Electric power grids in the United States are in a period of rapid transformation, driven by a confluence of factors such as an increase in electricity demand, retirement of certain baseload power generation, an increase in distributed generation, lengthy interconnection queues and new “grid-edge” technologies being brought online. Layered into this evolution are new state and national decarbonization objectives, heightened awareness of the magnitude and frequency of threats that could compromise reliable power delivery, and unprecedented federal investment through legislation like the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). With these transformative trends in process, Governors are eager to support deployment of technology solutions to facilitate their policy objectives and meet increased loads – and doing so while maintaining or even improving grid reliability, resilience and affordability.
This paper is part of a series published by the National Governors Association (NGA) to identify actions Governors can take to guide their states and territories through intentional and effective power sector transformations. While other papers explore regulatory structures, regional markets and power transmission, this paper provides a deeper dive into actions Governors can take to modernize the grid through the deployment of grid technologies. While careful planning, stakeholder engagement and robust technical analysis is needed to optimize technology investment, an understanding of the range of technologies currently available can help Governors determine how best to initiate or improve those processes in their states and territories.
Often a combination of technologies will best allow states and grid operators to meet their objectives. While by no means exhaustive, this paper will focus on several of the grid modernizing technologies that are commercially available and being deployed.
Why Modernize The Grid?
The electrical grid of the United States supports all aspects of the economy, as well as the safety of all Americans. From powering homes, schools and businesses to critical infrastructure and industries, the safe, reliable and affordable flow of electricity is essential to modern life. The electric grids have evolved from a loosely connected set of systems to a vast network of interconnected infrastructure serving hundreds of millions of customers. The electrical grid is undergoing a robust transformation, driven by (1) an increase in demand for electricity, (2) economic and technical viability of more diverse sources of energy generation, (3) the growth of distributed energy resources (DERs) and (4) states’ clean energy or decarbonization policy goals or requirements. According to 2023 filings with the Federal Energy Regulatory Commission, the cumulative forecast of annual electricity load growth over the next five years has increased from 2.6% to 4.7%, with some experts cautioning that these forecasts may be underestimating actual load growth. This transformation, coupled with aging energy infrastructure; an increase in physical, natural, and cyber threats to the grid; and other constraints, has driven the need for grid modernization.
Much of the energy infrastructure across the United States is aging and in need of maintenance. For example, 70 percent of transmission infrastructure is over 25 years old. In some cases, grid components are far past their 50-year life expectancies. In addition, the increasing frequency and severity of extreme weather storms continue to stress the energy system. There have been significant investments made by utilities, the federal government, and state, local, territorial and tribal governments to improve the reliability and resilience of the electrical grid. However, there is still work to be done to prepare the current electrical grid to meet the energy needs of the future.
To modernize the electrical grids, policymakers, regulators and utilities will need to engage in thoughtful assessments and planning processes to evaluate what policy interventions, technology deployments and infrastructure buildouts are necessary to address the specific needs of their states, territories or jurisdictions.
Modernizing electrical grids can include robust buildouts of energy infrastructure, such as building new or replacing and retrofitting existing transmission lines and distribution systems. Building new lines and expanding existing transmission infrastructure can increase grid capacity, power system reliability and energy affordability, but embarking on large-scale projects can be difficult, costly and take many years to implement. Investments in grid modernization technologies can improve affordability, resilience and reliability through increasing line capacity, managing demand and load, and allowing for microgrid systems to operate during grid failures. Often with lower investment costs, the benefits of technology deployments can be realized on a much shorter timescale and complement larger scale investments. A 2021 study published by the Brattle Group and WATT Coalition found that the implementation of grid-enhancing technologies could lead to $5 billion in yearly energy production cost savings, double the amount of renewable energy sources added to the grid without large-scale transmission expansions, and reduce carbon emissions by 90 million tons. Similarly, a 2023 study published by the Rocky Mountain Institute found that the deployment of grid-enhancing technologies in the PJM footprint, a regional transmission operator serving thirteen states and the District of Columbia, could yield approximately $1 billion annually in production cost savings across the region by enabling the interconnection of 6.6 gigawatts of new, low-cost renewable energy generation on the grid.
Careful planning, stakeholder engagement and technical analysis is ultimately needed to optimize technology investment. An understanding of the range of technologies currently available can help Governors determine how best to initiate those processes in their states and territories.
Reasons For Pursuing Grid Modernization
Maintaining and Improving Grid Stability
As generation facilities and the grid continue to age, threats to the grid become more prevalent, and increased demand exacerbates transmission carrying capacities. Maintaining the reliability of energy systems is becoming a greater challenge for states and territories. A resilient grid results in fewer outages, faster service restoration after an emergency, and more efficient load management. Strategic planning and assessment of electricity needs, including advanced grid technologies and other resilience strategies, can inform which technologies and investments will best address state policy goals. Thoughtful investments in decentralized energy resources and microgrids have the potential to remove strain from existing grids and allow reprioritization of other transmission and distribution needs, for example.
Meeting Increased Electricity Demands and Protecting Ratepayers
In recent years, more frequent and severe extreme weather, rising manufacturing and data center energy demand, economic growth and transportation and building electrification have had a significant impact on electricity needs. With demand projected to increase in the future, the deployment of modern technologies can help the grid become more efficient and effectively meet demand by: (1) delivering power to end-use customers more efficiently, (2) managing demand more effectively with lower-cost supply, (3) collecting and utilizing customer data to facilitate reductions in energy consumption during high-demand, high-cost periods, and (4) requiring less investment in grid operations and maintenance.
Decarbonization and Reduced Emissions
States and territories continue to look for ways to reduce the emissions and environmental impact of electricity generation by improving efficiency, reducing consumption and utilizing cleaner forms of energy generation. Many Governors have adopted broad emission reduction goals for the coming decades. As of November 2024, twenty-three states and the District of Columbia had adopted some form of decarbonization target, many of which were initiated by executive action or signed into law by Governors. Core to these solutions is the deployment of low-carbon, carbon-free and carbon neutral generation sources, including wind, solar and nuclear energy among others. Often, the lowest-cost renewable resources may not be located in close proximity to power demand and load centers, thus added transmission capacity is needed. A modernized power grid can more efficiently transmit power to where it is needed, increasing power line carrying capacity and facilitating power-sector emissions reductions.
Market Evolution: Economic Development and Job Creation
The passage of the federal Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) created many federal incentives for grid modernization, including technology deployment. By taking advantage of these opportunities, Governors can build their state’s economy and create jobs that support grid modernization. Similarly, private industry within the energy sector is also utilizing state and federal incentives to produce innovative technologies to meet the demands for grid modernization. This has led to the commercial deployment of cost-effective and advanced grid technologies. Grid modernization supports economic development through direct job creation and by enabling the new power generation needed to support economic activity in related sectors, such as manufacturing. Additionally, ensuring reliable and affordable electricity is available to meet the electricity needs of facilities that bring economic opportunities, such as large manufacturing sites and data centers, can be facilitated through grid technology deployment.
Investment in and Deployment of Distributed Energy Resources
Increasingly, consumer demand is driving the incorporation of distributed energy resources (DERs), behind-the-meter resources such as rooftop solar, residential energy storage systems and electric vehicles into the fabric of U.S. electric systems and communities across the country. DER deployment can contribute to Governors’ efficiency, affordability and emissions-reductions goals. Grids are evolving to improve integration and utilization of DERs; enable intelligent, flexible, efficient and secure distribution systems; and automate grid balancing across significantly more electricity resources, both supply and demand. Grid modernizing technologies can help integrate DERs into the broader electrical grid and use the growing pool of DERs for grid services that strengthen the broader system.
Grid Modernization Technology Overview
Advanced technologies are being integrated into electricity grids to supply energy closer to loads, maximize energy delivery capacity, and increase the effectiveness, reliability and efficiency of the energy system. These technologies can also facilitate the efficient integration of higher levels of DERs, including distributed generation (e.g., rooftop solar, fuel-based generators); storage (e.g., EV batteries, power walls); demand response; flexible demand (e.g., EV chargers, heat pumps); and more.
This paper focuses on common, commercially ready technologies that modernize electric grids and identifies steps Governors can take to ensure the effective deployment of these technologies to maximize the grid. This list is by no means exhaustive, and this paper does not seek to encourage the adoption of any specific technology or endorse specific policies. The mix of technologies and policies will be determined by the needs of the grid, policy context in the state, and other factors.
Continue reading at the source (National Governors Association)
Leave a Reply