The grid is expected to change in different, perhaps fundamental ways, requiring careful assessment of the costs and opportunities of different technological and policy pathways.It also requires attention to the reality that the value of the grid may accrue to new stakeholders, including DER suppliers and customers.

This paper is the first phase in a larger Electric Power Research Institute (EPRI) project aimed at charting the transformation to the Integrated Grid.Also under consideration will be new business practices based on technologies, systems, and the potential for customers to become more active participants in the power system.Such information can support prudent, cost-effective investment in grid modernization, and the integration of DER to enable energy efficiency, more responsive demand, and the management of variable generation such as wind and solar.1

Along with reinforcing and modernizing the grid it will be essential to update interconnection rules and wholesale market and retail rate structures so that they adequately value both capacity and energy.Secure communications systems will be needed to connect DER and system operators.As distributed resources penetrate the power system more fully, a failure to plan for these needs could lead to higher costs and lower reliability.

Analysis of the integrated grid, as outlined here, should not favor any particular energy technology, power system configuration or power market structure.Instead, it should make it possible for stakeholders to identify optimal architectures and the most promising configurations – recognizing that the best solutions vary with local circumstances, goals, and interconnections.

Because local circumstances vary, this paper illustrates how the issues that are central to the integrated grid are playing out in different power systems.For example, Germany’s experience illustrates consequences for price, power quality and reliability when the drive to achieve a high penetration of distributed wind and PV results in outcomes that were not fully anticipated.As a result, German policymakers and utilities now are changing interconnection rules, grid expansion plans, DER connectivity requirements, wind and PV incentives, and operations to integrate distributed resources.

In the United States, Hawaii has experienced a rapid deployment of distributed PV technology that is challenging the power system’s reliability.In these and other jurisdictions policymakers are considering how best to recover the costs of an integrated grid from all consumers that benefit from its value.

Key Points – The Integrated Grid

Several requirements are recognized when defining an integrated grid.It must enhance electrical infrastructure, must be universally applicable and should remain robust under a range of foreseeable conditions.

• Consumers and investors of all sizes are installing DER with technical and economic attributes that differ radically from the central energy resources that have traditionally dominated the power system.
• So far, rapidly expanding deployments of DER are connected to the grid but not integrated into grid operations, which is a pattern that is unlikely to be sustainable.
• Electricity consumers and producers, even those that rely heavily on distributed energy resources, derive significant value from their grid connection.Indeed, in nearly all settings the full value of DER requires grid connection to provide reliability, virtual storage and access to upstream markets.
• DER and the grid are not competitors but complements, provided that grid technologies and practices develop with the expansion of distributed energy resources.
• We estimate that the cost of providing grid services for customers with distributed energy systems is about $51/month on average in the typical current configuration of the grid in the United States; in residential PV systems, for example, providing that same service completely independent of the grid would be four to eight times more expensive.
• Increased adoption of distributed resources requires interconnection rules, communications technologies and standards, advanced distribution and reliability technologies, integration with grid planning, and enabling policy and regulation.
• Experience in Germany provides a useful case study regarding the potential consequences of adding extensive amounts of DER without appropriate collaboration, planning and strategic development.
• While this report focuses on DER, a coherent strategy for building an integrated grid could address other challenges such as managing the intermittent and variable supply of power from utility-scale wind and solar generators.

The Growth in Deployment of Distributed Energy Resources

The classic vision of electric power grids with one-way flow may now be changing.Consumers, energy suppliers, and developers increasingly are adopting DER to supplement or supplant grid-provided electricity.This is particularly notable with respect to distributed PV power generation—for example, solar panels on homes and stores—which has increased from approximately 4 GW of global installed capacity in 2003 to nearly 128 GW in 2013 [7].In Germany, the present capacity of solar generation is approximately 36 GW while the daily system peak demand ranges from about 40 to 80 GW.By the end of 2012, Germany’s PV capacity was spread across approximately 1.3 million residences, businesses and industries, and exceeded the capacity of any other single power generation technology in the country [8].This rapid spread of DER reflects a variety of public and political pressures along with important changes in technology.This paper focuses on system operation impacts as DER reaches large scales.

By the end of 2013, U.S.PV installations had grown to nearly 10 GW.Although parts of the U.S.have higher regional penetration of PV, this 10 GW represents less than 2% of total installed U.S.generation capacity [9], which matches German PV penetration in 2003 (Figure 2).With PV growth projected to increase in scale and pace over the next decade, now is the time to consider lessons from Germany and other areas with high penetration of distributed resources.

In addition to Germany, high penetration of distributed PV is evident in California, Arizona, and Hawaii and in countries such as Italy, Spain, Japan and Australia [7].Beyond PV, other distributed resources are expanding and include such diverse technologies as batteries for energy storage, gas-fired micro-generators, and combined heat and power (CHP) installations – often referred to as cogeneration.In the United States natural gas prices and the cost and efficiency of gas-fired technologies have made these options effectively competitive with retail electricity service in some regions, for some consumers [10].In jurisdictions where power prices are high, even more costly DER such as solar PV can be competitive with grid-supplied power.

In most cases, grid-connected DER benefit from the electrical support, flexibility and reliability that the grid provides, but they are not integrated with the grid’s operation.Consequently the full value of DER is not realized with respect to providing support for grid reliability, voltage, frequency and reactive power.

Distributed PV power generation has increased from approximately 4 GW of global installed capacity in 2003 to nearly 128 GW in 2013.

Conclusion

Changes to the electric power system with the rise of DER have had a substantial impact on the operation of the electric power grid in places such as Germany and Hawaii.As consumers continue to exercise their choice in technology and service, technologies improve in performance and cost, and federal and regional policy incentives are passed, DER could become even more pervasive.

DER deployment may provide several benefits, including reduced environmental impact, deferred capacity upgrades, optimized distribution operations, demand response capabilities, and improved power system resiliency.The successful integration of DER depends pivotally on the existing electric power grid, especially its distribution systems which were not designed to accommodate a high penetration of DER while sustaining high levels of electric quality and reliability.Certain types of DER operate with more variability and intermittency than the central power stations on which the existing power system is based.The grid provides support that balances out the variability and intermittency while also providing other services that may be difficult to replicate locally.