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What Keeps Grid Operators Up at Night?

The workshop began with a series of presentations and a panel discussion focused on drawing out the main issues that grid operators are facing as they seek to maintain reliability while integrating distributed energy resources (DERs) and operating in an increasingly complex environment. Speakers highlighted key challenges related to growing demand, or load, on the grid; increasing generation by intermittent sources; financial barriers to making needed improvements to accommodate these changes; the challenge of balancing economics with equity and affordability; and areas of uncertainty around modeling and projecting loads, energy supply, and policy developments into the future.

KEYNOTE ADDRESS

Gene Rodrigues, Assistant Secretary for Electricity, Department of Energy, began the workshop with a keynote address highlighting the constraints and opportunities represented by the workshop’s task. While the U.S. electricity system was the envy of the world in the past century, he posited that we now face a grid that is not “ready and capable of handling both the challenges and opportunities of the 21st century.” As a community invested in the reliability, resilience, security, equity, and affordability of the U.S. grid, Rodrigues urged workshop participants and the organizations they represent to collaborate on new solutions to maintain and improve operational integrity as the grid incorporates more DERs.

Noting that many different groups have sought to tackle the issue but have done so through their own perspectives—many of which he characterized as being stuck in the past—Rodrigues cautioned that the level of collaboration seen to date will not be sufficient to overcome the challenges ahead. To move forward, he said it will be important for many disparate groups to align their individual missions toward a collective goal of unlocking the full potential of DERs. For this process to work, he suggested that the community will need to break free of what he described as artificial intellectual constraints, recognizing that worked in the past may not apply and that entirely new pathways are needed. “We must not … look at what has been successful in the past as the foundation for the future. Let us be bold enough, and let us be wise enough, to start with a clean sheet of paper and start thinking about what is absolutely necessary,” Rodrigues said. To focus on the long term, he also underscored the need for information and approaches that will be used and useful in the future, and not only those that reflect the vision of a particular administration.

Collaborating toward new pathways is not easy, but Rodrigues suggested that the workshop can make headway if participants focus on creating outcomes that are credible, intellectually honest, inclusive of multiple viewpoints, and responsive to the technological and social challenges involved.

PANEL PRESENTATIONS

Panelists representing diverse perspectives offered opening comments on the challenges that grid operators face, laying the groundwork for an in-depth discussion of common issues.

Bulk Power System Reliability in a Changing Risk Environment

Mark Lauby, senior vice president and chief engineer, North American Electric Reliability Corporation, provided a historical perspective on the development and evolution of the U.S. power grid to provide context for the current challenges. Unlike many countries, the United States has never had a centralized grid. Starting in the 1930s, electricity in the United States was generated and distributed through an amalgamation of privately owned companies, local cooperatives, and government-sponsored energy projects. During the 1960s, as energy use skyrocketed, interconnection policies were instituted to provide insurance against frequent blackouts. These policies increased reliability and improved economics, but also brought additional risks, including the prospect of cascading, system-wide impacts. The North American Electric Reliability Council (NERC)

and the Electric Power Research Institute were formed to address these risks and develop operational protocols. In the 1970s, to lower costs and meet the still-increasing demand for electricity, large, centralized power stations replaced smaller, more distributed stations.

Throughout the following decades, the grid weathered many ups and downs. Technological advancements, market restructuring, hurricanes and blackouts, and price volatility drove a need for continued efforts to update and refine standards and enforce compliance. The current formation of NERC, now the North American Electric Reliability Corporation, was founded in 2007, and the most significant constraints on the grid shifted from generation capacity to fuel constraints as more intermittent energy resources such as solar and wind came online. Now, as the country looks toward a “100% green” system, Lauby said that the task for this workshop is to inform the future grid, identify the new standards and metrics it will need, and help to map the best pathways to achieve these goals. He added that this task is being undertaken against a backdrop of many complex pressures, including long-duration extreme weather events, decarbonization goals, and rising consumer demands.

Four Pillars for a Successful Clean Energy Transition

Gordon van Welie, president and chief executive officer (CEO), ISO-New England, discussed the clean energy transition from the perspective of ISO-New England, which ensures the availability of electricity across most of the six New England states. Emphasizing that a successful clean energy transition will require overcoming siloed thinking and addressing multiple grid challenges, he outlined four essential elements of this transition: (1) clean energy, (2) balancing resources, (3) energy adequacy, and (4) robust transmission.

First, significant amounts of clean energy will be needed to meet decarbonization goals while meeting significantly increased energy demands. Although ISO-New England has seen an easing of peak demands in recent years thanks to the adoption of energy efficiency measures and DERs, it is projected that the coming decades will bring surging demand and new usage peaks. The second pillar, balancing resources, refers to the importance of dispatchable generators, energy storage, demand response, and a range of other services to ensure operational equilibrium as both energy production and energy demand fluctuate. Third, van Welie said that a dependable energy supply chain with a robust reserve is needed to achieve energy adequacy. This can pose particular challenges during severe weather or periods of constrained supply—for example, van Welie noted that the difficulty of generating renewable energy from sources such as solar panels during cold, dark New England winters complicates the

challenges of fully transitioning away from carbon-based energy sources. Fourth, he said that robust transmission requires significant investment in new and existing infrastructure to integrate and deliver renewable energy while increasing the capacity to meet anticipated demands, particularly in cities (where there are older, existing rights-of-way that could be utilized).

DERs and energy efficiency measures can benefit all four pillars. For example, increased adoption of solar panels, heat pumps, demand response, and energy storage technologies can promote clean energy, help to increase efficiency, and help with energy adequacy, although it can be challenging to predict the future adoption of such measures and how quickly they will be able to come on board in light of the dependency on state policy support and in some cases, development backlogs. van Welie posited that as these developments help to strengthen the first three pillars, pressures on transmission could be reduced if the states could stimulate greater levels of demand response by implementing dynamic pricing and/or retail demand response programs, potentially helping to lessen the strain on existing infrastructure and incrementally reducing the need for additional infrastructure.

Consumer demand is a key factor to consider in planning for the clean energy transition. Consumer demand for energy is not easily controlled—stemming from multiple shifting sources, such as state or federal incentives and societal wishes and expectations—and in general, it is rising rapidly. To best meet this surging demand requires addressing all four pillars simultaneously, something van Welie noted can be challenging without a central decision-making organization. Noting that achieving clean energy goals will necessitate different physical and operational needs than grid operators have traditionally responded to and require new market designs and reliability standards, van Welie emphasized that balancing the many objectives—affordability, reliability, demand, decarbonization goals, and more—will require coordination and collaboration across the entire energy industry, and noted that ISO-New England’s current work plan is focused on wholesale market designs and transmission planning.

Proactive Planning for a Flexible Energy Future

Julieta Giráldez, director of integrated grid planning, Electric Power Engineers, discussed anticipated future energy needs along with opportunities to proactively plan how to meet demand and consumer goals. Giráldez leads a group engaged in collaborative, long-term load forecasting, which can help to guide best practices as grid operators plan for the future. The U.S. transition to clean energy is a certainty, Giráldez stated, but there is much less certainty around how, where, and at what speed the transition will happen. To make this transition efficient and economical,

she emphasized the need for proactive planning to create a new grid infrastructure that supports flexibility for both energy generation and demand while maintaining affordability.

One of the greatest challenges, Giráldez said, is addressing rapid changes in energy consumption. Across the country, the United States is moving from a period of no or negative load growth toward a future of unprecedented growth in energy consumption. This shift is driven by increased consumer and industry electrification and the growth of large data centers, but many of these drivers are not captured in the models that grid planners and operators have traditionally used to forecast and plan for future loads (previously, relatively simple economic and weather models). For example, the consumer adoption of electric vehicles and household appliances is typically not reported to the utilities or easily trackable, leaving system operators and utilities with a dearth of data on which to base their projections of residential, commercial, and industrial energy use. Grid operators are also facing complex new challenges with large loads coming online and seeking grid interconnections on the order of 500 megawatts to 1 gigawatt for a single interconnect and ramping operations in less than a year.

“The general feeling … when you talk to planners and grid operators, is that this transition has just started, and we’re already playing catchup,” Giráldez said. To put the anticipated needs into perspective, Giráldez speculated that the United States has perhaps 10–15 years to essentially build a new grid the size of the existing one, while doing so with access to far less capital than was used to build today’s grid. As the nation approaches this daunting task, Giráldez cautioned that current models and decision-making practices are out of date and may not be relevant to the unprecedented and uncertain paradigm that lies ahead. To overcome these challenges, she suggested that stakeholders can focus on proactively aligning, planning, and acting upon ambitious, if sometimes imperfect, modernization and integration efforts. She said that these efforts—from flexible generation, demand-side management, infrastructure, and management systems and controls—can bring new efficiencies to the system, achieve fair customer rate programs, and also create the flexibility a new grid needs. “I think we can do this, but we do need to align stakeholders to perform proactive planning and unlock some of the barriers to execute these ambitious plans,” she said. “We cannot afford an analysis paralysis.”

Proceeding with Confidence in an Unpredictable World

Katie Dykes, commissioner, Connecticut Department of Energy and Environmental Protection, offered further insights on how uncertainty can hamper efforts to plan and prepare for the future. She drew on the

experience of Connecticut, which aims to achieve 100 percent zero-carbon electricity by 2040, to highlight some of the challenges that grid operators and planners face nationally. While the state and its neighbors have been making strides in meeting clean energy goals, there have also been some unexpected challenges. For example, certain offshore wind projects, which are seen as a key resource for energy reliability in the New England winter, have run into delays owing to supply chain issues, high interest rates, and competition and demand globally for a limited number of components—including boats. Related challenges facing Connecticut and grid operators in many other states include limitations in the supply chain and availability of grid components, extreme weather events and prolonged outages, disruptions from overseas wars, and challenges associated with macroeconomic factors including rising interest rates.

Building on Giráldez’s comments, Dykes also said that uncertainties around consumer behavior and industrial energy needs are making it difficult to plan for the future. Grid planners need to predict factors such as how many electric vehicles (EVs) will be in use in the next decade, how many heat pumps will be deployed and how this will affect peak winter demands, and how much energy new data centers will use. Many such factors are subject to economic, technological, and policy shifts that can be difficult to predict, but these changes are coming with or without foreknowledge or grid readiness.

As all of these issues contribute to a rising sense of anxiety among both grid operators and consumers, Dykes said that it is important for energy experts and regulators to project confidence amid the anxiety and focus on moving forward. She underscored the need for state regulators and policy makers to coordinate and communicate with grid planners to smooth the adoption of new technologies, increase predictability, and emphasize reliability and affordability in grid operations.

Integrated Planning in a Context of Complex Interdependencies

Venkat Banunarayanan, vice president of integrated grid, National Rural Electric Cooperative Association (NRECA), discussed additional challenges to grid reliability and the importance of integrated planning. NRECA represents nearly 900 U.S. electric cooperatives that serve 42 million people in 48 states. Its members collectively own and maintain 42 percent of the nation’s electric distribution lines, but the customers they serve are much more sparsely distributed along these lines than is seen in the rest of the industry, and many of these lines are in remote areas that make repair and maintenance challenging. In addition to living in rural areas, many of customers served by NRECA members live in areas of persistent poverty, making affordability a crucial issue.

Achieving not just reliability but affordable reliability is a challenging goal. Banunarayanan emphasized that grid operators need the right tools if they are to be able to operate the grid reliably without extreme rate increases, especially during this period of grid evolution and increased electrification. To achieve this, he said that it is important to recognize the increasing interdependencies among every facet of the grid—from energy generation to transmission, distribution, power markets, and consumption—because factors like grid standards, DER impacts, power flows, equipment loading, system protection, and price signals can affect multiple facets.

Both the value of and demand for reliable electricity are only increasing, Banunarayanan noted, which means that the costs of losing electricity are greater than ever before (including lost productivity, broken lines of communication, spoiled food, and unsafe indoor temperatures, or, in the case of EVs, loss of transportation). He posited that this fact can be used to justify improvements to address reliability challenges on the energy generation and transmission end related to factors such as fuel availability, weather, permitting, security, and the retirement of legacy systems, and to address challenges on the distribution and consumption end related to factors such as electrification, consumer expectations, demand management, business models, and DERs. Addressing these issues is a complex challenge but essential to improving operational reliability, ensuring sufficient capacity, and enhancing resiliency.

As more DERs are planned and installed, Banunarayanan posited that the grid is undergoing a fundamental transformation from a state of inherent stability, which seeks to achieve reliability through resource adequacy, to a paradigm of more active management, in which hardware, software, and analytics enable real-time situational awareness, visibility, monitoring, and control. However, the path from the historical mechanically controlled grid to a modernized, electronically controlled one is complicated by additional significant investments needed, along with limitations in modeling, changing technology, and logistical challenges. Banunarayanan noted that such a transformation should be done in a measured fashion and ensure that power system reliability is maintained through provision of sufficient inertia and stability support by traditional rotating machines to avoid potentially disastrous consequences.

Looking forward, Banunarayanan emphasized the need for an integrated planning approach that brings multiple stakeholders together to communicate, share information, and work collaboratively to identify resource and infrastructure needs, establish operational processes, coordinate across the energy spectrum, address workforce needs, and outline the investments that will be required to achieve grid reliability goals. As an example, he described the importance of understanding, modeling, and

predicting inverter performance in the field to inform decision making around the deployment of smart inverters, which are critical to realizing the value of DERs, spanning the whole system from generation to transmission and distribution. He stressed that this work is extremely urgent as more and more renewable energy sources seek to interconnect with the grid, impacting reliability.

Challenges and Policy Solutions Amid Rapid Load Growth

Karen Onaran, president and CEO, Electricity Consumers Resource Council (ELCON), spoke about some of the industrial drivers of load growth, the broader challenges that grid operators face, and policy solutions that are being explored. As an association representing large industrial users of electricity, ELCON represents its members’ interests in federal and state energy policies and promotes legislation consistent with its objectives. Onaran described how manufacturers have become a major driver of load growth for today’s grid. Fueled in part by federal investments intended to grow the U.S. domestic manufacturing sector, manufacturers contribute trillions of dollars annually to the U.S. economy and consume about one-third of the nation’s energy. Continued growth in this sector, combined with increased electrification of manufacturing processes, is projected to increase industrial power usage by another 36 gigawatts by 2030. At the same time, artificial intelligence (AI) and other computationally intensive technologies are rapidly increasing electricity demands in data centers across the country.

This growing energy demand is happening alongside many other challenges that grid operators face. While much of the existing equipment needs to be retired, the replacement generation has not kept pace with the retirements and tends to be weather dependent, creating gaps. The queue to interconnect with the grid is already bottlenecked, and Onaran said that the transmission grid needs to be doubled in size, or even tripled, to accommodate this queue and meet future energy demands. To put this statement into perspective, she noted that it took 100 years to create the current grid, and we are now facing the need to double its capacity in less than 10 years. This poses challenges on many fronts, including a long development horizon for new infrastructure, siloed transmission planning structures, siting and permitting challenges, high deployment costs, and political resistance. (Even when the current process goes smoothly, transmission lines can take 7–10 years to be constructed.) All of these challenges are further compounded by more frequent and prolonged extreme weather events, as well as wildfires, which can disrupt generation and cause outages. While some of these impacts could theoretically be addressed by the ability to efficiently transfer electricity from one place

to another when one region is affected by weather and another is not, the capability for such transfers is currently limited, with Onaran summarizing “our grid needs to be bigger than the weather.”

As other speakers mentioned, Onaran suggested that energy planning would benefit from a more collaborative approach bringing together engineers, regulators, and policy makers to design systems that could quickly bring new energy resources online, enable capacity sharing and interstate cooperation, respond to political and social trends, and adapt to shifting climate patterns and adverse weather events. Toward these goals, she highlighted several policy developments that could require or incentivize improvements such as grid-enhancing technology, transmission siting, and transfer capabilities. These include the Federal Energy Regulatory Commission (FERC) Order No. 1920 (FERC n.d.(a)), Order No. 1977 (FERC 2024b), and Order No. 2023 (FERC n.d.(b)); a study on inter-regional transfer capabilities being conducted by NERC (NERC n.d.); and several proposed bills currently being considered by Congress.

PANEL DISCUSSION

Following the panelists’ opening remarks, Lauby moderated a panel discussion that took a deeper look at barriers to overcome in the clean energy transition, the role of the consumer, the need for collaboration, and the importance of energy equity.

Overcoming Barriers

Lauby asked panelists to identify barriers that they believe can be overcome in ensuring reliability as operators, planners, and policy makers grapple with current challenges and look toward the future.

One issue that panelists highlighted is the backlog of DER interconnections and the development lag. “This attrition in projects that have gone through the queue and are not getting built is definitely the thing that’s keeping me up at night,” Dykes said. van Welie noted that FERC Orders No. 1920 and 2023 attempt to address this problem by making it easier to clear the queues, but he posited that the high investment required to deploy transmission upgrades remains a key barrier. Dykes noted that the Power Purchase Agreements (PPAs) that were successful in the past need to evolve to keep up with the pace of change, and several states are working on designing new models to speed up deployment in today’s deregulated markets. van Welie added that ISO-New England is attempting to remedy this issue by giving the states decisional authority over transmission expansion; he suggested that this approach can help give states (who ultimately represent the consumers who will pay for

upgrades) the authority they need to make and use assumptions about future energy supply and demand in their planning.

Consumer demand is another key issue. van Welie suggested that technologies such as retail-level smart metering and demand-response automation have untapped potential to help mitigate rising electricity demands. With the right design and level of automation, these approaches can send signals to consumers, often via pricing, and encourage people to reduce electricity use overall and especially during demand peaks. He added that the deployment of such technologies could be done much faster than building offshore wind farms or expanding transmission capacity, which are necessary but longer-term investments in grid expansion.

Dykes agreed that smart metering technologies could be helpful, and added that untapped potential also remains in other areas of energy efficiency. For example, she noted that Connecticut customers were so eager to sign up for home energy audits and weatherization measures that the state lowered its incentives to be able to extend these programs and meet demand. However, adoption of smart meters and DERs has been slower. She said it is important to recognize that the average customer is going to be most likely to embrace the changes they perceive as simplest and most cost-effective.

Rodrigues posited that a crucial barrier is the fact that the general public has little understanding of the complexity of the grid or the challenges that are now being faced. After a century of reliable service, consumers as well as regulators and policy makers have come to expect a level of service that will be impossible to sustain without significant new investments. “The real problem is a complacency built on a century of reliability,” he said. “We really have to rethink and reinnovate the grid and do it while continuing to provide reliability, and that is a massive challenge.” Banunarayanan added that customers know they should contact their electric utility when the power goes out, but most are unaware of the complex, multilayered business model that operates behind the scenes to supply their power. He suggested that applying design thinking to consumers’ view of the electric power system, especially demand-response programs that encourage customers to better match power supply and demand, could help to address energy demands more holistically.

At the same time, Banunarayanan also acknowledged that it has been challenging to engage consumers around demand response. van Welie noted that this has been an important focus for ISO-New England, especially within the pillars of resource balance and energy adequacy. He stressed that context is important when thinking about what grid operators can reasonably expect consumers to do. For example, asking a person to delay charging their EV for 6 hours is much simpler than asking someone to conserve electricity for multiple days during an extreme

weather event. The increased electrification of daily life only amplifies this challenge, he added.

Rodrigues and Onaran also noted that political polarization around energy further complicates consumer perceptions and policy making around this issue. Even in this polarized environment, however, Onaran suggested that integrating grid-enhancing technologies—what she characterized as the “lowest-hanging fruit”—can help the existing grid perform at its full potential while the community works toward tackling the larger challenges.

Energy Equity

Prompted by a question from the audience about energy equity, Rodrigues commented that the goals of economics and equity are often in conflict in the energy space. He posited that energy cannot be equitably distributed through a fully free market. “Safe, reliable, affordable, and secure energy is absolutely foundational to the health, safety, and comfort of every American, to the ability of America’s businesses to be competitive, et cetera,” he said. “I think you can’t trust the markets to deliver equity—you have to ask the regulators and the planners to have part of that mindset built in.” For example, he said that mindful regulations and policies can be used to oblige those receiving funding to create community benefit plans. Lauby agreed, adding that equity is especially challenging to achieve in rural areas. He also noted that the government has had limited success in addressing these issues through grants and low-interest loans.

The Need for Collaboration

Giráldez reiterated that unpredictability and uncertainty are key challenges. Increased data collection and analysis can help operators and planners better understand and predict energy demands, but the existing knowledge gaps create inefficiencies and undermine confidence in projections and decision-making processes. She suggested that multistakeholder collaborations that include consumers and key stakeholders and make better use of data can help to bolster that confidence and facilitate progress toward a more flexible future grid.

Rodrigues and Lauby agreed that the traditional siloed approach to energy planning and decision making—for example, separately planning for distribution, transmission, resource procurement, and customer programs or DERs—hinders progress toward the types of large-scale efforts that they believe are needed. Rodrigues described today’s patchwork of siloed plans and decisions as “horrendously failing,” leading

to suboptimal grid use. While there is often an appearance of coming together, he said that in many cases the different silos are developing their own plans and then stacking them together, rather than truly collaborating to develop plans that holistically address the entire grid. “I would argue that this construct is alive and well in probably the large majority of the utilities around the country, even those who claim to be the most sophisticated utilities, and it is getting in the way of the kind of changes we need to be making,” he stated.

Dykes added that planners have also historically put clean energy resources into a different silo built around meeting environmental goals, which can create barriers for establishing multistate cost-sharing agreements because states are reticent to bear the costs of another state’s policies. She described how taking a broader view of clean energy resources—encompassing not only environmental goals but also reliability impacts—can help states find ways to share costs equitably for mutual benefit.

Banunarayanan stated that it is not easy to balance comprehensive change with integrated, collaborative planning. However, combining traditional design plans and new paradigms can help. For example, improved information and data sharing—areas that he characterized as low-hanging fruit—can help to reform individual processes. He suggested focusing on iterative approaches that preserve some lessons that, from an engineering perspective, worked successfully for decades, while redefining or jettisoning others that are no longer relevant.

In the absence of a mechanism for centralized grid planning across the entire United States, which van Welie pointed out is extremely unlikely short of an act of Congress, multistakeholder collaboration becomes even more essential. While independence enables experimentation as states explore different models for integrating DERs, he said that the lack of cohesion combined with out-of-date PPAs and out-of-market incentives creates multiple complications to delivering renewable energy. “There’s no central planner that’s going to come to rescue the system,” he said.