This prompt is the first in a series of discussions led by invited speakers at the upcoming 15th National Conference and Global Forum on Science, Policy and the Environment: Energy and Climate Change to be held January 27-29, 2015 in Washington, DC.

electric-poles-384623_640The environmental benefits and declining price of solar, wind, storage and other distributed energy resources are driving their increased use in the electrical utility system. As a result, more power is being generated at homes, businesses, and commercial buildings and used locally. This jump in power production at the distribution level presents a challenge to the traditional electrical transmission and distribution system based on centralized power generation and control. The centralized system operated by utilities was not designed for the flexible load tracking required by renewables or the control of large numbers of distributed electrical energy resources.

The Wisconsin Energy Institute has outlined an alternative approach that holds promise: a dynamic distribution system that includes a distribution system operator as the local balancing authority. The dynamic distribution system would use local sources to track loads, stabilize voltage and frequency, and smooth intermittent renewable energy generation providing a predictable, constant load profile to the utility. This new dynamic distribution system connects central and local electricity generation, storage, microgrids, and loads with a marketplace that enables energy transactions, such as payments passing between buyers and sellers of energy, at the local distribution level.

This new system provides a promising framework for distributed energy resources to deliver the same services as the traditional utility model at a better price, with decreased power losses, decreased emissions, and better resiliency. It is envisioned that this new dynamic distribution system would be a cost-effective architecture to adapt and integrate centralized generation, transmission, fuel supplies and individualized markets into a balanced energy ecosystem. State and federal policy will have to adapt in order to facilitate these changes; performance based ratemaking and other ways for utilities to generate new revenue streams will be necessary steps in this transition.

The challenges and opportunities associated with this dynamic distribution system architecture and how it fits with larger issue of reinventing the electric utility will be discussed at a National Council for Science and Environment conference workshop on Wednesday, January 27, 2015 in Washington D.C.

How might performance based ratemaking be adapted to maximize this dynamic distribution system? What is the best way to manage energy distribution as we transition to a landscape with multiple and different sources of electricity generation?