Nearly three quarters of US took steps toward grid modernization in first quarter, study finds

A new report by the North Carolina Clean Energy Technology Center (NCCETC) found that 37 U.S. states plus the District of Columbia took some action related to grid modernization in the first quarter in an effort to make the electricity system more resilient and interactive.

“As we collected this information, we were excited to see the extent of activity occurring and just how
many states are currently working to modernize the grid in some way,” Autumn Proudlove, lead author of the study and manager of policy research at NCCETC, told Daily Energy Insider.

The report, The 50 States of Grid Modernization, provides insight into grid modernization actions. The study broke down actions into six categories: studies and investigations, planning and market access, utility business model and rate reform, grid modernization policies, financial incentives and deployment of advanced grid technologies.

Of the six categories, deployment was the most common with 36 state or utility proposals in 19 states regarding demand response programs or deployment of advanced metering infrastructure, smart grid technologies, microgrids or energy storage.

More specifically, the most common types of actions were advanced metering infrastructure deployment of which there were 19 actions, smart grid deployment with 13 actions and time-varying rates for residential customers with 10.

Sixteen states considered or enacted changes to policies dealing with grid modernization such as energy storage targets and clean peak standards. Sixteen states plus the District of Columbia launched studies or investigations into grid modernization, energy storage, demand response or rate reform.

The state that took the most actions, according to the report, was New York with 17 total actions. Hawaii had 16, followed by California and Massachusetts with 13 and 12 respectively.

NCCETC also listed in its report the five top policy developments for the quarter. Among them were the launch of grid modernization proceedings in Ohio and Illinois aimed at creating regulatory environments that foster innovation, drive economic development, improve the customer experience and optimize the electric utility industry.

“The grid modernization proceedings launched in Illinois and Ohio are very important, signaling a serious commitment from these states to modernize the electric system, beginning in a way that will help ensure decision-makers are well-informed and stakeholders have a chance to be engaged,” Proudlove said.

The inaugural report also highlighted Maryland’s adoption of a state tax credit for energy storage systems, the completion of a multi-year study of grid modernization in New Hampshire, and a draft policy statement on the role of energy storage in the integrated resource planning process issued in Washington. It also cited an order by the New York Public Service Commission that includes an examination of compensation for behind-the-meter energy storage systems with the intent to compensate their installation in the future.

The report also included an outlook for the second quarter (Q2) of 2017. The researchers projected that most of the decisions on policy proposals made in the first quarter (Q1) would be decided in Q2. In the first quarter, 82 relevant bills were introduced, most of which remained pending at its close.

The outlook highlighted a bill active in Hawaii that would create an energy storage tax credit similar to the one enacted in Maryland in Q1, as well as an energy storage grant program enacted by New York in early Q2.

The authors also noted that a microgrid project proposed by Duke Energy Progress in North Carolina was approved in April, and they discussed a bill advanced by the California Senate in Q2 that would create a new energy storage rebate program.

NCCETC plans to add coverage of developments dealing with wholesale power market treatment of energy storage and demand response resources in the second installation of the report.

“I believe we will see these grid modernization efforts spread to new states, and that we’ll continue seeing states take diverse approaches – initiating studies, offering incentives, adjusting rate structures, deploying pilot projects, and so on,” Proudlove said. “I think we’ll particularly see more states initiate studies or investigations in this area before proposing specific policy or regulatory changes.”