Getting the New Electric Power Grid Right (or Wrong)

There is a great deal of interest, study, deliberation and conflict about how to manage and pay the electric power grid as it evolves into a system characterized by multidirectional energy and information flows. As distributed energy resources (DER) such as solar, storage, efficiency, and demand response become more widespread throughout the grid, utilities are looking for ways to ensure that they can deliver electricity reliably and affordably to their customers. The old business and regulatory models were developed in response to the technology that has been used for more than a century to provide power to consumers. New technologies are now prompting the need for new business practices and regulations.

Now that there are smart meters, electric vehicles, and of course, a rapidly growing number of solar PV systems installed on houses and buildings to deliver onsite generation, along with a feared "death spiral" for electric utilities, the ideas for reimagining the grid are proliferating rapidly.  The general trend seems to be the introduction of variable rates based on time of use,  new net-metering rules, demand charges, or other customer charges to compensate utilities for the services they provide to customers whose net electricity usage from the utility may be rather small.

For example, in Arizona the major utilities - Arizona Public Service and Tucson Electric Power -- are allowed to charge customers who use onsite solar generation a monthly fee. Customers using net metering also receive something less than the full retail price for the excess electricity they generate and sell back to the utility. Other proposals being floated around the country call for the adoption of time-of-use rates for residential customers, payments to DER users for the value of the energy they produce during peak hours.

Such proposal seek to introduce a level of granularity to the grid, to accommodate the various ways in which market actors engage the grid. The idea of making the grid "fit" ones needs and interests is attractive. However, if the solution involves making customers more educated about or interested in their energy use and costs, or introduces a level of complexity into the system that requires a great deal of time and attention from consumers, then my expectation is that such solutions are not likely to succeed, or at least deliver on their full potential.

The virtue of the grid and the utility business model as it has existed has been that the complexity of the system has been masked by the utilities. People tend to not need or want to be energy experts, they want to have the services they need, and then pay the bill. The utility provides this. The power stays on, the bill is affordable. What's the problem?

To the extent that an evolving grid will need to address flat growth curves in demand, climate concerns, transmission congestion, demands for energy choice, the falling cost and rising popularity of solar, along with other concerns, then we will be well served by devising a system that continues to mask complexity for the consumer as we seek to accomplish these other goals.

To me, the gold standard in taking complexity out of the consumer's hands is Uber. Imagine trying to get a cab in the rain, or on a busy afternoon. If you're in New York city, you might be able to hail a cab quickly, but not always. So you have to wait a while and hope an empty cab drives by. Then when you get frustrated, you call the cab company who tells you a cab will arrive in about 20 minutes. Meanwhile, you're running late, getting wet, etc. Uber takes all that out of your hands. You simply tap the button on your phone, type in where you want to go, and in a minute or so, you get a call from someone who is on the way to get you. In only a few minutes, you have a ride. You can track the car's movements, and you don't even have to pay or ask for a receipt at the end of the ride. That's the ideal user experience, and the one that we should strive for in imagining and building the grid of the future.

The way I think we should want the grid to work is like a smartphone. It allows for both individualized experiences that fit the users interests (I like particular apps, news sources, and games), while also being connected to a larger network that allows the user to interact with people all over the world via voice, text, email, video and social media.  And it has a camera too!  Moreover, the complexity of the smartphone is completely hidden. My children (everybody's children) can use an iPhone with ease, and the adults also do pretty well.

If the electric power grid we have years from now combines the power, efficiency, individuality and simplicity of the telecommunications sector, that will be a victory.