Can electric utilities innovate?
Electric utilities are usually characterized as ‘anti-innovators’ as their ultimate goal is only to sell electricity at the lowest cost and highest reliability, Nicholson writes. But a new study suggests some paths forward for the electric utility industry.
Last year Maryland Governor Martin O’Malley asked the Energy Future Coalition (EFC), a project of the UN Foundation, to design a multi-faceted and comprehensive pilot-project plan for the state’s utilities. EFC assembled a stakeholder group including two Maryland utilities, PEPCO and Baltimore Gas & Electric Company (BGE), to submit ideas for pilot projects that could build a “better utility future.” The resulting report, “Utility 2.0: Piloting the Future for Maryland’s Electric Utilities and their Customers,” takes a different path than typical electricity utility reform strategies. Rather than dictating a single pathway for higher renewable penetration, the report calls for a number of pilot projects designed to create an entirely new grid system that advances innovation, resilience, reliability, flexibility, and financial viability for customers.Skip to next paragraph
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Electric utilities are usually characterized as ‘anti-innovators’ as their ultimate goal is only to sell electricity at the lowest cost and highest reliability. Integrating and transmitting distributed renewable energy presents a challenge to the standard operation of utilities due to intermittency issues, distribution, and new infrastructure needs.
Conventional policy suggests that utilities must be regulated into conforming to a renewable future. The Maryland study indicates an alternative path for implementing complementary policies necessary for bringing energy innovation to the utility system.
The study recommends five key aspects of a successful future utility system:
- Aligning utility compensation with customers’ changing needs and values.
- Supporting utility investment in an interoperable, integrated suite of smart-grid technologies, not only on its own system, but on the premises of willing customers.
- Allowing utilities to finance and customers to repay system-related and efficiency investments on their bills.
- Optimizing automated system sectionalizing and reclosing for reliability and resiliency, and facilitating microgrids for areas where customers could safely provide their own energy during an outage.
- Facilitating electric vehicle deployment and utility benefit from utility-controlled vehicle battery changing.