Aligning the Electricity Market Evolution with U.S. Strategic Priorities: The Need for Research and Investment in Mid-Stream “Smart” Technologies

Abstract:Investments in smart grid technologies are imbalanced. The current investment distribution reflects the market but creates significant concerns for U.S. strategic priorities. To date, industry investment, financing mechanisms and market conditions have favored end-use technologies, in particular the advanced meter installations (AMI) that monitor energy use in homes and businesses across much of the developed world. While these technologies offer the quickest return on investment, they represent only a small portion of existing smart technologies that could potentially be deployed grid-wide. Slow adoption of the remaining technologies is largely due to the faster pace of technological advancement and clear profit margin for end-use devices. These conditions have failed to create significant progress in two areas of strategic and economic interest: grid integration for distributed and renewable energies, and a system for robust remote response to severe grid disruptions. This paper proposes that energy policies prioritize smart grid research and technology deployment along the electrical grid’s transmission and distribution (T&D) power lines. Among other benefits, such technologies will: raise electrical current capacity (delaying expensive investments in new infrastructure);1 facilitate integration of distributed energy sources, including renewables, into the main grid system; and enhance operator response capacity to severe weather and non-weather disruptions (reducing consumers’ time without power and saving money on costly repairs). Advanced smart systems such as sensors and information and control technologies that are deployed along T&D lines will enhance grid capacity, flexibility and resiliency in ways that end-use technologies cannot and will serve U.S. national goals and business interests.