How FERC can spur modernization of the bulk power system
Transmission technology vendors say their products could save electricity consumers billions — if utilities were incentivized to invest.
The world’s largest machine needs an upgrade — and it’s costing consumers big money.
America’s 7 million miles of transmission and distribution system wires, often called the planet’s biggest networked machine, have an estimated value as high as $2 trillion. Built up over a century, the network supports the world’s largest economy, but there are mounting worries it is not keeping up with the times.
Pushed by public policy and favorable economics, U.S. utilities are adding more renewable energy and distributed resources to their systems, increasing the complexity of a system once run by fewer centralized generators. At the same time, a number of states are stepping up efforts to electrify other sectors of the economy, potentially creating a huge source of controllable electric load for utilities through resources like electric vehicles.
Better digital monitoring and control systems for the transmission system could help it adapt to these changes, according to a new industry white paper.
Today, upgraded data communication, analysis and control systems could allow the transmission system to save customers an estimated $2 billion per year, according to “Bringing the Grid to Life,” a new paper from the Working for Advanced Transmission Technologies (WATT) Coalition, a group of advanced transmission vendors.
Separating consumers from those savings is what’s known in regulatory circles as the “perverse incentive,” the trade group argues. Utilities make higher revenues from building new lines — a lengthy and costly process — but much less from optimizing the existing system with new technologies.
This, according to WATT and other advocates, limits utility investments and directs them away from the innovation their systems need to move to a power system with higher levels of renewable resources.
The Federal Energy Regulatory Commission (FERC) can fix the perverse incentive, former Chairman James Hoecker told Utility Dive. But to do that, FERC must look closely “at what advanced transmission system technologies can offer and at what the purpose of the transmission system really is.”
Congestion and advanced technologies
The U.S. power system is listed as the number one greatest engineering achievement of the 20th century by the National Academy of Engineering. But this is the 21st century and there are “proven, advanced technologies” that add reliability and resilience, WATT argues. They allow system operators to identify and use “hidden transmission capacity” or to use lines more efficiently.
Those capabilities are becoming increasingly important as transmission congestion rises, WATT argues. Congestion happens when a system operator sees a set of lines carrying its full capacity. The cost to customers rises because the operator is forced to dispatch electricity from a different location, which is likely to be more expensive than the market’s first choice.
In the U.S., congestion decreased between 2009 and 2015 because of major transmission capacity expansions, especially those by the Electric Reliability Council of Texas (ERCOT), the Midcontinent Independent System Operator (MISO), and the Southwest Power Pool (SPP), according to Rob Gramlich, WATT executive director and author of the white paper.