VLADIMIR: Well? What do we do?
ESTRAGON: Don’t let’s do anything. It’s safer.
-Samuel Beckett, Waiting for Godot
The need for electricity grid (distribution and transmission) modernization and expansion has been the subject of many high profile announcements and reports.
In the United States, on April 2024 the US Department of Energy published its Pathways to Commercial Liftoff: Innovative Grid Deployment report (Liftoff report). In May 2024, the White House launched the Federal-State Modern Grid Deployment Initiative (the Initiative). Also in May, in the European Union (EU), the ministers of the EU Energy Council approved conclusions on Advancing Sustainable Electricity Grid Infrastructure; and, Eurelectric (and EY in collaboration with Imperial College London) published its Grids for Speed report.
Most recently, in Canada, on June 10, 2024, the federal government published the final report of the Canada Electricity Advisory Council (CEAC), Powering Canada: A blueprint for success.
Grid investment and expansion continues to emerge as the critical element of the energy transition
Much discussion on net zero goals focusses on the need to transition away from fossil-fuel sources and end-use consumption towards non-emitting supply and end-use. Clean electricity generation coupled with significant electrification of end-uses (heating, transportation, and industrial processes) is considered the key element of the energy transition. The transmission and distribution grids that link electricity generation with end-users have not received as much attention. However, that is changing with many jurisdictions now identifying electricity grids as needing substantial investment to accommodate the seismic changes to supply and demand and avoid interconnection bottlenecks.
For example, the goal of the White House’s Initiative is for the federal government working with 21 participating state governments “to accelerate improvements to the electric transmission and distribution network, which are critical to meeting the country’s objectives for affordable, clean, reliable, and resilient power.”
Further, the White House notes “Grid modernization can be encumbered by legacy policies and technologies designed for a time when electricity demand was much more static than it is today. The resurgence of American domestic manufacturing along with the rapid adoption of electric vehicles and growth of large data centers, among other factors, require a collective shift in perspective about the grid to more proactive, innovative approaches that are better suited to tackle the accelerating pace of innovation.”
The Department of Energy’s Liftoff report states “Safely managing and integrating additions of electric loads (e.g., electric vehicles, heat pumps), other distributed energy resources (e.g., energy storage, rooftop solar), industrial load (e.g., manufacturing, data centers), and renewable generation at the bulk scale requires a larger grid with greater capacity and more flexibility.” Further, the report states “With electricity demand growing significantly for the first time in decades, grid operators and regulators are faced with the need to pursue a new, growth-oriented grid investment strategy.”
The EU Energy Council conclusions include urging the EU “to build on initiatives to strengthen and expand distribution grids so as to integrate decentralised renewable energy, flexible resources, and to accommodate new demand linked to electrification as well as to ensure secure electricity supply to consumers in a more coordinated way.” The conclusions recognized that there are “unprecedented investment needs in electricity networks at both transmission and distribution level in order to ensure a highly interconnected, integrated and synchronised European power system to achieve the EU’s decarbonisation, competitiveness and security of supply objectives.”
The Grid for Speed report, which is focussed on the distribution grid, argues that “€67 billion investment annually is needed [in the EU] to 2050 is needed to deliver a distribution grid that will enable the energy transition […] Anticipatory no-regrets investment is the most cost-effective strategy for building out distribution grid capabilities that are fit for a decarbonised future.” Also, the report identifies “mega-trends” that are driving changes to the electricity distribution (and transmission) grid:
The Canada Electricity Advisory Council report’s modelling results indicated that “capital investments of approximately $1.4 trillion will be needed by 2050 to enable the necessary growth of the electricity system [of which] half would be invested in transmission and distribution infrastructure to deliver power to consumers.”
The findings of these initiatives echo the conclusions of many studies and outlooks from late 2023, such as the International Energy Agency’s (IEA), Electricity Grids and Secure Energy Transitions, and the National Academies of Sciences, Engineering, and Medicine’s (NASEM), Accelerating Decarbonization in the United States: Technology, Policy, and Societal Dimensions.
The IEA noted that “Lack of grid development – expansion and strengthening, digitalisation, modernisation and more effective utilisation – presents risks to electricity security while both limiting the pace and increasing the cost of clean transitions.” Similarly, the NASEM report stated “Perhaps the single greatest risk to a successful energy transition during the 2020s is the risk that the nation fails to site, modernize, and buildout the electrical grid […] Expansion of the high-voltage interstate transmission grid is needed in addition to, rather than instead of, modernization of local electricity distribution systems...”
The primacy of technology
Increasingly, the use of advanced technology to increase the capacity and functionality of existing transmission and distribution infrastructure is seen as the fastest, most cost-effective solution in the near-term because of the high cost and time required for regulatory approvals, permitting, and construction of new grid infrastructure.
The CEAC’s recommendations to the Government of Canada include “taking a future orientation regarding the incorporation of new and evolving technologies into electricity grids.” The Grids for Speed reports states “Failure to invest in distribution grid modernisation will stall much-needed connections of technologies, such as renewables, heat pumps and electric vehicles (EVs).”
The White House’s Initiative argues that “modern grid technologies, including high performance conductors and grid enhancing technologies (“GETs”, such as dynamic line ratings), are proven, commercially-available solutions that can be rapidly and affordably deployed at-scale today to improve line capacity, performance, and resilience. They can be beneficial for both new and existing transmission and distribution projects.”
Similarly, with respect to advanced grid technologies, the Liftoff report states “Deploying these technologies overnight could increase the capacity of the existing grid to support 20-100 GW of incremental peak demand when installed individually, with significant additional capacity potential when installed in strategic combinations. This could help defer an estimated $5-35B in transmission and distribution infrastructure costs over the next five years.” As a specific transmission example, the report notes “dynamic line rating (DLR) can be scaled in fewer than three months after initial implementation to increase effective transmission capacity by an average of 10-30% at less than five percent of the cost of rebuilding the line to expand capacity.”
Overall, the Liftoff identifies twenty advanced grid solutions assessed as being commercially available now:
Commentary
The identification of transmission and distribution grids as a barrier to the energy transition, the need to invest in known, commercially available advanced technologies, and numerous options to overcome deployment barriers are not new (see previous commentary).
For example, it is noteworthy that Volume 1 of the US Department of Energy’s four volume Modern Distribution Grid Report was published in 2017 (with the final volume published in 2020) “to inform decision-makers interested in pursuing grid modernization on any or all of the following goals: a) reliability, safety and operational efficiency, b) enabling customer adoption of distributed energy resources (DER), and c) the utilization of DER as non-wires alternatives.”
In 2020, Natural Resources Canada released the report Navigating Barriers to Utility Investment in Grid Modernization, which stated “Technologies offer opportunities and benefits for utilities, service providers and consumers. However, without robust leadership and a push towards innovation in the electricity sector, the current utility delivery model could impede changes necessary for meeting policy, consumer and societal objectives.”
It is now 2024 and the theme of grids as a barrier continues seemingly unabated. This apparent lack of progress, makes it difficult to argue against the White House Initiative identifying the problem as stemming from “legacy policies” and the need for “a collective shift in perspective about the grid to more proactive, innovative approaches...”
But how can legacy policies be changed? How can a collective shift in perspective to a more proactive approach to investments in grid modernization and expansion be achieved (referred to as anticipatory investment in the EU)? Even though the Initiative speaks about the need for collaboration, coordination, cooperation, and raising awareness, it does not pose or seek to impose a decisive solution to cut through these perceived barriers.
In contrast, the Liftoff report offers more concrete “example actions,” such as “Regulators and/or grid operator executives could require operational pilot programs to include scaling plans and resources in initial program designs” to avoid ““pilot purgatory.” Yet, even the Liftoff report stops short of definitive recommendations by couching items as “example actions” and/or “potential solutions.”
However, it seems obvious that the any solution must (to some degree) involve clear policy direction from government (national or sub-national, depending on the jurisdiction) to utilities and regulators, requiring investments in advanced grid technologies be made to meet broader energy transition and economic objectives.
Certainly, such government action is easier said than done; however, some US states provide evidence that it is possible. For example, in 2022, Massachusetts enacted legislation requiring each investor-owned electric distribution company operating in the state to submit an Electric Sector Modernization Plan Resources (ESMP) with the Department of Public Utilities. The first ESMPs were filed with the DPU in late January 2024 and are currently under review. The statute requires that the DPU “approve, approve with modifications or reject the plan within 7 months of submittal. In order to be approved, a plan shall provide net benefits for customers.”
Specifically, the legislation requires that distribution utilities “to develop an electric-sector modernization plan to proactively upgrade the distribution and, where applicable, transmission systems to: (i) improve grid reliability, communications and resiliency; (ii) enable increased, timely adoption of renewable energy and distributed energy resources; (iii) promote energy storage and electrification technologies necessary to decarbonize the environment and economy; (iv) prepare for future climate-driven impacts on the transmission and distribution systems; (v) accommodate increased transportation electrification, increased building electrification and other potential future demands…” (emphasis added)
A more recent example is Virginia, which passed a law in April 2024, requiring electricity utilities “to include in an integrated resource plan (i) a comprehensive assessment of the potential application of grid-enhancing technologies and advanced conductors, as those terms are defined in the bill, in a manner that ensures grid reliability and safeguards the cybersecurity and physical security of the electric distribution grid and (ii) if applicable, a detailed explanation of why such technologies or conductors are not included in such plan.” (emphasis added)
While it remains to be seen if the requirements by jurisdictions such as Massachusetts and Virginia ultimately lead to the widescale deployment of advance grid technologies deemed necessary to enable both economic growth and the energy transition, such actions are the most direct way to overcome the legacy policies and mindsets believed to be hindering grid modernization.
Ultimately, they may serve as examples of policy leadership for other governments, regulators, and utilities to emulate, especially if it is shown that advanced grid technologies increase economic competitiveness through, for example, enhancing the ability of a region to attract and connect new loads and new supply.