Grid investments, incentives, and initiatives: taking a look at the grid interconnections

The urgency surrounding the modernization of our grid is putting pressure on industry – and that pressure comes in many forms. Decarbonization objectives, rapidly evolving technological complexities, growing consumption, and cost are all important factors that utilities need to think about in tandem. These factors all affect one another, much like the chain reaction that occurs within our networks.

The “chain reaction” of electricity first occurred in 1882. Thomas Edison connected a system of cables that carried electricity from a remote generator to homes and businesses in New York. The electricity, however, could not travel more than a mile without losing voltage – and that was the beginning of improving invention and innovation. From the source of energy to the consumption of it, the grid is made up of connections. Foundationally, high-power transmission requires wiring to move electrons from the source to the load.

Change cycle

Fast-forward to 2023, and we are seeing distributed energy resources (DERs) entering the system at the distribution level. Further, we are seeing rising renewable integration. When you have more renewable energy sources, the variability of these sources also increases. Why? Simply put, the wind doesn’t blow whenever you need, and the sun doesn’t shine 24/7. As a result, utilities don’t have the leverage to install renewable energy sources wherever they choose. A good example of this are offshore wind farms as they can only be built along the coast where conditions and water depths are just right.

Today, the industry is facing competing needs and juxtaposed factors. We need more grid infrastructure than ever before to support the growing demand of consumption. We also need renewables to decarbonize, but to have renewables, you also need the grid. And the grid needs to be interconnected for a reliable balance of load generation. Again, the chain or cycle of interconnection is clear.

If you look at the infrastructure of transportation and its channels, we gain an excellent analogy: roads connect us to various regions. They are the lifelines that enable consumption of various goods and services we might not otherwise have. Think of electrons as food, travelling down roads (instead of wires). Without connected infrastructure, we’d be limited to our local region. Here is an example of a US interconnection study from NREL:

Investment, incentives, and initiatives

We know we need interconnection, far beyond the existing grid. The industry has two options: a) we either need to increase the utilization of existing interconnections or b) build more interconnections. While there is some apprehension in going digital, it’s a necessary step as we modernize the grid, and we need to be confident that digital technologies can address the challenges we face. We do not have the time to rely on one type of solution – new transmission lines take time (anywhere from five to 10+ years).

To improve grid capacity, we need to implement grid-enhancing technology, make investments into the grid, incentivize certain opportunities, and partner with industry peers. In the U.S., the Department of Energy recently revealed a funding opportunity announcement to issue funding towards grid-enhancing technologies. Further, programs initiated this year, such as i2X, aim at enhancing the resiliency and reliability of our grid through interconnection network upgrades.

To achieve decarbonization and digitalization goals, a shift is required. As mentioned above, utilities need to think about their operations fiscally and sustainably. The norm thus far was for utilities to have CAPEX incentives – and the bigger the project, the higher the incentives. But I think it’s important to move to a TOTEX model, which includes operational and maintenance costs but also looks at the equation more holistically: how can we reduce costs, expand distribution and transmission, and do so in a sustainable manner?

Stay tuned for my next blog on artificial intelligence (AI) for power systems, what’s happening in this domain, and applying AI to the grid.