This paper, a submission for the Solar Electric Power Association’s (SEPA) 51st State Challenge, synthesizes current thinking on system optimization by returning to first principles of rate design and market structure. By starting from first principles, the recommendations can be widely applied across jurisdictions with different market structures, resources, and demographics, including but not limited to a hypothetical 51st State.
This paper recommends policy initiatives that California can take in order to meet Gov. Brown’s renewable energy, energy efficiency, and transportation fuel use goals for 2030. Recommendations include expansion of the Renewable Portfolio Standard, a carbon standard to decarbonize the electricity supply, and a new energy efficiency performance incentive for utilities.
This report, written for the Major Economies Forum, describes the power sector transformation underway across the globe. The transformation will undoubtedly look different around the world, but this paper posits five potential pathways to a dramatically-improved power system. Policymakers can use these pathways to proactively guide the sector’s transformation. A 2-page report summary can be found here.
This whitepaper, written as part of America’s Power Plan, describes the changing role of electric utility companies as new technologies for energy efficiency and distributed generation pose threats to their traditional business models. Aging infrastructure, changing customer demands, and stricter environmental and climate regulations additionally incite the need for evolution of utility structures. This paper offers recommendations for several types of utility structures, but focuses mostly on vertically-integrated and regulated utilities. It outlines three future scenarios for utilities; minimum utility involvement, medium involvement as smart integrator; or orchestrator; or maximum role as energy services utility.
This paper was written at the request of the government of Japan to describe best practices in renewable energy policy design, using numerous international case studies as examples. It evaluates Japan’s status with respect to these policies and makes recommendations, including: update Japan’s transmission system, reduce the power of utility monopolies, implement policies to support biomass and geothermal, and strengthen clean energy R&D.
Demand-response will continue to play an important role in modernizing the power system by allowing grid operators to control electricity demand. This paper describes two ways that demand-response can be used to optimize electricity flows, avoiding peak capacity issues and balancing unprecedented levels of variable generation.
Electric utilities have great potential to reinvent themselves in order to stay relevant throughout the power sector’s imminent transformation. A confluence of factors – new and cheap technologies, declining electricity demand, and increased action against climate change – are driving this change. To account for these factors, utilities must evolve from electron suppliers to system optimizers, and they ought to be rewarded based on performance rather than sales.
This paper discusses the potential role for Staircase Capabilities Markets as a pricing mechanism to tackle some of the major issues associated with load balancing as more variable sources are added to the grid. This involves long-term planning for investment certainty, as well as flexible, small volume requests for proposals to encourage capabilities experimentation. The paper includes a California case study, provides a list of systems that could effectively participate in the market mechanism, and discusses the conditions of transitioning toward a new energy paradigm.
This op-ed piece discusses the successes and failures that Germany has encountered during its Energiewende, or energy transition. Despite the country’s many achievements in renewable energy policy and practices, energy customers remain concerned with the increase in variable energy sources creating an unreliable supply of electricity or raising energy bills. As Germany’s electric power system continues to evolve, policymakers will need to consider how existing programs, market structures, and utility business models will need to change in order to remain effective and relevant.
This paper provides an overview of America’s Power Plan (APP), a series of papers on how policymakers, market operators, and utilities can address changing market conditions head-on. The papers cover wholesale market design, utility business models, finance policy, transmission policy, distributed energy resources, distributed generation, and siting. Energy Innovation’s Director of Strategy, Sonia Aggarwal, directed research for APP’s development.