The Implications of Not Enough Grid

A copyrighted story in the Los Angeles Times on December 2 (“Power struggle: Green energy versus a grid that’s not ready”), raises important issues for policy makers, developers, transmission owners and consumers alike. The article points out the significant limitations of the existing U.S. energy grid for integrating renewable resources.

For example, the grid as we know it is a highly complex network of interconnected systems that is designed to maintain an integrate balance between the supply of electricity and the demand. Unfortunately, renewable energy resources (wind, solar, biomass) are by their very nature, intermittent.

Technologies – including cost-effective storage for electricity generated by renewable sources – are expensive and not yet fully developed at a utility scale (though on the same date as the Los Angeles Times story, Bloomberg News reported that Hitachi has developed a utility-scare storage technology that they plan to test in 2014 and sell in 2015. And the thorny issue of who pays for the development and implementation of such technologies is far from settled.

How these and other issues get resolved will have profound implications for all stakeholders. Will effective, utility-scale storage, such as that envisioned by Hitachi, come online? Will the cost allocation for such technologies be accepted by ratepayers, utilities and technology developers? Will the grid remain the primary source of electricity delivery, or will the grid eventually become the “backstop” to microgrids and distributed generation? How will the price volatility and political pressures associated with carbon-based, nuclear and renewable resources affect access to the capital needed to build electricity infrastructure in the next 10 – 30 years?

The subject of the Los Angeles Times article focused on the readiness of the grid to integrate renewable resources. Yet this is just the tip of the iceberg toward which the utility industry is heading. The utility industry has grown, thrived and delivered returns to Wall Street based on stability. But the status quo is no longer an option. Industry leaders need to understanding and anticipating change – and the associated risks and opportunities – if they are to succeed. Click here to learn how the Implications Wheel® can help, or simply fill in the form on the right side of this page.