Report: Money Must Flow Two Ways in a Modern Utility Grid

High Voltage Power

By James Noble

September 4, 2014

The electrical grid is moving from a one-way, centralized electricity generation and delivery system to a more distributed, networked system for generating, storing and consuming power. Yet power customers are still charged under the unwieldy block pricing system developed by large, monolithic utilities almost a century ago.

new report by the Electricity Innovation Lab and the Rocky Mountain Institute offers a way to price electricity that could become vital to valuing clean energy — including solar, wind, energy storage, demand response, efficiency, microgrids and home automation.

The report’s authors argue that distributed grid technology is outpacing the economic and regulatory systems governing it. Accounting for that clean technology will require pricing reforms.

In many places, consumers pay the same price at all times of the day, regardless of overall demand. The report argues that pricing structures should build in real-time pricing to reflect variances in the cost of power through the day.

Sophisticated pricing structures would also compensate customers who provide services to the grid. Smart inverters coupled to solar panels could provide voltage support to distribution networks. Presently no rules compensate a homeowner for these services.

While somewhat controversial, BC Hydro’s smart meter program is an attempt by a utility to modernize and better manage the flow of electricity in British Columbia. The smart metering system is designed to measure the quality of power, such as voltage being delivered to homes and businesses, to record consumption data and to automatically detect power outages.

The new meters mark the beginning of a transition to a two-way utility-customer relationship in which customers can manage their energy.  In return, customers will provide the utility with invaluable information that allows the utility to better manage its resources. The smart metering system is projected to save BC Hydro ratepayers $1.6 billion over the next 20 years.