive their decision-making. Acadia Center’s UtilityVision is a framework for an updated approach to energy regulation with four overarching principles for needed reforms:

  • Coordinated utility planning for the future. Grid planning must be comprehensive and proactive, merging traditional engineering and infrastructure solutions with customer-side, clean-energy technologies.
  • Utility incentives aligned with the public interest. Current utility financial incentives guarantee utility returns of over 10 percent for building new transmission in comparison to less than half that level for achieving energy savings. These incentives must be rebalanced to enable customer-sited demand reductions through weatherization and efficiency to compete fairly with large-scale supply projects such as pipelines and transmission lines.
  • Consumer protection and fair pricing for all. The modern energy system must empower all consumers by allowing customer-side resources—such as energy efficiency and rooftop solar–to thrive by establishing fair and non-burdensome rates, and by providing a full safety net of necessary regulatory protections for consumers.
  • Updated roles for regulators, utilities, and stakeholders. Regulators must have a stronger role in strategic grid planning in order to align utility incentives with consumer and environmental goals and to ensure the consumer’s central role.

These changes are not simple fixes. They challenge the current model for how energy is controlled, purchased, and delivered. But there are available pathways forward, and states are now considering important incremental steps. UtilityVision ties these steps together through recommendations for empowering the modern energy consumer, planning strategically for the consumer-focused power grid, aligning utility incentives with consumer and environmental goals, reforming how consumers pay for power they use, and ensuring consumers get paid for power they produce.

Meet the Author
The core principle for this clean energy future is that consumers are the focal point, and they will be armed with information and the freedom to make beneficial choices regarding how to source and use energy. Such changes to the power grid could be fundamental and transformative for our homes, workplaces, vehicles, and neighborhoods.

Abigail Anthony is director of the grid modernization initiative at the Acadia Center, a non-profit, research and advocacy organization committed to advancing the clean energy future.