Virginia earlier this year enacted the country’s first law directing utilities to quantify how much of the grid is being used, and to find ways to use it more efficiently. By mid-October, Dominion Energy and Appalachian Power must submit their plans to state regulators, a closely-watched process that is expected to influence other states interested in following in Virginia’s footsteps, including Colorado, Maryland, Michigan, Minnesota, Montana, New Jersey, and North Carolina.
These utilities are attempting to fill a significant gap in grid utilization policy: a shared method for measurement. What they come up with will be critical — especially if a single approach is adopted more broadly — because state regulators are in search of metrics to assess whether utilities should build costly new infrastructure, or could instead make better use of the existing grid.
The Utilize Coalition, a nonprofit advocacy group whose members include Google and Tesla, aims to influence the methodology. On Tuesday the group, which endorsed Virginia’s law, published its own proposal for capturing how much of the grid goes unused at specific times and locations. The policy proposal, shared exclusively with Latitude Media, involves measuring the relationship between delivered energy and deliverable energy over time.
Metrics like load factor and peak load aren’t on their own enough to capture how much of the grid goes unused in a specific time and place, said Ian Magruder, founder and executive director of the Utilize Coalition. He argues that grid utilization should be leveraged as a “diagnostic tool” that can help inform more cost-effective grid planning in coordination with other metrics like reliability, peak conditions, and asset health.
“While we think that increasing and optimizing utilization is really critical here, and there is a lot of untapped potential on the grid, higher utilization is not always the end goal in every scenario,” Magruder said. “That’s a common misconception with our effort that we’re trying to clarify here.”
Instead, he added, a grid utilization metric can help identify both existing pockets of headroom, and specific locations where tacking on a certain technology can provide the most value. For example, in places on the grid with low utilization and more constraint, flexibility solutions like batteries and grid-enhancing technologies can be extremely beneficial. In places with high constraint and high utilization, meanwhile, it might be most prudent to instead build new infrastructure.
Image source: Utilize Coalition
An incentives challenge
In the nearly two years since a Duke University study found that a small amount of data center flexibility could unlock 100 gigawatts of capacity on the grid, the market has been flooded with studies and ideas about the benefits of squeezing more from existing poles and wires.
Today, the momentum over grid utilization remains closely linked to this flexible data centers push. But it’s equally intertwined with affordability: A recent study by the Brattle Group suggested that using the grid more efficiently could save utility customers billions of dollars because new load could be integrated at lower-than-average costs. And it’s also tied up with the strategic use of distributed energy resources, explained Pier LaFarge, co-founder and CEO of SparkFund, who heads the Utilize Coalition’s advisory board; his company works with utilities to deploy distributed capacity.
“I really think utilization has a chance to be the key that unlocks a lot of progress on deploying distributed capacity,” LaFarge said. “Regulators, utilities, and legislators all at the same time are realizing that utilization is not just a thing to measure…it’s actually a resource you can harvest.”
LaFarge is adamant that while grid utilization may be picking up steam right now thanks to data center-driven load growth, the timing ultimately comes down to tech innovation. During the last several decades, operators managed the grid with an eye toward moments of high demand, building enough generation and wires to support peaks throughout the year — even though as much as half of that capacity went unused most days. That was partly due to a lack of technology, he explained. “Where we’re going to be for the next 100 years is [maximizing] total throughput and utilization because we have the technology to do it.”
That said, the grid utilization push has drawn criticism, in part because of the metrics problem. In fact, experts have suggested that the lack of measurement options risks undercutting the Virginia policy’s effectiveness altogether. Earlier this year, power market analyst Oliver Kerr argued that metrics would need to account for temperature, wind speed, generation and customer mix, as well as the age of power plants and power lines. Given how variable those factors are across the country, comparing grid utilization across utilities will be hard. Plus, utilities remain financially incentivized to build new wires and generation because that’s how they earn a profit.
LaFarge, for his part, isn’t convinced that incentive structure would prevent grid utilization from bringing down rates. When demand is flat, there are fewer kilowatt-hours over which to spread the cost of new wires, substations, and power plants, he explained. But when demand grows, utilities can support more economic activity and divide infrastructure costs across more sales.
“It’s a system of invest, grow, and create value that we’ve kind of forgotten how to talk about because we’ve gotten so focused on optimizing it,” LaFarge said. “Load growth coming back fixes everything, even inside the current system….We just think that by utilizing the grid on a non-peak basis, going beyond peak, you can both unlock more delivered energy sooner and maximize the affordability benefit of growing the grid.”
LaFarge, Magruder, and the Utilize Coalition emphasize that their proposed approach to measuring grid utilization isn’t meant to be considered alone, nor do they expect the policy paper to be the last word on the topic.
“This is intentionally designed to be a flexible definition that could apply both at a system level and to more granular levels as we think about the locational value in specific parts of the grid,” Magruder said. “There’s a fundamental opportunity here to think about how we build and plan the grid in a new way that meets the era we find ourselves now in the energy world…and we hope that utilization can be a really helpful framework for getting us there.”
