Solar Energy Association Calls For Modernizing The Electrical Grid

Source: By Steve Hanley, Clean Technica • Posted: Monday, April 17, 2017

The Solar Energy Industries Association (SEIA) has released another hit in its series of white papers, this one entitled “New Opportunities for Solar Through Grid Modernization.” In it, SEIA looks at grid modernization policies in New York and California and makes recommendations that other states could use to make their electrical grids more up to date.

The white paper begins with this statement: “Built during the last century, the United States electric grid is in need of an update to account for changes in how Americans get their electricity.” It explores how California and New York have been working on policies that encourage the use of clean, distributed energy resources while allowing ratepayers to save money. “Our goal is to help inform the conversation so distributed energy technologies can continue to flourish,” said SEIA president and CEO Abigail Ross Hopper. “Consumers deserve reliable, low-cost, clean power and this is easily achievable by tackling grid modernization correctly.”

Even though New York and California lead the nation with their grid modernization efforts, SEIA says they are still in the “walking phase” of the process. It suggests ways regulators can improve grid modernization, beginning with better information from utilities and rate designs that allow for more distributed energy resources (DERs).

The Common Elements of Grid Modernization

The elements of grid modernization include the following five main concepts, according to the SEIA:

  1. updating utility system planning
  2. identifying alternatives to traditional utility investments
  3. establishing robust cost benefit frameworks
  4. modifying compensation frameworks to drive investments in distributed energy resources
  5. making utility investments in technologies that bring new functionality to the grid itself.


SEIA begins by saying, “The foundation to all grid modernization efforts involves a fundamental shift in the way electric utilities plan to meet electric system needs. This planning should view all distributed energy resources as an asset to the grid instead of a problem to be avoided, as it is sometimes perceived today.”

Indeed, it is. Many utility companies look upon solar energy — especially from residential rooftop solar systems — as a threat to be beaten back rather than a benefit. A consortium of utility companies banded together to pursue a deliberately misleading campaign against rooftop solar in the state of Florida last fall. They poured millions of dollars (much of it obtained from their customers) into an effort to change the Florida constitution to make it all but impossible for homeowners to install solar panels on their roofs.


Utilities should explore alternatives to conventional grid investments such as grid storage options. Pilot projects in New York, California, and elsewhere have sought distributed energy resources in lieu of more conventional grid upgrades. California used them to meet the needs created by the unexpected closure of the San Onofre Nuclear Generating Station and is repeating this process to meet electricity needs in Santa Barbara. New York is conducting a similar effort to avoid a billion-dollar upgrade to a distribution substation in Queens.

Battery-based grid storage installations have been in the news lately, such as Tesla completing a large battery facility for Southern California Edison in record time. Costs have also been coming down at a rapid pace.

Cost–Benefit Analysis

Instead of just repeating the typically incorrect party line that renewables destabilize the grid and put an unfair burden on some utility customers, SEIA suggests putting real data to work to determine where distributed energy resources make economic sense. “A benefit cost framework should take into consideration values including, but not limited to, bulk system values, distribution system values, reliability and resiliency, and societal values. Additionally, the framework should consider costs associated with grid modernization efforts, including potential costs resulting from integrating DERs into the grid. The benefit cost framework can be used to place a value on DERs for the benefits they deliver, which may inform tariff development or solicitations of DERs on a portfolio basis.”

Smart Compensation

SEIA recommends rethinking the utility rate structure to encourage more distributed energy resources. “Another element of grid modernization involves developing compensation frameworks or rate design reforms to encourage DER providers to build projects in strategic locations. This includes making valuation more locationally dependent, developing solicitations, rates, and tariffs to meet needs in areas of the distribution system with identified needs, and potentially modifying underlying tariffs. In areas with high levels of solar deployment modification of tariffs could include net metering.”

New Technology

There are digital tools available that can help make the utility grid operate more efficiently and thus lower operating costs for utilities. “These investments in infrastructure may include monitoring technologies to help more easily identify areas of system constraints, they may provide more real-time data about system needs, technologies that allow DER to even out power flows, and metering infrastructure to provide more accurate and timely information about customer electricity usage as well as billing. Utilities across the country vary widely on the extent to which they use these tools.

“In this area of grid modernization, there is another balance between utility and DER investment. Utilities may need investments, like distributed energy resource management systems. But there are also potential opportunities for DERs, particularly with the capabilities of smart inverters which can provide much more data than utility equipment and have the capability to help manage power quality on the distribution system.”


The SEIA white paper envisions an energy future in which smaller, localized grids (see illustration above) powered by renewable energy sources are an important adjunct to the wide-area grid structure in common usage today. In essence, what SEIA is saying is that utilities need to stop looking to the past and trying to preserve the status quo and start looking forward and implementing the ideas that will be needed in the 21st century. For many utilities that are used to doing business in the same old-fashioned way, change is something to be resisted. But SEIA argues that intelligent adaptations could actually improve profitability for utility companies — and help keep them from becoming irrelevant as massive structural changes engulf the industry.