Regulators Implore Utilities to Deploy Grid Enhancing Technologies
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The U.S. needs more transmission capacity, but this will take at least a decade to develop, so in the meantime utility companies are being encouraged to explore so-called grid enhancing technologies to boost reliability. Simply put, these technologies can help squeeze more efficiency out of the existing infrastructure. The burning question is, why haven’t utilities already adopted these technologies?
The Business Case for Grid Enhancing Technologies
Between cost barriers, permitting delays, public resistance, and similar issues, the development of new transmission lines can be a daunting and uncertain process. Therefore, anything that can be done to optimize existing lines and potentially reduce the need for new lines would be extremely beneficial. And grid enhancing technologies are the way to do this.
These technologies consist of things like sensors, power-flow devices, software that can deliver real-time weather data, and other technologies like topology optimization tools which can optimize grid configurations to relieve congestion.
Congestion is a huge problem because it causes operators to reroute electricity through less optimal paths, increasing costs. For example, a July 2023 report from Grid Strategies found that costs incurred by 6 large U.S. regional transmission organizations related to power congestion increased by a whopping 56% from 2021 to 2022 (to just over $12 billion).
While increasing transmission capacity is the best way to alleviate congestion, grid enhancing technologies represent the low hanging fruit. These technologies have enjoyed relatively widespread adoption overseas, but adoption has lagged here in the U.S.
So, what gives with the slow adoption in the U.S.? Well, it boils down to the factors that incentivize utility companies. Utilities are not directly impacted by the inefficient use of transmission lines because they can pass the cost of congestion on to their customers. Conversely, utilities are financially motivated to complete capital projects like new transmission lines because this can help facilitate a growth in the customer base on which they earn a return. Other, less impactful reasons for the slow adoption include lack of performance data on these technologies, lack of standards, and cybersecurity concerns.
The good news is that recent rule changes by FERC, along with the allocation of about $14 billion of federal funding for grid enhancing technologies, should help open the door to these opportunities going forward.
