The U.S. electric grid is at a crossroads. Originally designed to transport power from remote power plants to end-use customers, our centralized grid is being challenged by new technologies. Distributed energy resources (DER) like local renewables, energy storage, demand response, and energy efficiency are increasingly being deployed at the distribution level. This can overload and unbalance the grid.
Our outdated power grid is not flexible enough to allow for today’s complexity and is not resilient in the face of disasters, as has been highlighted by California’s severe fire seasons and Public Safety Power Shutoffs (PSPS).
The reform our grid needs
Currently, our grid is managed at the macro level:
To move to a modern energy system, we must change both the utilities’ natural monopolies and how we manage the grid. We need more granular grid management for today’s reality. The utilities could take on this role as Distribution System Operators (DSOs).
The DSO model
Achieving this vision will require that utilities divest from their transmission assets and embrace the full range of distribution-level services. This will force utilities to become fierce innovators focused on achieving maximum value from DER and the distribution grid.
A DSO would operate and maintain each local distribution area, separate from the transmission operator, and would be responsible for providing reliable real-time distribution service.
Utilities, which already perform many of the functions of a DSO, are uniquely positioned for the DSO role — which would give them the opportunity to shift to a successful business model and remove their current conflict of interest with DER.