What the DOE's grid study missed out on

The much-anticipated grid study released by the U.S. Department of Energy last week, has drawn a mostly positive reaction from the industry's observers for its "reasoned" approach. Part of this may be because the study does not deviate significantly from existing energy policy. That there hasn’t been major legislative change affecting the energy industry for more than a decade has also helped matters.

Still, the study’s predictable conclusions haven’t shielded it from criticism. In a reference to the study’s recommendations, the National Resources Defense Council stated that it contained “misguided proposals to gut environmental rules for coal and nuclear plants and to pay fossil resources for reliability services that DOE hasn’t demonstrated are necessary.” There are also those who are disappointed with the study’s limited investigation of future grid technology. Ari Peskoe, Senior Fellow in Electricity Law at Harvard Law School, wrote that the study “finds nothing new”. According to him, Perry’s memo acts as a constraint in the study’s scope. “Rather than embracing and seeking to accelerate current trends, as the QER (the DOE report released in 2016) did, the Grid study examines how to shoehorn old, inflexible generators into a rapidly evolving and more nimble grid,” he writes.

Paul DeCotis, senior director in business consultancy West Monroe’s Energy & Utilities practice, shares Peskoe's assessment. “They could have spent more time looking at technology plays and combinations of technology (that could benefit the grid),” he says. As an example of his point, he said the study could have analyzed the role of storage technology (coupled with distributed energy resources) in future scenarios. “If you think 5 or 10 years from now, after storage costs come down, that technology will have a significant system impact on the grid,” he explained. “I didn’t see that (analysis) in the study.”

He is also critical of the study’s recommendation for “fuel and technology neutral” regulations. According to him, the economics of determining a fuel mix for power generation is a combination of several factors, including restructuring of energy markets, wholesale competitiveness of electricity, and attributes of generation technologies that are being permitted inside it. “The forces that are driving selection of fuels is greater than anything that the environmental regulations are opposing,” he said.

Then there is also the fact that a fuel-neutral approach does not make sense, especially given current goals of achieving low carbon emissions. To that extent, a fuel neutral approach will hinder rather than benefit those goals. “If you are suggesting that maybe all those incentives (to promote distributed energy resources and renewable energy sources) are taken and let the technology compete on its own, I don’t think they will hit the public policy goals we are trying to achieve,” said DeCotis.

Finally there is the raison d’etre of the study itself. In an interview with Greentech Media, Travis Fisher, who led the study, mentioned the need for evaluating the grid’s resilience given change in sources of generation from coal and nuclear to renewable energy and natural gas. But DeCotis said increased proliferation of DERs means that there will be some optimization on the  demand-side by utilities within 5 to 10 years. This means that they will be able to co-optimize demand and supply sides of the equation, thereby leading to increased resiliency in the grid.

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