《美國企業研究所（AEI）：2025創新未來電力系統研究報告：從愿景邁向行動（英文版）（71頁）.pdf》由會員分享，可在線閱讀，更多相關《美國企業研究所（AEI）：2025創新未來電力系統研究報告：從愿景邁向行動（英文版）（71頁）.pdf（71頁珍藏版）》請在三個皮匠報告上搜索。

1、AA M E R I C A N E N T E R P R I S E I N S T I T U T EInnovating Future Power SystemsFrom Vision to ActionThe Electricity Technology,Regulation,and Market Design Working GroupFEBRUARY 2025iContentsExecutive Summary .1I.A Clean and Prosperous Energy Future Relies on Innovation and Dynamism .4II.Frame

2、work .12III.Implications of the Innovation Framework .48IV.Action Plans for Implementation .53The Electricity Technology,Regulation,and Market Design Working Group .62Notes .63 2025 by the American Enterprise Institute for Public Policy Research.All rights reserved.The American Enterprise Institute(

3、AEI)is a nonpartisan,nonprofit,501(c)(3)educational organization and does not take institutional positions on any issues.The views expressed here are those of the author(s).1Executive SummaryThe global energy landscape is transforming,and nowhere is this more evident than the electricity sec-tor.Tec

4、hnological advancements,shifting economic conditions,and evolving environmental policies are converging to reshape the way power systems operate.This report explores the implications of these changes for the future of power systems,focusing on the intersection of technology,regulation,and market des

5、ign.It offers a vision for a dynamic,clean,pros-perous energy future that balances dependability,decarbonization,democratization,and justice,with innovation playing a central role.The Challenge of Energy System TransformationThe transformation of power systems is driven by several key factors:electr

6、ification trends,technolog-ical advances,and decarbonization.These changes are about not just reducing carbon emissions but also integrating new technologies,improving resil-ience,and rethinking how systems are managed and regulated.These forces are exerting pressure on tra-ditional business models,

7、regulatory institutions,and market designs.Traditional utilities,operating under a cost-of-service regulatory model,are facing new opportuni-ties and challenges from distributed energy resources such as solar,wind,and battery storage.Technolog-ical advancements,particularly in digitalization,are ena

8、bling new forms of energy management,allowing consumers to play a more active role in electric-ity markets.As a result,the boundaries between centralized and decentralized power systems are becoming increasingly blurred,challenging the reg-ulatory frameworks that have governed the industry for decad

9、es.Historically,the electricity sector has focused on three primary policy objectives:safety,affordability,and reliability.Evolving priorities in the electricity sector have introduced three additional dimensions:resilience,decarbonization,and justice.Balancing Thomas EdisonImage generated with AI b

10、y AdnanArif.Adobe Stock Images.2Innovating Future Power Systems these six objectives will be critical to ensuring the success of future power systems,but doing so will require significant innovation,both technological and institutional.A Framework for a Clean and Prosperous FutureTo navigate changin

11、g power systems,this report pres-ents a framework centered around six key concepts:digitalization,decentralization,democratization,dependability,decarbonization,and justice.These interrelated concepts provide a holistic approach to understanding the challenges and opportunities that lie ahead.Digita

12、lization.The integration of advanced technologies such as smart meters,sensors,and automation into the grid is transforming how electricity systems operate.Digitalization enables real-time monitoring,optimizes grid operations,and facilitates the integration of dis-tributed energy resources,improving

13、 flexibility and resilience.Decentralization.As energy generation becomes more distributed,power systems are shifting away from centralized control to include smaller,decentralized resources such as rooftop solar,battery storage,and microgrids.This shift enhances resilience,reduces transmission loss

14、es,and empowers consumers to play a more active role in managing their energy needs.Democratization.Technological advances and regulatory reforms are enabling broader partici-pation in energy markets.Consumers can now generate and manage their electricity,partici-pate in community solar projects,and

15、 engage in peer-to-peer energy trading.Democratiza-tion also emphasizes equity,ensuring that all communities have access to the benefits of the energy transition.Dependability.As power systems become more decentralized,ensuring reliability and resilience becomes more complex.Dependabil-ity must be r

16、edefined from a consumer-centric perspective,focusing on providing consistent,reliable power while allowing consumers to choose how they use and produce electricity.Decarbonization.The shift to low-carbon energy sources,such as wind,solar,and battery storage,is reshaping power systems and creating n

17、ew regulatory and market challenges and oppor-tunities.Achieving decarbonization will require significant investment in grid modernization,energy storage,and renewable energy integra-tion,in addition to developing technologies like advanced geothermal and advanced nuclear.Justice.Future power system

18、s must also address issues of distributive,procedural,and commutative justice.Ensuring equitable and affordable access to energy,fair distribution of costs and benefits,inclusive decision-making processes,and equality before the law is essen-tial for creating a just energy future.Innovation and Inst

19、itutional ChangeFor this vision of the future to become a reality,significant institutional changes are required.Cur-rent regulatory frameworks are often outdated and ill-suited to the dynamic nature of technological change in the electricity sector.In many cases,reg-ulation stifles innovation,preve

20、nting the adoption of new technologies and business models that could enhance grid flexibility,reduce costs,and improve resilience.Innovation,in the Schumpeterian sense,is the process of turning human creativity into new inputs,products,services,production techniques,and orga-nizational methods.This

21、 process is essential for balancing competing policy objectives and driving economic growth.Schumpeterian dynamism often The Electricity Technology,Regulation,and Market Design Working Group 3means that legacy technologies and incumbent firms become less profitable unless they innovate.To foster inn

22、ovation,regulatory reform must focus on removing barriers to entry,encouraging competition,and incentivizing the adoption of new technologies.This focus includes revisiting the tra-ditional utility business model,which is based on cost-of-service regulation and often discourages utilities from inves

23、ting in innovative solutions that could benefit consumers.Policymakers must also consider the role of digitalization and decentraliza-tion in creating a more dynamic and adaptable regu-latory framework.Case Study:Winter Storm Uri and the Importance of ResilienceThe devastating impacts of Winter Stor

24、m Uri in 2021 highlighted the vulnerabilities of centralized power systems.The storm caused widespread power out-ages,leaving millions of Texans without electric-ity for days.While decentralization alone would not have prevented the storms impacts,it could have mitigated the consequences,as could ha

25、ve more con-sumer digital management technologies and retail services like virtual power plants.Decentralized solu-tions such as microgrids and backup generators could have provided localized resilience,allowing commu-nities to maintain power even as the larger grid failed.This case study underscore

26、s the importance of integrating resilience into future power systems.As extreme weather events become more frequent and severe due to climate change,power systems must be designed to withstand and recover from disruptions.Decentralized solutions,combined with advanced digital technologies,offer a pa

27、th forward for creat-ing more resilient and dependable power systems.Recommendations and the Path ForwardThe report concludes with a set of actionable recom-mendations for decision-makers in four key policy actor groups:executive-branch policymakers,legis-lators,federal and state regulators,and agen

28、cies.The analysis and recommendations are also relevant to utility executives,other industry members,electric-ity consumers,and other stakeholder organizations.These recommendations include the following:Reform regulatory frameworks to encourage innovation,competition,and the integration of new tech

29、nologies.Support the development and deployment of decentralized energy solutions such as micro-grids,virtual power plants,and transactive energy systems.Invest in grid modernization and digitalization to enhance flexibility,resilience,and consumer participation.Promote justice by ensuring that all

30、people,including those in historically marginalized communities,experience commensurate distri-bution of benefits and costs and have access to and are treated equally in regulatory and legal procedure.Encourage collaboration among regulators,pol-icymakers,industry stakeholders,and consum-ers to fost

31、er a dynamic and adaptable energy system.The future of power systems depends on our abil-ity to embrace innovation,reform regulatory frame-works,and invest in new technologies.By focusing on digitalization,decentralization,democratization,dependability,decarbonization,and justice,we can create power

32、 systems that are not only more depend-able but also cleaner and more just.Changing power systems present significant challenges,but with the right strategies in place,they also offer tremendous opportunities for creating a dynamic,prosperous,and sustainable energy future.4I.A Clean and Prosperous E

33、nergy Future Relies on Innovation and DynamismIts almost clich to observe that electricity was the most transformational invention of the 20th century.In 2000,the National Academy of Engineering named electrification as the greatest engineering achieve-ment of the past century.1 Electricity has incr

34、eased our productivity and quality of life by orders of mag-nitude compared with the candles,whale oil and ker-osene lanterns,town gas lighting,water wheels,and steam engines of the 19th century and before.Over the 20th century,we built the infrastructure,operat-ing procedures,utilities,and regulato

35、ry commissions that made this progress possible;we created indus-trial and consumer machines and devices predicated on the electric service platform.In the late 19th and early 20th centuries,the com-mercialization of large-scale electricity technologies,such as power plants and transmission networks

36、,was driven by vertically integrated investor-owned utilities.These utilities were regulated under a cost-based rate-of-return framework,ensuring they could recover their costs and earn a reasonable profit.This business model resulted in fixed,regulated retail prices based on the average cost of ser

37、vice,and it established a uni-form definition of electric service that applied to all customers in each of the three customer categoriesresidential,commercial,and industrialregardless of their specific needs or usage patterns.In the United States,the legacy model of verti-cally integrated monopolies

38、 has given way in many regions to various forms of unbundling and competi-tion in generation and,in some regions,retail supply.However,in nearly all regions,state-regulated electric distribution utilities are still granted exclusive fran-chises,giving them the right to operate distribution wires in

39、a defined geographic area.This right cre-ates a monopoly,where the utility controls the phys-ical infrastructure delivering electricity to homes and businesses.While competition for the sale of electric-ity over the distribution grid has been introduced in some states,in most areas this is not the c

40、ase,and where competition exists it is often constrained in practice.The monopoly distribution structure is jus-tified by the high capital costs and efficiency of hav-ing a single operator manage the local grid rather than multiple companies duplicating infrastructure.However,this structure has a tr

41、ade-off:It limits competition even as technology and services in and around the delivery of electricity evolve,potentially stifling innovation and customer choice in services like distributed energy resources(DERs),unless regu-latory frameworks allow for more open access or com-petition at the servi

42、ce level.This structure reinforces the centralized nature of power distribution but cre-ates friction as options like self-supply,microgrids,The Electricity Technology,Regulation,and Market Design Working Group 5and transactive energy challenge the traditional util-ity model.Today power systems are

43、experiencing significant transformations,driven by technological advance-ments,economic shifts,and changing environmental and geopolitical policy goals.The push for decarbon-ization and electrification is putting pressure on cur-rent business models,regulatory frameworks,and market structures.These

44、shifts present both oppor-tunities and challenges,affecting consumer value propositions,reshaping industry structures and firm boundaries,and influencing regulatory approaches.Technological advancements,particularly the development of the combined-cycle gas turbine in the 1980s,began to erode the ec

45、onomic basis for the monolithic vertically integrated,regulated business model,so in some regions utilities are no longer fully vertically integrated.More recent innovations in dig-italization enable more DERs,such as solar,storage,and demand response,to participate in the grid and form other busine

46、ss models,like nonutility micro-grids.As these technologies proliferate,they chal-lenge the traditional utilitys monopoly,shrinking the economic boundaries of the regulated utility foot-print,although an increasingly outdated regulatory footprint precludes new and different business mod-els.Technolo

47、gical change has been happening more quickly than institutional change.As American consumers and producers of elec-tricity sitting today with this inherited history and legacy systems,we face a substantive challenge:try-ing to decarbonize power systems quickly while maintaining safety,affordability,

48、and reliability and ensuring that power systems are more just,includ-ing equitable distribution of benefits and costs,than they have been historically.Balancing these objectives presents a complex challenge.Decarbonization to mitigate climate changes effects introduces its own set of investment,poli

49、cy,and cultural challenges.The shift toward low-carbon technologies requires significant capital investment in renewable energy,grid modernization,and energy storage,creating financial risks and uncertainties for investors,utilities,innovators,and customers.Wood Mackenzie forecasts that“262 gigawatt

50、s(GW)of new DER and demand flexibility capacity will be installed from 2023 to 2027,close to matching the 272GW of utility-scale resource installations also expected during that period.”2 At the regulatory level,outdated frameworks often hinder the integration of these tech-nologies,requiring reform

51、s to incentivize innovation,ensure market fairness,and balance reliability with environmental goals.Culturally,the goal of decarbon-ization challenges traditional energy systems,push-ing for decentralized models and changing consumer behaviors,while navigating political resistance and societal adapt

52、ation to new energy paradigms.To the extent that climate change manifests as variability in climate-based phenomena,we are likely to see greater variability in storm intensity,increases in the scope and duration of droughts,and other costly and disruptive phenomena.For exam-ple,Hurricane Beryl made

53、landfall on July 8,2024,and maintained hurricane strength until it reached Houston,delivering 1015 inches of rain in some areas and resulting in 2.7 million power outages in the region.3 Four days later,over one million cus-tomers were still without power.4 The confluence of events diminished the re

54、gions resilience and recov-ery:flooding and outages from a strong derecho in May,then Beryl,and then a July heat wave,almost like a summer version of the combination in 2021s Winter Storm Uri.This pattern is called a compound disaster,in which multiple events cascade and affect a systems resilience,

55、its ability to rebound from damage and return to full functionality.5Balancing Policy Objectives and Economic Growth:The Role of InnovationWhere historically we have balanced three policy objectives of safety,affordability,and reliability,we now strive to balance six policy objectives,includ-ing res

56、ilience,decarbonization,and justice.Balanc-ing three policy objectives in power systems has been challenging enough;balancing six will be even more difficult and costly unless something changes to reduce those trade-offs.6Innovating Future Power Systems That something is technology.Following the eco

57、n-omist Joseph Schumpeter,we characterize new tech-nology as emerging from innovation,an ongoing process of turning human creativity into new inputs,products and services,production techniques and methods,organization methods,and business mod-els.6 This process is essential,but not sufficient,for ba

58、lancing these policy objectives with a view toward future prosperity and flourishing.In The Lever of Riches,Joel Mokyr distinguishes between invention,the initial creation or discovery of novel ideas,technologies,or methods,and innovation,the practical application of those inventions involving the a

59、ctual implementation and widespread adoption of new technologies in a way that transforms eco-nomic processes and industries.7 While inventions are often the product of individual or small-group creativity,innovations depend on broader societal,economic,and institutional factors that facilitate the

60、diffusion of these new ideas,allowing them to gen-erate tangible economic impact.Innovation,not just invention,is crucial for long-term economic growth.Similarly,Brian Arthur argues that technological progress of the kind described by both Schumpeter and Mokyr is,like biological systems,a combinato-

61、rial process in which new technologies are created by combining existing technologies in novel ways.8 Rather than being entirely original,most innovations result from recombining and integrating preexist-ing components,ideas,or processes.This combina-torial process means that the pace of innovation

62、can accelerate as the“library”of available technologies growseach new addition increases the potential combinations,creating more opportunities for fur-ther innovation.Innovation and the novel recombination of exist-ing technologies are often incompatible with the current utility industry structure,

63、dominated by reg-ulated monopolies.The utility industry is designed for stability and control,not the nimble adaptability required for rapid innovation.This rigidity can stifle the experimentation and diffusion necessary for inno-vation,creating a disconnect between technological advances and the in

64、dustrys capacity to adopt them efficiently.We also see it as imperative to pursue depend-ability,decarbonization,and justice on a foundation of innovation and economic growth.Technologi-cal change is necessary for achieving these often-conflicting objectives and lessening the associated trade-offs.S

65、uch innovation is often a consequence of economic growth and increased living standards and is essential for further advances.Over the past two decades,digital innovation has transformed the global economy,enabling unprece-dented connectivity,data analytics,and automation across industries.The rise

66、of the internet,cloud com-puting,and artificial intelligence has facilitated new business models,enhanced productivity,and revolu-tionized consumer experiences.In parallel,the energy sector has witnessed sig-nificant technological advancements,particularly in renewable energy and storage solutions.I

67、nnovations in wind and solar power have reduced costs,making them increasingly competitive with traditional fos-sil fuels.Battery technology has evolved,enhancing grid reliability and enabling the broader integration of intermittent renewable resources.Other energy technologies,such as geothermal an

68、d various forms of energy storage,have advanced,contributing to a more resilient,sustainable,and decentralized energy system.These innovations underscore the critical role of markets and regulatory reform in fostering a dynamic environment where technological prog-ress can deliver the energy systems

69、 compatible with future flourishing.The pace of innovation has increased since the late 19th century,as Figure 1 indicates.As they mature and reach mass adoption,earlier technologies become(complementary)inputs into recent new technolo-gies like AI.Technologies do not existand innovation does not oc

70、curin a vacuum.The institutional context matters greatly in determining whether,how,and how much any innovation incentives exist.Institu-tions are the formal and informal rules that shape our incentives and govern how we act and interact,ranging from formal laws and regulations to infor-mal customs

71、and social norms.9 All kinds of insti-tutions can affect incentives to innovate,although The Electricity Technology,Regulation,and Market Design Working Group 7in the electricity setting the primary focus is public utility regulation.10In much the same way that older technologies become obsolete ove

72、r time through innovation,institutions can become obsolete due to dynamic changes in the economy and our expectationsor,at the very least,they can become misaligned with new economic and technological settings that have changed our expectations.Cost-based rate-of-return regulation of monopoly utilit

73、ies creates incentives that hinder the invention,innovation,recombina-tion,and adoption processes,both inside the util-ity and by insulating the utility from competition,that enable a beneficialand,indeed,sustainable balance of those six policy objectives with continued high living standards and a v

74、ision of flourishing and prosperity for all.For these reasons,the animating question of this report is one of institutional change:how to improve the association among regulation,industry business models,and innovation to increase our chances of creating a vibrant,dynamic,abundant future with power

75、systems that are dependable,decarbonized,democratized,and just.Technological change,partic-ularly in digitalization and decentralization,unlocks those opportunities if the institutional environment does not erect barriers to it.Our VisionReorienting the dominant industry perspective to the end-use c

76、onsumer is paramount.The pace of inno-vation in consumer engagement,as reflected in the treatment of demand-side options in resource plans and forecasts across the industry,is far behind what it needs to be to decarbonize the electric supply and reliably and affordably meet the demands for energy se

77、rvices.Innovation is occurring,but meeting these challenges requires amplified innovation,in new and creative ways,including both technological and insti-tutional innovation.Figure 1.The Speed of Technological Adoption over TimeSource:Rita McGrath,“The Pace of Technology Adoption Is Speeding Up,”Har

78、vard Business Review,November 25,2013,https:/hbr.org/2013/11/the-pace-of-technology-adoption-is-speeding-up.8Innovating Future Power Systems A Case Study in Reimagining Power Systems:Winter Storm UriWinter Storm Uri,which struck the south-central United States in February 2021,led to cata-strophic p

79、ower outages.In Texas in particular,power plants shut down,natural gas infrastruc-ture froze,and utilities failed to rotate outages effectively and,later,reenergize customers even after adequate supply once again had become available.Some customers retained power throughout the multiday event,while

80、others were left without electricity for extended periods.The grids failure at scale and its lack of decentraliza-tion worsened the situation.While decentraliza-tion wouldnt have prevented the event,it could have mitigated the consequences.First,the grid was not granular enough to dis-tribute the ou

81、tages caused by Winter Storm Uri equitably.This failure magnified the harm of the power outages,as customers who lost power ended up without it for days,rather than expe-riencing the“rolling”outages that a grid with a more granular architecture would provide.As federal regulators identified in their

82、 post-storm report,Texass advanced metering infrastructure was not capable of“rotating”outages in the Texas electricity network.11 Advanced metering infra-structure is used in routine business operations,such as disconnecting customers for nonpayment.The regulated utility business model,under which

83、utilities profit from capital expenditures but not directly from operational performance,contrib-uted to underutilization of these technologies.The larger grid infrastructure also failed during the storm.Distribution circuits were too large,and their design made it difficult to rotate outages withou

84、t destabilizing the grids frequency.Cir-cuits serving critical infrastructure,like hospitals or police stations,remained powered,while other circuits experienced complete blackouts.While much of Austin,Texas,lost power,for example,downtown remained powered to sup-port essential services.This decisio

85、n left many residential neighborhoods without electricity for days.But as Austin Energys manager explained,“There is no more energy we can shut off at this time so we can bring those customers back on as all available circuits were serving critical load such as hospitals and water treatment centers.

86、”12Decentralized solutions like microgrids that could have allowed neighborhoods to maintain powercapable of islanding and self-supplying a local area when power supply is interrupted at a larger scaleare rare in residential neighbor-hoods in Texas.These systems could have reduced dependence on the

87、central grid.Similarly,while the adoption of backup gener-ators is growing,it remains limited.According to one supplier,only 6.25percent of US single-family homes have backup power,despite increasing demand in areas prone to outages.13 Texas has appropriated funding for backup power installa-tions i

88、n critical institutions,but the program has yet to be implemented.14 Residential customers also do not yet have widespread access to digital systems to automate their participation in mar-kets or enable automated or remote adjustments to their energy demand in emergency situations.Winter Storm Uri h

89、as many lessons to offer policymakers,covering such issues as how energy infrastructure should be weatherized,the depend-ability of certain power resources and the impli-cations on electricity market design,and the codependency of natural gas and electric net-works.The storms devastation illustrates

90、 the cru-cial interplay of technology and institutions for dependable,decarbonized power systems.The Electricity Technology,Regulation,and Market Design Working Group 9As supply becomes more variable and as more demand becomes inherently flexible,we can no lon-ger assume the system must be prepared

91、to serve every kilowatt-hour of demand at a flat rate at what-ever time it may appear,no matter how much it costs to do so.We can meet consumers demand for energy services dependably at much lower cost,but doing so will require an acceleration of innovation in products and services targeted to flexi

92、ble consumers.This report is guided by the following vision statement:We should strive toward an energy system that seeks to remove barriers to innovation and enable vibrant ecosystems to accelerate opportunities for consumers to have access to affordable and dependable power systems,decide how and

93、when they consume(and produce)the electricity they want and need,and invest in the solutions that bring them the greatest value.We recognize,as do many industry professionals,policy experts,and academics,that aspects of the tech-nologies,regulatory institutions,and industry busi-ness models in elect

94、ricity have become obsolete and in some ways have become obstacles to achieving the vision we have articulated.In this report,we propose a holistic framework for reflecting on and analyzing the changes we are experiencing in our technologies,our economies,and our expectations and for articu-lating t

95、he dimensions of this vision.We also suggest some actionable principles to inform steps that stake-holders can take to address institutional obsolescence and make this vision of a dynamic,clean,prosperous future a reality.In the following analysis,we adopt a specific scope and make some assumptions.

96、This report does not address transmission innovation,investment,plan-ning,or cost-allocation issues in depth;it also does not examine deeply the implications of our analy-sis for wholesale power market design and regional transmission organization governance,although we discuss these macro-grid topi

97、cs when relevant to our primary focus.We also do not examine in detail changes in areas like geothermal or nuclear energy.We assume that safety and affordability continue to be paramount objectives of future power systems.We also assume that the transmission and distribu-tion wires networks still ha

98、ve economies of scale and scope but that wires networks are increasingly con-testable due to digital innovation and advances in storage and other distributed energy technologies.15 Investor-owned utilities and the distribution grid remain important elements of future power systems and our framework.

99、We do not see DERs and utilities as a(false)dichotomy,but rather claim that utilities can help or hinder DER innovation and that regula-tory reform can improve their complementarity.A Framework for a Clean and Prosperous FutureThe energy transition requires a profound trans-formation in how we gener

100、ate,distribute,and con-sume electricity.This transformation is not just about replacing fossil fuels with renewable sources;it also necessitates a reimagining of regulatory frame-works and industry business models.Central to this reimagining are six interrelated concepts:digitaliza-tion,decentraliza

101、tion,democratization,dependabil-ity,decarbonization,and justice.As seen in Figure 2,each plays a critical role in shaping a future energy system that is innovative and aligned with consumer perspectives.Digitalization in the electricity industry involves integrating advanced technologies like smart

102、meters,sensors,automation,data analytics,and grid-edge consumer electronics.These tools enable real-time monitoring and management,optimizing grid opera-tions and enhancing flexibility.Flexibility is essential as it allows the grid to respond dynamically to fluctu-ations in supply and demand,especia

103、lly with the inte-gration of renewable energy.Digitalization supports more efficient load bal-ancing,facilitates the integration of DERs,and gives consumers greater control over energy use.It also lowers DER interconnection costs and enables decen-tralized,decarbonized systems that were previously u

104、nattainable with analog controls.AI and digital 10Innovating Future Power Systems infrastructure are vital for managing complex,decen-tralized systems with millions of participants,a core feature of the modern grid.Decentralization expands the focus from centralized power plants to include smaller,d

105、istributed resources like rooftop solar,battery storage,and microgrids.It is a set of technologies,grid architecture,and organi-zation that enables consumers to choose to generate and manage their electricity,reducing reliance on tra-ditional utilities and challenging existing regulatory frameworks.

106、As the grid decentralizes,regulations must evolve to support new forms of energy exchange and ensure broad access to these innovations.Decentralized systems enhance resilience by reducing the risk of widespread outages.They offer flexibility,improving reliability with low-carbon,intermittent resourc

107、es and supporting local energy markets and demand-response programs.By dynam-ically adjusting supply and demand,decentralized systems reduce grid strain during peak periods and optimize energy use when renewable supply is abun-dant,making evolving systems more dependable.Democratization of the elect

108、ricity industry is an institutional approach that emphasizes increas-ing accessibility and consumer participation in the energy market.Historically,a few large entities have controlled energy generation and distribution,but technological advances and regulatory reforms are opening the door for broad

109、er participation.Com-munity solar projects and the rise of“prosumers”individuals who both produce and consume electricityare key examples of democratization(and decentralization).For public utility regulation,democratization necessitates a shift toward policies that promote equity,ensuring that all

110、consumers,regardless of socioeconomic status,have access to the benefits of power systems.This concept also ties into broader discussions about energy justice and sys-temic inequities in energy access.Dependability encompasses the traditional pillars of reliability,resilience,and resource adequacy b

111、ut from a consumer-centric perspective.Consumers expect that their electricity supply will be consistent,resilient to disruptions,and adequate to meet their Figure 2.The FrameworkSource:Authors.Digitalization Data Automation Network architecture New business modelsDecentralization Local and smaller

112、scale More feasible and resilient Different technologies and institutions Democratization Participation Consumer focused Consumer engagement Dependability Reliability Resource adequacy ResilienceDecarbonization Technology agnostic Performance-based policyDistributive,Procedural,and Universal Justice

113、 Equality before the law Proportionate access to benefits and cost sharing Access to administrative procedures Attention to outcome disparities The Electricity Technology,Regulation,and Market Design Working Group 11needs at all times.However,in a more flexible and dynamic energy system,dependabilit

114、y also includes consumers ability to adjust their demand if doing so is advantageous.For example,consumers might choose when and how to cool their homes or charge their electric vehicles according to market prices and their own preferences.As the energy landscape evolves with increasing reliance on

115、intermittent renewable resources,ensur-ing dependability becomes more complex.Techno-logical advancements,such as grid modernization,energy storage,and advanced forecasting methods,are essential for maintaining dependability in a decen-tralized and digitalized grid.Regulators must also consider new

116、metrics and standards that reflect the changing nature of the grid and consumers increased role in ensuring dependability.Decarbonization aims at reducing greenhouse gas emissions.This change involves a substantial shift from fossil fuels to a mix of low-carbon energy sources,including renewables li

117、ke wind,solar,and hydropower,as well as nuclear and geothermal energy.The incremental process of decarbonization also involves substituting natural gas for coal-fired generation and diesel backup generation.Decarbonization is not only a technological challenge but also an institutional one,as existi

118、ng regulatory frameworks were not designed for decar-bonization.Utilities are central to this process,as they must balance the integration of these diverse low-carbon resources with maintaining grid stabil-ity and affordability for consumers.Decarboniza-tion efforts are also closely linked to other

119、aspects of this framework,as achieving a low-carbon future requires advances in digitalization,decentralization,and dependability.Justice in the context of changing power systems is a multifaceted concept that includes distributive justice,procedural justice,and foundational princi-ples of universal

120、 and commutative justice.Distrib-utive justice focuses on the equitable distribution of the benefits and burdens of changing power sys-tems.Procedural justice emphasizes the importance of inclusive and transparent decision-making processes,where all stakeholders,including consumers,have a voice in t

121、he regulatory and policy decisions that affect them.Procedural justice builds trust and ensures that all parties involved perceive the transition to future power systems as fair.Beyond these,energy justice must also be guided by universal justice principles,rooted in the Aristote-lian notion of just

122、ice as equality before the law.Uni-versal justice includes respecting individuals rights.The related concept of commutative justice refers to requirements not to harm others,often understood as negatively defined rights to freedom from harm to ones life,liberty,and property.By incorporating these br

123、oader concepts of justice,changing power systems can be more than just a technical shift;it can become a transformation that respects and enhances all individuals rights and well-being.Together,these six concepts provide a holistic framework for understanding the challenges and opportunities of the

124、energy transition.They high-light the interconnected nature of technological inno-vation,evolving business models,and regulatory reform,emphasizing that a successful transition must consider not only the technical and economic aspects but also the institutional and social implications.By focusing on

125、 digitalization,decentralization,democra-tization,dependability,decarbonization,and justice,we can build power systems that enable a clean and prosperous future.What This Report ProvidesThis report presents a holistic vision of future power systems with desired attributes and,after develop-ing a fra

126、mework for articulating that vision,proposes some recommended actions for four key policy actor groups:executive-branch policymakers,legislators,federal and state regulators,and agencies.Chapter II provides a detailed description and analysis of the reports framework and its six dimen-sions and a sy

127、nthesis of the complementarities across the six dimensions.Chapter III draws some implica-tions for future power systems from this framework.Chapter IV provides some actionable implementation principles and paths forward for decision-makers.12II.FrameworkThe changing electricity landscape is shaped

128、by the integration of digitalization,decentralization,democ-ratization,dependability,decarbonization,and jus-tice.This framework highlights the important role each factor plays in transforming power systems.DigitalizationDigitalization,the process of using digital technolo-gies,data,and real-time co

129、mmunications networks to digitize once-analog information,is transforming economies and societies and creating new value.This transformation makes intelligent systems possible,improving productivity,consumer experiences,and personal opportunities.These changes are both vis-ible in daily life and tak

130、ing place behind the scenes.Banking and retail are clear examples of digitali-zations broader impact.From ATMs in the 1970s to mobile banking and online shopping today,digitali-zation has reshaped industries.While challenges like privacy and cybersecurity have emerged,the overall effect has been wid

131、espread greater well-being.Digi-talization also spurs further innovation,creating new products,services,and markets across the economy.The digital age has been driven by technologies like big data,cloud computing,the Internet of Things,blockchain,and AI.These tools alone are not neces-sarily disrupt

132、ive,but when combined,they change how organizations and societies create value,shape norms,and communicate.Continuous connectivity is driving rapid social and economic shifts and creating systemic social-economic changes at a scale and pace unprecedented in human history.16 Digitalization has also c

133、reated platforms for further innovation and creation of new products,services,business models,and markets more generally throughout the econ-omy,reducing transaction costs and making market exchange in previously unreachable areas easier.Digitalization and Digitization in ElectricityWhether referred

134、 to as“the smart grid,”“grid mod-ernization,”or“digitalization,”the intersection of information and communications technologies with power systems is growing.This intersection includes data collection,analytics,and real-time communi-cations for sensing,monitoring,power electronics,distributed energy

135、 resource(DER)interfaces,and grid management.Electricity systems generate three types of data:consumer consumption,resource performance,and grid state.Consumer data have been digital for over 20 years;advanced meter reading and advanced metering infrastructure have automated data collec-tion for the

136、 past 15 years.Resource performance data are gathered through Supervisory Control and Data Acquisition systems and telemetry,managed by grid operators and resource owners.Grid state data have been digital in high-voltage systems for decades,and distribution systems have been digitizing for the past

137、20 years,although full digitization may take another decade.While many distribution systems still lack real-time communications at smaller substations,feeders,The Electricity Technology,Regulation,and Market Design Working Group 13and meters,digitalization has accelerated since the mid-2010s.These e

138、fforts enhance reliability,support technologies like dynamic line rating,enable flexible demand,and improve energy management.Digita-lization also facilitates electric vehicle(EV)integra-tion,including bidirectional charging and better energy storage connections.17 Figure 3 presents actual and forec

139、ast data on smart grid investments in the US by subcategory of investment.Digitalization is a foundational key to a decen-tralized,dependable,decarbonized energy future.By integrating DERs,such as low-carbon generation and storage,it supports a more resilient and reliable grid.Technologies like digi

140、tal inverters simplify DER-grid coordination,and grid-forming inverters stabilize frequency swings and allow higher DER penetration without sacrificing reliability.18An operations-focused digital tool gaining impor-tance is the use of digital twinsvirtual models that replicate physical systems in re

141、al time.These mod-els integrate data from sensors and devices,allowing operators to monitor,analyze,and optimize system performance.Digital twins simulate asset behavior and conditions,model scenarios,predict outcomes,and optimize operations without disrupting the actual system,making them essential

142、 for decision-making in complex infrastructures.In electricity grids,digital twins provide real-time simulations of power systems,from generation to distribution,allowing utilities to predict and address issues like load changes,renew-able integration,and outages before they occur.In smart grids,dig

143、ital twins can optimize DERs such as solar panels and batteries by simulating interactions with the grid during peak demand to optimize energy dispatch and manage voltage.As digital technologies and DERs expand,con-sumers will have a more active role in meeting energy needs,reducing costs,and enhanc

144、ing sus-tainability.Automation will ease participation in energy markets,enabling consumers to optimize their usage and support grid stability.This shift will create a more resilient energy ecosystem and foster new retail business models based on decentralized consumer aggregation.Figure 3.Annual Sm

145、art Grid InvestmentSource:US Department of Energy,2020 Smart Grid System Report,January 2022,https:/www.energy.gov/sites/default/files/2022-05/2020%20Smart%20Grid%20System%20Report_0.pdf.14Innovating Future Power Systems The Role of AIIn the age of generative AI,digitalizations role in the grid has

146、expanded significantly.AI can optimize grid operations by providing real-time insights to transmission and distribution operators,helping them make informed decisions and forecast poten-tial grid disruptions.AI processes vast datasets to assist in planning equipment placement,reinforcing infrastruct

147、ure against extreme weather,improving system efficiency,and calculating real-time assess-ments of the maximum amount of power that trans-mission lines can carry(i.e.,dynamic line rating).It also enhances grid maintenance by enabling remote inspections,predicting equipment failures,and arranging for

148、preventive maintenance.On the dis-tribution grid,AI aids fault detection and repair for smoother operations.The US Department of Energy is funding AI-driven projects to improve grid resil-ience,such as undergrounding power lines.19 Table 1 summarizes a framework for how AI enables climate change ada

149、ptation and mitigation.As digitized DERs like smart thermostats,EVs,and batteries generate data,AI will enhance grid depend-ability by managing demand and integrating clean energy.A decentralized grid requires greater coordi-nation and flexibility,which AI can provide by reduc-ing demand during shor

150、tages and increasing it during surplus.AI optimizes EV charging,rooftop solar,energy storage,and distributed resources by integrat-ing grid services and demand response and enabling transactive energy platforms.20AI,along with smart-grid technologies,can help large electricity consumers like data ce

151、nters and buildings become more flexible with energy.By unlocking flexible demand,AI reduces the need for curtailments,especially in regions with supply or transmission constraints.AI-driven systems enable homes,industries,and data centers to shift and lower energy consumption using building manage-

152、ment systems and sensor data to optimize HVAC and other operations.Micro-grids powered by AI also help consumers manage when to buy,sell,or store energy.21While AI use for grid operations will be beneficial,AI-enabling data centers and their growth present challenges due to their high and continuous

153、 energy demand for AI inference.(Energy demand for AI model training is more inter-temporally flexible.)Their strain on infrastructure often requires costly capacity investments that have long construction times.As data centers grow with cloud computing and AI,their energy use risks outpacing low-ca

154、rbon generation.Advanced energy management and effi-ciency improvements are essential to balancing this demand with clean,affordable power and support-ing grid decarbonization.22Digitalization in Practice:Some ExamplesIn the short term,digitalization-driven decentralized approaches will mainly origi

155、nate from top-down ini-tiatives by grid operators at both the bulk and dis-tribution levels,aiming to manage DERs and ensure system stability.However,these trends will foster bottom-up change,with consumers increasingly tak-ing charge of their energy needs and focusing on cost,sustainability,and eff

156、iciency.Schneider Electrics EcoStruxure Microgrid Advi-sor is a software platform that connects,monitors,and controls a facilitys DERs to optimize perfor-mance.Using machine learning,it analyzes data from energy sources,EV charging stations,batter-ies,HVAC systems,and lighting systems to forecast an

157、d optimize energy consumption,production,and storage.23The IEEE Standard 1547 has simplified the integra-tion of DERs like solar panels and batteries by setting uniform requirements for performance and safety.The 2018 and 2020 revisions have reduced costs and effort for utilities and developers,maki

158、ng it easier to incorporate renewable energy while maintaining grid stability and reliability.24AI helps optimize the siting and sizing of solar and wind projects,maximize output,and improve supply and demand predictions.For example,while weather models predict wind power,deviations in wind flow can

159、 cause unexpected output.To address this,Google and DeepMind developed a neural network that uses historical data to predict renewable energy output up to 36 hours in advance with greater accu-racy.25 In 2023,Google also implemented demand The Electricity Technology,Regulation,and Market Design Work

160、ing Group 15response in its data centers,shifting nonurgent tasks to times of lower grid congestion.26Formerly OhmConnect,Renew Home enables res-idential customers to actively participate in energy conservation and grid management as a virtual power plant.It connects to smart home devices,such as th

161、er-mostats and smart plugs,and notifies users during peak demand,encouraging reduced energy use.Using real-time data and predictive analytics,Renew Home forecasts peak grid demand and coordinates energy Table 1.Using AI to Combat Climate ChangeTopicsTopicsMitigationMitigationAdaptation and Resilienc

162、eAdaptation and ResilienceFundamentalsFundamentalsMeasurementMeasurementReductionReductionRemovalRemovalHazard Hazard ForecastingForecastingVulnerability Vulnerability and Exposure and Exposure ManagementManagementSubtopics Subtopics and and ExamplesExamples Macro-level Macro-level measurement measu

163、rement(e.g.,estimating(e.g.,estimating remote carbon remote carbon stock)stock)Micro-level Micro-level measurement measurement(e.g.,calculat-(e.g.,calculat-ing the carbon ing the carbon footprint of indi-footprint of indi-vidual products)vidual products)Reduction of Reduction of the intensity the in

164、tensity of greenhouse of greenhouse gas emissions gas emissions(e.g.,supply(e.g.,supply forecasting for forecasting for solar energy)solar energy)Improvement Improvement of energy of energy efficiency(e.g.,efficiency(e.g.,encouraging encouraging behavioral behavioral change)change)Reduction Reductio

165、n of greenhouse of greenhouse gas effects gas effects(e.g.,acceler-(e.g.,acceler-ating aerosol ating aerosol and chemistry and chemistry research)research)Environmental Environmental removal(e.g.,removal(e.g.,monitoring monitoring encroachment encroachment on forests and on forests and other natural

166、 other natural reserves)reserves)Technological Technological removal(e.g.,removal(e.g.,assessing assessing carbon-capture carbon-capture storage sites)storage sites)Projections of Projections of localized long-localized long-term trends term trends(e.g.,regional-(e.g.,regional-ized modeling ized mod

167、eling of sea-level of sea-level rise or extreme rise or extreme events such as events such as wildfires and wildfires and floods)floods)Early-Early-warning sys-warning sys-tems(e.g.,pre-tems(e.g.,pre-dicting extreme dicting extreme events such as events such as cyclones)cyclones)Crisis manage-Crisis

168、 manage-ment(e.g.,moni-ment(e.g.,moni-toring epidemics)toring epidemics)Stronger infra-Stronger infra-structure(e.g.,structure(e.g.,implementing in-implementing in-telligent irrigation)telligent irrigation)Population Population protection(e.g.,protection(e.g.,predicting large-predicting large-scale

169、migration scale migration patterns)patterns)Preservation of Preservation of biodiversity(e.g.,biodiversity(e.g.,identifying and identifying and counting species)counting species)Climate research Climate research models(e.g.,mod-models(e.g.,mod-eling economic and eling economic and social transition)

170、social transition)Climate finance Climate finance(e.g.,forecasting(e.g.,forecasting carbon prices)carbon prices)Education,Education,nudging,and nudging,and behavioral change behavioral change(e.g.,providing(e.g.,providing recommendations recommendations for climate-friendly for climate-friendly cons

171、umption)consumption)Uses Uses for AIfor AIGather,Gather,complete,and complete,and process dataprocess data Satellite and Satellite and Internet of Internet of Things dataThings data Gaps in Gaps in temporally and temporally and spatially sparse spatially sparse datadataStrengthen planning and Streng

172、then planning and decision-makingdecision-making Policy and climate-risk analytics Policy and climate-risk analytics Modeling of higher-order effects Modeling of higher-order effects Bionic management Bionic managementOptimize Optimize processesprocesses Supply-chain Supply-chain optimizationoptimiz

173、ation Simulation Simulation environmentsenvironmentsSupport collabora-Support collabora-tive ecosystemstive ecosystems Vertical data Vertical data sharingsharing Enhanced com-Enhanced com-munication toolsmunication toolsEncourage Encourage climate-positive climate-positive behaviorsbehaviors Climate

174、-weighted Climate-weighted suggestionssuggestions Climate-friendly Climate-friendly optimization optimization functionsfunctionsSource:Digital Climate Alliance,Promise and Peril:Sustainability&the Rise of Artificial Intelligence,June 2024,https:/www.digitalclimate.io/2024-ai-white-paper.16Innovating

175、 Future Power Systems reduction across its network,rewarding participants with financial incentives or bill credits.This helps bal-ance the grid,prevents outages,and increases con-sumer engagement in energy conservation,making it a key tool in grid digitalization.Grid Architecture and Why It Matters

176、Fully leveraging new technologies requires rethink-ing grid design,connection,and operation,which is where grid architecture plays a key role.Grid architec-ture combines system architecture,network theory,and control theory to manage complex grid inter-actions and drive modernization.27 A well-desig

177、ned architecture ensures stability,reliability,and the seamless integration of new technologies by address-ing costs and challenges in the planning phase.28Key systems theory conceptslayered systems,loose coupling,and interoperabilityare essential for grid architecture.Layered systems organize the g

178、rid by function for easier management,loose cou-pling allows components to operate independently,and interoperability ensures different technologies work together,even if from different manufacturers.These principles make the grid more adaptable,resil-ient,and efficient.The National Institute of Sta

179、ndards and Tech-nologys smart-grid framework is a key reference for digital grid architecture,offering a high-level analy-sis of digitalization and grid modernization through a layered system-of-systems approach to grid com-munications.29 This report presents a set of graphical scenarios representin

180、g the layered system-of-systems approach to the communications networks in a digi-talized grid.Figure 4 shows the graphic scenario for a system with a large share of DER.Modern grids are complex,with decentralized data and evolving demands.Proper grid architecture streamlines investment,future proof

181、s technology,and reduces DER integration costs.By minimizing costly integration issues and stranded investments,it enhances economic efficiency in grid modernization.Grid architecture also boosts resilience by creat-ing agile,modular systems that limit failure spread and enable rapid reconfiguration

182、 during events like wildfires.For example,in Humboldt County,Cal-ifornia,Pacific Gas and Electric Company and local Figure 4.High-DER Communication PathwaysSource:Avi Gopstein et al.,NIST Framework and Roadmap for Smart Grid Interoperability Standards,Release 4.0,US Department of Commerce,National I

183、nstitute of Standards and Technology,February 18,2021,https:/doi.org/10.6028/NIST.SP.1108r4.22 The Electricity Technology,Regulation,and Market Design Working Group 17governments developed nested microgrids,allowing segments to“island”during disruptions.This modu-larity at the transmission,distribut

184、ion,and customer levels enables key facilities to maintain power inde-pendently,showcasing the benefits of decentraliza-tion and digitalization.Digitalization supports DER coordination through approaches ranging from direct utility control to decentralized autonomy.For example,Australias dynamic ope

185、rating envelopes on distribution net-works set flexible,real-time limits on DER exports and imports according to grid conditions.They opti-mize infrastructure use and maintain stability by mit-igating issues like voltage fluctuations and overloads,allowing the grid to accommodate more renewable ener

186、gy without major upgrades.This approach to DER coordination relies more on centralized control and curtailment than the Humboldt County nested microgrids.Figure 5 illustrates the concept.In the US,the Department of Energy and some util-ities are developing flexible practices for DER and EV interconn

187、ections.California has implemented a Lim-ited Generation Profile architecture,enabling auton-omous,decentralized customer operation through dynamic operating envelopes.Southern California Edison is piloting this approach in an EV project.By defining and organizing the grids structure,grid architectu

188、re ensures dependability,affordability,and decarbonization.Applying system architecture prin-ciples provides the tools to navigate modernization challenges and build future-proof power systems.Data AccessData access is a critical issue in power system digi-talization.As digital technologies become m

189、ore integrated into the grid,large amounts of data are gen-erated from smart meters,DERs,and other intelligent devices.These data could improve grid management,enable innovative energy services,and empower con-sumers with more control over their energy usage and more flexibility in their consumption

190、 and production.However,access to these data is often tightly con-trolled by incumbent regulated utilities,which can limit the ability of customers and third-party service providers to employ these data effectively.Incumbent utilities,motivated by regulatory,com-petitive,and operational concerns,may

191、 restrict access to data to maintain their market position or comply with outdated regulatory frameworks that do not fully account for the benefits of open data.These restric-tions can stifle innovation,limit consumer choice,and slow down the transition to a more decentral-ized and customer-centric

192、energy system.Address-ing these data-access issues is essential for unlocking the full potential of digitalization in the electricity sector,ensuring that customers and third parties can Figure 5.Dynamic Operating Envelope ConceptSource:University of Melbourne,Project EDGE:Fairness in Dynamic Operat

193、ing Envelope Objective Functions,April 2023,https:/.au/-/media/files/initiatives/der/2023/the-fairness-in-dynamic-operating-envelope-objectives-report.pdf.18Innovating Future Power Systems leverage data to enhance efficiency,sustainability,and grid resilience.Challenges and RisksThe digital revoluti

194、on also contains significant risks,with cybersecurity being the most critical.The elec-tricity grid is especially vulnerable for two reasons.First,the grid has evolved with minimal coordina-tion among stakeholders,increasing its susceptibil-ity to cyberattacks.Historically,utilities used legacy syst

195、ems relying on isolation and security perimeters to protect assets.30 But this strategy has become less effective as the grid has grown more complex.Todays grid mixes residual legacy architecture with modern internet-based tools like sensors and smart meters,operated by various stakeholders with lit

196、tle coordina-tion.The North American Electric Reliability Corpo-ration(NERC)estimates that the number of attack points grows by 60 daily,rising from 22,000 in 2022 to 24,000 in early 2024.31Second,the grids crucial role makes it a prime target for hackers.The 2021 ransomware attack on Colonial Pipel

197、ines billing infrastructure highlighted the risks,causing significant disruptions and fuel shortages.Two years earlier,a successful attack on an electric utility briefly knocked out firewalls with-out disrupting power.32 The ripple effects of a suc-cessful attack make the grid a valuable target for

198、state-sponsored cyberattacks,political hacktivists,organized crime,and cybercriminals seeking ransom.33 Figure 6 indicates the increase in physical and cyberat-tacks despite an overall decrease in disturbances.In recent years,the government has taken steps to improve cybersecurity in the electricity

199、 industry.NERC has developed Critical Infrastructure Pro-tection standards focusing on significant threats to the bulk power system.Some states have additional requirements.NERC also oversees the Electricity Information Sharing and Analysis Centers biannual GridEx simulations for cyberattack respons

200、e prac-tice.34 The Department of Energy is implementing a national cybersecurity strategy,though Government Accountability Office reports highlight deficiencies,especially in distribution systems.35Figure 6.Electric Grid DisturbancesSource:US Department of Energy.Note:Physical attacks include report

201、s of vandalism,suspicious activity,cyber events,theft,and actual physical attacks.202320222021202020192018201720162015201420130400300200100TotalDisturbancesTotalDisturbancesPhysical andCyber AttacksPhysical andCyber AttacksDisturbances to the grid reported by utilities to the Department of Energy si

202、nce 2013Number of DisturbancesThe Electricity Technology,Regulation,and Market Design Working Group 19As digitalization increases grid complexity,the cybersecurity threat will grow.Stakeholders must make cybersecurity an important component of their overall business strategy,incorporating security b

203、y design,regularly testing systems,and innovating with cybersecurity in mind.Investment in preventive mea-sures and response planning is essential.Stakeholders should create ways to share key practices and insights in the cyberattack space.As in other industries,play-ers in the electricity industry

204、must train their work-forces to be vigilant to the cybersecurity threat and up-to-date on common attack vectors.36The Future Grid Is DigitalThe future grid will be digital,enabling more effi-cient,resilient,and adaptable energy systems.As we integrate DERs,advanced technologies,and AI,the tools of g

205、rid architecture will help manage com-plexity while ensuring stability.Digital tools will also enhance consumer participation,allowing individu-als to optimize energy use,provide grid services,and engage in energy markets without inconvenience or discomfort.This shift fosters greater market flexi-bi

206、lity and consumer empowerment.By embracing these innovations,we can build a grid that supports cleaner energy,economic efficiency,and active con-sumer involvement while achieving decarbonization and resilience goals.DecentralizationDecentralization involves shifting decision-making and resources fro

207、m a central authority to smaller,autonomous units.In power systems,this shift means moving on a continuum from centrally planned and operated electricity systems to a more dispersed model in which informed consumers play a larger role and investment and control are shared among many stakeholders.It

208、harnesses technological innovation through changes to grid architecture,regulatory insti-tutions,and the set of possible industry business models.A useful analogy is the evolution since the 1960s from mainframe computers to mini computers to personal computers.Mainframes centralized compu-tational p

209、ower,while personal computers democra-tized access,allowing individuals to perform complex tasks independently;mini computers were a transi-tion between the two.Digitalization and standard-ization,like the USB interface,further supported decentralization by enabling seamless connectivity without cen

210、tralized control.In a decentralized power system,the grid and the utility remain important,but the influence of large,centralized production decreases as smaller,dis-tributed units,such as municipalities,commercial consumers,communities,and individuals,have and use DERs.Just as computing evolved fro

211、m central-ized systems to personal control,power systems are moving toward greater grid-edge autonomy.Figure 7 represents the shift from a one-way grid to a“grid of things.”The electricity industry began with Thomas Edi-sons small-scale,vertically integrated systems,but innovation quickly led to lar

212、ge-scale generation located away from population centers,connected by networks of wires.As systems interconnected,investor-owned electric companies merged,forming vertically integrated utilities that managed genera-tion,transmission,and distribution.Centralized gen-eration became the norm,supported

213、by economies of scale and scope under government-regulated monop-olies,especially after the Federal Power Act of 1935.While early technologies favored centralization,recent advancements in rooftop solar,energy stor-age,and EVs have shifted the balance.Households and businesses can now generate and s

214、tore their own electricity,reducing dependence on centralized plants.These technologies enhance energy security,reduce transmission losses,and increase grid resil-ience.Factors driving this shift include research,venture-backed commercialization,government sub-sidies,and geopolitical influences.Alth

215、ough central-ized systems still benefit from economies of scale,decentralized systems offer flexibility,localized pro-duction,and greater consumer empowerment.DERs also benefit from economies of scale via modularity.Traditional power plants take years to build and require large financial investments

216、.DERs,20Innovating Future Power Systems on the other hand,are modular and scalable by,for example,installing a single rooftop solar system today and expanding it tomorrow by adding a battery stor-age unit or connecting an EV charger.This modularity makes it much easier to scale up clean-energy gener

217、-ation incrementally,rather than depending on large,risky projects.As consumers adopt electric appliances that blur the line between demand and supply,the one-way flow of energy and information is becoming obsolete.A decentralized ecosystem,leveraging internet-enabled devices and flexible services l

218、ike behind-the-meter generation,energy storage,and smart EV charging,is becoming essential.With mil-lions of distributed resources and billions of smart devices,decentralization is not just advantageousits a practical necessity.Why Is Decentralization Valuable?Power system decentralization offers nu

219、merous ben-efits,including lower costs,increased resilience,effi-cient integration of low-cost variable generation,local empowerment,economic development,techno-logical innovation,and reduced carbon emissions.37 Unlike centralized systems reliant on a few large power plants,decentralized systems eng

220、age grid-edge resources through smaller,flexible technologies that can be deployed autonomously.This approach enhances productivity,reliability,resilience,and adaptability,eventually lowering costs for all consum-ers,whether or not they participate in DERs or flexi-ble pricing.As these technologies

221、mature,their costs will decrease,and their capabilities will improve.Decentralized systems are also more dependable,distributing power generation and storage to the grid edges and reducing vulnerability to single-point fail-ures.They offer a cost-effective alternative to hard-ening centralized infra

222、structure against threats like storms,wildfires,and large-scale failures.38 By dis-tributing power generation and storage,decentralized systems strengthen resilience against disruptions and transmission grid vulnerabilities,both as indepen-dent systems(microgrids)and when integrated into utility dis

223、tribution systems.Figure 7.The Existing One-Way Grid Architecture and the Digital,Decentralized Grid ArchitectureSource:National Renewable Energy Laboratory,Autonomous Energy Systems:Building Reliable,Resilient,and Secure Electrified Com-munities,June 2024,https:/www.nrel.gov/docs/fy24osti/87629.pdf

224、.The Electricity Technology,Regulation,and Market Design Working Group 21A Decentralization ContinuumEnhanced digital metering technology and advanced grid-forming inverters,combined with a culture of innovation,enable new business models like vir-tual power plants(VPPs),microgrids,and transac-tive

225、energy.Advances in technology and business models are enabling a more balanced partnership between grid operators and consumers at the grids edge,offering greater diversity and choice in value cre-ation.This partnership can(1)increase the productiv-ity of low-cost,variable resources by better matchi

226、ng demand with supply;(2)reduce the need for long-term investments in centralized networks and backup gen-eration that may be needed only occasionally;and(3)support the development of local microgrids,reducing vulnerability to single-point failures during extreme events.39 Aggregating DERs can impro

227、ve the grids operating efficiency by contributing to increas-ing capacity utilization.Instead of building large new assets like peak power plants that sit idle for much of the year,leveraging customer assets(such as smart thermostats and batteries)can reduce peak demand and improve the efficiency of

228、 large grid assets.Even in a decentralized system,energy movement across regions remains essential for flexibility and adaptability.Regional transmission and distribution operators play a crucial role in balancing the vari-able energy resources available at different times and locations.But as resou

229、rces become more valuable,a decentralized grid shifts the focus from varying sup-ply to meet demand to varying demand to match sup-ply,incentivizing consumers to adjust usage.VPPsA VPP is a network of decentralized DERs,includ-ing solar panels,batteries,and flexible end uses such as EV charging,aggr

230、egated and managed through advanced software to function collectively as a sin-gle dispatchable power plant,optimizing energy pro-duction,storage,and consumption.40 VPPs still rely on centralized control.They require that the evolv-ing variety of grid-edge opportunities be screened and bundled into

231、packages that can be treated as peak-shaving resources in the traditional generation-focused utility operations paradigm.VPPs are an important step toward decentraliza-tion,and activity is ramping up rapidly in the US and abroad.Figure 8 shows a general VPP model.VPPs can provide services at the who

232、lesale and dis-tribution levels.For distribution utilities,VPPs can be designed to provide system peak shaving or can be deployed for locational dispatch at the feeder level to provide relief exactly when and where the grid needs it.For wholesale markets,VPPs can provide capacity or ancillary servic

233、es.Success depends on establishing the right regula-tory frameworks.Many state utility commissions are creating the market development frameworks to suc-cessfully deploy VPPs to provide distribution-level benefits while enabling VPPs to integrate into whole-sale markets.Similarly,the Federal Energy

234、Regula-tory Commissions(FERC)Order 2222 requires grid operators to allow DER aggregations to participate in wholesale energy markets,similar to VPPs.Order 2222 allows an aggregation that is sufficiently sized to have access to regional energy markets.41MicrogridsMicrogrids are a group of interconnec

235、ted loads and DERs that act as a single controllable entity with respect to the grid and that can disconnect from the grid if necessary to provide continuity of local ser-vice.42 They are another example of decentralization.Enabling microgrids allows for decentralized control of individual resources

236、,optimized energy consump-tion,energy sharing and peer-to-peer exchange,and coordinating grid and ancillary services with the grid operator to strengthen the bulk power system.Micro-grids need not be restricted to specific buildings or locations but can be developed at larger sizes accord-ing to eco

237、nomic feasibility and needs.In terms of busi-ness models,microgrids can operate independently from a utility,or a utility can integrate microgrids into its distribution grid architecture.Transactive EnergyA more decentralized approach to power systems at the distribution level is transactive energy.

238、Trans-active energy refers to a decentralized electric grid architecture that uses digital technologies to 22Innovating Future Power Systems manage and optimize electricity generation,distri-bution,and consumption through dynamic pricing and automated transactions.Through the process of price discov

239、ery and using prices as device control signals,transactive energy harnesses individual pref-erences to create a more flexible and adaptable sys-tem.This approach is designed to enhance the grids efficiency,reliability,and flexibility by enabling direct,real-time interactions among various energy res

240、ources and consumers.43An important analysis of the potential value of transactive energy is the Pacific Northwest National Laboratorys Distribution System Operator with Transactive(DSO+T)study.44 This study explores how a transactive energy system can coordinate DERs like HVAC systems,EVs,water hea

241、ters,and batter-ies to provide demand flexibility and improve grid reliability.The study simulated the use of transac-tive energy in a hypothetical grid system modeled on the Electric Reliability Council of Texas region,finding that such a system could reduce peak load by 915percent and daily load v

242、ariation by 2044per-cent.This coordination not only lowers electric-ity prices by optimizing energy use during low-price periods but also defers expensive infrastructure investments,resulting in annual customer benefits of$3.3$5.0billion for Texas and a potential national benefit of$33$50billion.The

243、 study highlights the scalability and economic feasibility of integrating flexible customer assets into grid operations,pro-viding stability in a high-renewables future while reducing the need for additional generation capacity.Figure 9 summarizes the transactive energy frame-work used in the DSO+T

244、study.Figure 8.Virtual Power PlantsSource:US Department of Energy,“Virtual Power Plants Projects,”https:/www.energy.gov/lpo/virtual-power-plants-projects.The Electricity Technology,Regulation,and Market Design Working Group 23Examples of Decentralization in ActionWhile VPPs are growing and serve an

245、estimated 3060 gigawatts of peak demand,examples of advanced decentralization have not yet realized their full eco-nomic potential.45Technologies,System Integration,and Regulatory InnovationThe National Renewable Energy Laboratorys autono-mous energy systems project has developed a frame-work for a

246、decentralized,“self-driving”electricity system,with promising results from various pilot projects.46 Notable efforts include those by Holy Cross Energy in Colorado,Southern Company,and DTE Energy.The National Renewable Energy Labora-torys work builds on the Pacific Northwest National Laboratorys DSO

247、+T analysis,which quantified some of the benefits of decentralized grid operations driven by a transactive tariff architecture.47Technology companies,service providers,and standards organizations are driving the transition to a decentralized electric system.Companies like SPAN are advancing smart el

248、ectrical panels that optimize electricity delivery for building energy services based on dynamic pricing.Fermata Energy has introduced bidirectional EV charging systems,turning EVs into customer-centric energy exchanges with the grid that can provide grid services(Figure 10).48The value of these eme

249、rging approaches to demand flexibility,compared with more traditional“inter-ruptible service”peak-shaving approaches,is the min-imal consumer effort,local control,and convenient Figure 9.Summary of Market Participants,Constraints,and Market OperationSource:Hayden M.Reeve et al.,Distribution System O

250、perator with Transactive(DSO+T)Study:Main Report,Pacific Northwest National Laboratory,January 2022,https:/www.pnnl.gov/main/publications/external/technical_reports/PNNL-32170-1.pdf.24Innovating Future Power Systems delivery of energy services.States are catching up to the opportunities offered by i

251、nnovators and making it possible for consumers to save money commensu-rate with the value of the flexibility and responsive-ness they can offer,directly or via a service provider.After years of successful pilot projects that saw lit-tle follow-through,49 regulators in a growing number of states are

252、now ramping up efforts to implement dynamic pricing options,including in some cases as the default opt-out tariff.50 These options range from basic peak shaving like peak-time rebates to more interactive multi-period time-of-use and even real-time pricing tariffs,including price differentials that m

253、ore clearly reflect temporal differences in the cost of electricity at the point of delivery.Energy retailer Octopus Energy has shown that customers will engage enthusiastically in managed electricity procurement for services like transport and heating if it is convenient,easy,and financially reward

254、ing.51 The California Public Utilities Commis-sion staff has proposed California Flexible Unified Signal for Energy(CalFUSE),a comprehensive pol-icy roadmap for a decentralized electric system.52 CalFUSE incorporates transactive pricing architec-ture and a transitional tariff approach,allowing con-s

255、umers to save money by making electricity purchases responsive to local grid conditions while maintaining reliable service.Technical organizations are also developing neces-sary interoperability standards,such as the recently adopted SAE J3068/2_202401 standard for Control of Bidirectional Power for

256、 AC Conductive Charging.53 These efforts collectively facilitate the shift toward a decentralized electric system.VPPsOne example of a VPP is the ConnectedSolutions program in the northeast United States.The pro-gram provides cost savings for participants through financial incentives for using their

257、 stored battery energy during peak times and helps reduce peak demand,which also benefits nonparticipants.The Figure 10.EVs as Grid ResourcesSource:Sam Calisch and Cora Wyent,Circuit Breakers:Electrification Wont Break the Grid,It Will Make It Smarter.,July 4,2022,https:/www.rewiringamerica.org/rese

258、arch/circuit-breakers/electrification-myths-circuit-breakers/electric-grid-smart-panel-technologies.The Electricity Technology,Regulation,and Market Design Working Group 25result is improved system capacity utilization and reduced need for expensive peak generation.Con-nectedSolutions lowers greenho

259、use gas emissions,boosts resilience for participants by giving them an incentive to install a battery that can be used to pro-vide backup power during outages,and fosters eco-nomic growth in the storage market.The program also has provisions for low-income and underserved communities.ConnectedSoluti

260、ons has reduced peak electricity demand and has proved to be cost-effective.It deliv-ers$4.18 in benefits for every dollar spent on com-mercial and industrial participants and$2.14 for every dollar spent on residential participants.High levels of customer satisfaction have been reported due to finan

261、cial and resilience benefits.54MicrogridsMicrogrids can optimize energy resources,provide grid services,and inject energy during peak demand periods.During outages,like those occurring after hurricanes,communities can disconnect from the grid,remain safe,and provide services for neighbor-ing areas.M

262、icrogrids created electric sanctuaries in Florida,Georgia,Virginia,and the Carolinas after Hurricane Ian made landfall in southwest Florida on September 28,2022,packing winds as high as 155 miles per hour.The storm knocked out power to more than two mil-lion people,leveled homes,and sparked floods a

263、nd water shortages.At least three residential commu-nities equipped with solar microgrids met their resi-dents electrical needs during and after Hurricane Ian in 2022:1.Medley at Southshore Bay in Wimauma,Flor-ida,which uses an Emera Technologies Block-Energy microgrid platform owned and operated by

264、 Tampa Electric 2.Hunters Point in Cortez,Florida,an LEED Plat-inum and net-zero community 3.Babcock Ranch in Punta Gorda,Florida,an 870-acre solar farm operated by Florida Power&Light Company that includes two 74.5 mega-watt solar facilitiesRecent events such as Winter Storm Uri and Hur-ricane Bery

265、l in Texas,recovery efforts in Puerto Rico following Hurricane Maria,and wildfire-driven power shutoffs across the West have brought increased attention to distributed microgrids as a more effec-tive,lower-cost,and more readily implementable alternative to investments in redundancy and hard-ening of

266、 large,centralized networks(Figure 11).Figure 11.Microgrids in ActionSource:US Department of Energy,“Grid Systems,”https:/www.energy.gov/oe/grid-systems.26Innovating Future Power Systems International ProjectsStrategic developments and pilot projects are emerg-ing globally.Elia,a Belgian grid operat

267、or,has embraced its vision for a decentralized electric system,described in its study The Power of Flex:Enabling Consumers to Benefit from the Energy Transition.55 National Energy System Operator,an independent system opera-tor in Great Britain,has adopted a similar vision of an increasingly decentr

268、alized system called Crowd-flex and has demonstrated significant cost savings and sustained consumer participation.56 In Germany,smaller pilot projects like SoLAR Allensbach are pro-viding decentralized,self-organized energy manage-ment with lower costs and improved reliability.The International Ene

269、rgy Agencys Global Observa-tory on Peer-to-Peer,Community Self-Consumption,and Transactive Energy Models is an interdisciplinary initiative that bridges research and industry.It col-lects data,analyzes case studies,and shares best prac-tices to support the integration of DERs.The goal is to foster f

270、lexible,resilient,and consumer-driven energy systems worldwide by promoting new market struc-tures and technological innovation.57The Transactive Energy Services SystemThe Transactive Energy Services System(TESS)is an innovative platform developed by a team led by the Post Road Foundation.58 TESS is

271、 designed to enhance grid efficiency and resilience by leveraging transac-tive energy principles,integrating advanced digital technologies to facilitate dynamic pricing and auto-mated transactions across DERs and consumers.This platform coordinates energy use and distribu-tion through real-time data

272、 exchange and decentral-ized value-based decision-making,promoting a more adaptive and efficient energy system.Figure 12 shows the data and energy flows in TESS.The TESS platform is being deployed in a project with Efficiency Maine,funded by the US Department of Energys Connected Communities program

273、.This initiative aims to demonstrate how connected tech-nologies and smart-grid solutions can enhance energy efficiency and reliability at the community level.By integrating TESS with local energy resources,the project seeks to create a scalable,replicable model for energy management.This collaborat

274、ion highlights the potential of transactive energy systems to trans-form energy consumption patterns and support DER integration.Challenges to DecentralizationDecentralization in the power system will evolve gradually,as many challenges are institutional rather than technological.Technological chang

275、e Figure 12.The Transactive Energy Services SystemSource:SLAC National Accelerator Laboratory,Grid Integration Systems and Mobility,“TESS(Transactive Energy Services System),”https:/gismo.slac.stanford.edu/research/tess-transactive-energy-services-system.FeederSolarThermostatAuctionMarketBillsAMIDat

276、aElectricityDataDataDataDataBatteryThe Electricity Technology,Regulation,and Market Design Working Group 27presents a juxtaposition between large-scale central-ized resources and smaller,more modular,distributed resources.While rate-regulated utilities have been the owners of large-scale resources,t

277、hey need not be bar-riers to technological change and decentralization more generally.Utilities and regulators can accel-erate the pace of change through,for example,rate reform,incorporation of DERs into planning,and bet-ter data-access standards.A regulation-related challenge to realizing the bene

278、fits of decentralization is embedded in the century-long interpretation of monopoly utility fran-chises,which grant exclusive rights to operate dis-tribution wires and in many cases to sell goods and services to customers,within specific areas.Sharing power across property lines is compli-cated by l

279、egacy regulations and opposition from util-ities invested in the status quo.In the 1980s,Tom Castens company Trigen Energy faced legal chal-lenges from Commonwealth Edison(ComEd)when building a combined heat and power system for McCormick Place in Chicago.ComEd challenged the project,asserting franc

280、hise rights that only the util-ity could operate wires across public rights of way.59 This case exemplified the obstacles to decentraliza-tion in the late 20th century and shows how franchise rights can challenge what might otherwise be the best alternatives.More recently,Californias“over-the-fence

281、rule”(Public Utility Code 218)requires entities selling energy across more than two parcels to become regu-lated electrical corporations.In 2022,Sunnova sought unsuccessfully to create neighborhood microgrids in California,allowing homeowners to share energy,but the fight over regulatory approval co

282、ntinues.60To promote decentralization and microgrids,the over-the-fence rule must be reevaluated to enable community-based systems.Microgrid service pro-viders should be allowed to build,own,and operate microgrids independently of utilities,ensuring costs arent shifted to ratepayers.Microgrid servic

283、e pro-viders would coordinate with grid operators for safe islanding and reconnection,offering valuable solu-tions for industries like data centers that face rising energy demands.Decentralization for Value Creation and DependabilityEnabling power systems to grow from the ground up(rather than the t

284、op down),including small building blocks that can be both aggregated and isolated,allows for a more dynamic,dependable,and cost-effective grid.Engaging consumers as participants and match-ing demand to supply,rather than the other way around,helps integrate large-scale renewables,shave peak demand,i

285、ncrease the productivity of invested capital,meet increasing energy demand,and keep costs lower for consumers.61Consumers are already investing in digitally enabled energy technologies like solar,storage,EVs,smart thermostats,smart water heaters,and efficient HVAC systems.Failing to use these resour

286、ces to meet demand and lower costs makes them stranded assets and results in ineffective system utilization.VPPs,microgrids,transactive energy,and other concepts can help meet future demand effectively,but these and other innovative technologies are stymied by our current centralized paradigm and th

287、e way that exist-ing regulations are implemented.Taking advantage of the significant benefits of digitally enabled decentral-ization requires reimagining our power systems and their regulatory and business models.DemocratizationDemocratization refers to the distribution of power,resources,and opport

288、unities to a broader segment of society.In power systems,it involves promoting participation,equality,transparency,and account-ability;expanding individual freedoms;and increas-ing collective decision-making in matters that affect communities,states,and regions.It takes advan-tage of the technologic

289、al and architectural aspects of decentralization.Democratization dates back to ancient Athens,gained prominence after the Enlightenment,and is now a fundamental political principle.In power sys-tems,democratization has two key aspects:enabling individual freedom and technology choices and facili-tat

290、ing inclusive collective decision-making.28Innovating Future Power Systems For much of the past century,democratization in power systems was considered impractical due to the economies of scale and the grids operational struc-ture.Regulation“stood in for”competition,with regulators representing cons

291、umers,especially small residential customers.As a result,individuals had no direct role in making decisions or choosing represen-tatives,leading to less autonomy compared with con-sumers in other markets,where decision-making was more direct.62As we move deeper into the 21st century,the con-straints

292、(physical,economic,and technological)that made a highly centralized regulatory model preferable have largely dissolved.Innovations ranging from the combined-cycle gas turbine to pervasive digitalization have made competitive wholesale and retail markets possible,shrinking the economic footprint of t

293、he nat-ural monopoly(even in states where the regulatory footprint remains vertically integrated).Digitaliza-tion and decentralization,discussed in the previous two sections,make democratization accessible and potentially valuable in ways that were not feasible in the 20th century.Americans should h

294、ave the power and autonomy to make choices in the energy that powers their homes and businesses.Such choices have many dimensions:From whom to buy energy The type of energy used The option to supply oneself and the right to sell ones excess production The ability to associate with others to take or

295、provide energy services with the wider energy sectorThese considerations entail a large number of important policy considerations in the retail and wholesale energy markets,regulated by state and fed-eral agencies.Investor-owned utilities in some states in the US are permitted to maintain vertical m

296、onopolies,subject to rate regulation,even as segments like generation have been recognized as competitive in other regions and other industries like telecommunications and transportation have been liberalized.While energy monopolies persist,technological advances should enable competition,and govern

297、ment-set rates should reflect actual costs of service.These rates should allow customers to avoid high costs by shifting usage and benefit from lower rates at different times.With-out such price signals,customers remain captive to government decisions,with no control over their energy choices.A Use

298、Case of Democratizing Energy:EVsIntegrating EVs into the power grid presents a transformative opportunity to democratize energy for customers.As the adoption of EVs grows,their potential as a grid asset becomes increasingly signif-icant.Leveraging EVs in this way can help save cus-tomers money,stabi

299、lize the grid,optimize energy use,and facilitate the transition to renewable energy sources.While EVs provide only one example of democratizing energy,here we explore how custom-ers can use EVs as a grid-balancing asset,the tech-nological and regulatory challenges involved,and the potential benefits

300、 for all end-use customers,not only EV owners.One key benefit of integrating EVs into the grid is their ability to provide grid services and enhance sta-bility.The grid needs constant balance between sup-ply and demand to avoid blackouts or infrastructure damage,and EVs can help achieve this balance

301、 through managed charging and bidirectional vehicle-to-grid(V2G)or vehicle-to-everything(V2X)capabilities.63 Managed charging is the strategic coordination of EV charging to align with grid conditions,energy prices,and system reliability needs.This approach lever-ages digital technologies and commun

302、ication plat-forms to adjust the timing,rate,and duration of EV charging dynamically based on factors such as elec-tricity demand,renewable energy availability,and grid capacity.By optimizing charging schedules,managed charging can reduce strain on the grid during peak demand periods,enhance the int

303、egration of intermit-tent renewable energy,and lower costs for both utili-ties and EV owners.The Electricity Technology,Regulation,and Market Design Working Group 29One example of managed charging policy is the New York State Energy Research and Development Authority SmartCharge program.Through part

304、ner-ships with utilities,SmartCharge integrates advanced data analytics and communication technologies to monitor and manage charging behavior.64 Partici-pants in the program benefit from lower electric-ity rates during off-peak hours,encouraging them to charge their vehicles when grid demand is low

305、 or when renewable energy generation is abundant.One notable success of the SmartCharge program has been its ability to significantly reduce peak load impacts,demonstrating the potential for widespread adoption of managed charging to mitigate stress on the grid as EV penetration grows.V2X means that

306、 EVs can not only draw electricity from the grid to charge their batteries but also dis-charge stored energy back into the grid when needed.This bidirectional capability transforms EV owners from mere consumers of electricity to active par-ticipants and asset owners in the energy system.65 Figure 13

307、 illustrates the process of bidirectional EV charging and discharging.Managed charging allows EVs to adjust charging according to grid conditions,reducing stress during peak times and optimizing schedules for low-demand periods or high renewable energy generation.Transactive charging goes further,le

308、tting EV owners sell demand flexibility and respond to real-time price signals,which turns EVs into valuable grid resources that support resilience and renewable integration and reduce the need for costly grid upgrades.Digi-tally enabled automation makes active participation convenient for EV owners

309、.Facilitating Renewable Energy IntegrationAnother advantage of using EVs as grid assets is their potential to facilitate renewable energy inte-gration.Renewable sources like solar and wind are variable,creating challenges for grid operators who must maintain consistent electricity supply.EVs can hel

310、p by acting as distributed energy storage.When renewable generation is high,EVs can store excess energy and discharge it back to the grid when gen-eration drops.Managed and transactive charging systems allow EVs to shift demand to times of abundant renewable energy,reducing the need for backup fossi

311、l fuel gener-ation.As a result,the system is less reliant on expen-sive energy generation for peak periods,lowering system costs and emissions,increasing the produc-tivity of scarce invested capital,and transforming EV owners from mere consumers to active participants in the energy system.Figure 13.

312、Bidirectional EV ChargingSource:Jason Svarc,“Bidirectional EV Charging ExplainedV2G,V2H&V2L,”Clean Energy Reviews,October 10,2024,https:/www.cleanenergyreviews.info/blog/bidirectional-ev-charging-v2g-v2h-v2l.30Innovating Future Power Systems Economic and Environmental Benefits of EVsUsing EVs as gri

313、d assets has significant economic and environmental benefits.66 Economically,EVs can provide additional revenue for owners through demand-response programs,VPPs,and transactive energy,helping offset ownership costs and acceler-ating EV adoption.Environmentally,EVs support greater use of renewable en

314、ergy,reducing greenhouse gas emissions and the need for capital investments in traditional power infrastructure.By offering flexible,distributed storage,EVs contribute to decarbonizing both the grid and the transportation sector.Technological and Regulatory ChallengesDespite the benefits,several tec

315、hnological and regula-tory challenges must be addressed to fully realize EVs as grid assets.67Technological Challenges to EVs for Grid ServicesOne key challenge is potential battery degrada-tion from frequent charging and discharging,which can reduce EV battery lifespan and perfor-mance.Improvements

316、 in battery chemistry,ther-mal management,and software controls can help ensure EVs maintain longevity while supporting grid operations.The successful deployment of V2X technology also depends on expanding smart charging infrastructure capable of bidirectional energy flow.This infrastruc-ture requir

317、es significant investments and grid mod-ernization,as the current system was not designed for bidirectional flow.Collaboration among utili-ties,regulators,and private industry is essential for this transition.Interoperability is another challenge,as EV mod-els,charging stations,and grid systems must

318、 work together seamlessly.Standardized protocols and communication systems are needed to ensure uni-form integration,reduce costs,and encourage widespread adoption of V2X technology.Such stan-dardization will ensure that all stakeholders,from EV manufacturers to utilities,can invest confidently in V

319、2X technology.68Regulatory ChallengesEVs as grid assets also face regulatory hurdles.Gov-ernments and regulatory bodies must create poli-cies that reduce barriers to EV and V2X adoption.Clear grid interconnection standards are necessary to ensure seamless integration,and utility companies should be

320、encouraged to launch V2X pilot programs for real-world testing.State regulators and legislatures should allow EV owners to participate directly or through aggrega-tors,as intended by FERC Order 2222.Fair access and compensation for services like energy storage and demand response will make EVs valua

321、ble participants in the energy transition.The bidirectional flow of energy and data with V2X raises concerns about data privacy and cyberse-curity.Developing robust standards to protect user data and ensure grid security will be crucial.Collabo-ration among manufacturers,utilities,and regulators is

322、needed to create secure frameworks that can scale with EV integration.While not directly a regulatory challenge,the development of EV charging infrastructure faces a classic chicken-and-egg problem,as the growth of EV adoption and the expansion of charging networks are interdependent.Consumers are h

323、esitant to purchase EVs due to concerns about the availability of charging stations,especially in less densely populated areas.At the same time,companies are reluctant to invest in building widespread charging infrastructure until there is a larger base of EV users to justify the invest-ment.This si

324、tuation creates a cycle that hinders EV adoption,as most existing chargers are concentrated in urban areas(Figure 14).Future OutlookAs technological advancements and supportive poli-cies emerge,EVs will play a key role in democratiz-ing energy.Innovations like solid-state batteries will improve EV s

325、uitability for grid services,while smart grids and advanced energy management systems will enable seamless integration.On the policy front,state regulators are recognizing the potential of V2X tech-nology and beginning to evaluate supportive mea-sures.69 Local distribution utilities in certain state

326、s,The Electricity Technology,Regulation,and Market Design Working Group 31including California,are also exploring pilot pro-grams and regulatory frameworks to support the use of EVs as grid assets.V2X can also enhance resilience as part of local microgrids,allowing consumers to maintain service duri

327、ng extreme weather and grid failures.Using EVs as grid assets presents a compelling opportunity to democratize energy by empowering consumers to enhance grid stability,optimize energy use,and sup-port the transition to renewables.While technologi-cal and regulatory challenges remain,the potential ec

328、onomic and environmental benefits make it worth-while.As EV adoption grows,V2X will play an increas-ingly important role,providing customers with more choices and tools to shape their energy usage while fostering innovation.Figure 14.EV Charging Stations in the USSource:Pew Research Center,“Electric

329、 Vehicle Charging Stations Exist Across the Country,but Most Are Concentrated in and Around Urban Areas,”May 21,2024,https:/www.pewresearch.org/data-labs/2024/05/23/electric-vehicle-charging-infrastructure-in-the-u-s/pl_2024-05-24_ev-chargers_0_02/.32Innovating Future Power Systems Moving Democratiz

330、ation ForwardThe growth of digitalization and decentralization offers individuals greater self-determination in energy systems.These forces democratize energy by empow-ering customers to take control of a critical aspect of their daily lives.Historically,regulated,centralized systems made sense due

331、to the scale advantages of 20th-century technologies.However,todays advancements in dig-ital and distributed energy technologies have reduced the efficient scope of monopolies,making democrati-zation more feasible.The“natural monopoly”bound-aries have receded and have expanded the scope for the auto

332、nomy that customers deserve.DependabilityDependability refers to the customers experience with their electric service.Traditionally,grid planners and operators have focused on“reliability,”framed in terms of operational security and resource adequacy.Operational security ensures that generation,tran

333、s-mission,and distribution systems function within safe limits in real time.Resource adequacy addresses being able to call on enough energy production to meet projected demand in every hour to an economi-cally efficient standard over the long term.However,the increasing frequency and severity of grid disruptions have shifted attention to“resilience,”the grids ability to withstand,avoid,and recover