the modern grid. There has been significant focus in recent years on individual technologies and on energy-related issues such as environmental impact, but less attention has been paid to developing a vision that integrates technologies, solves the various grid-related issues, and provides the desired benefits to stakeholders and society. The Energy Policy Act of 2005 and the Energy Independence & Security Act of 2007 have been positive steps in the right direction, but much more is needed to directly address the regulatory and policy factors that create significant impediments to the modernization of the U.S. T&D system. For example, a wholesale pricing structure that recognizes the value of reliability and signals when transmission system upgrades are necessary would help provide investment predictability.

In addition, policies regarding the grid are often inconsistent because they are set by multiple groups—individual states (state energy policies and public utility commissions [PUCs]); the Federal Energy Regulatory Commission (FERC); and environmental agencies. Inconsistent policies among states and between state and federal regulators, for example, prevent effective collaboration across transmission regions.

Also, time-of-day rates for consumers that reflect actual wholesale market conditions are not yet widely implemented, thereby preventing the level of demand-side involvement needed in the modern grid. Net metering policies that provide customers with retail credit for energy generated by them are also not widely deployed, which reduces the incentive for end users to install rooftop photovoltaics or other generating technologies. Finally, regulatory policies often do not reward customers for investments that provide substantial societal benefits, such as credits for local storage that has been made dispatchable.51

A reduction in R&D expenditures by utilities, an unintended result of restructuring, has impacted the development and deployment of newer T&D technologies. A more predictable regulatory environment that accounts for societal costs and benefits in the rate structure and supports R&D will be needed.

Cultural and Communication Barriers

The fundamental value of the T&D system in general and the societal and economic benefits of a modernized grid and the costs associated with antiquated sys-

51

Dispatchable energy storage is a set of technologies for storing electricity to be deployed quickly (dispatched) into the grid when other power sources become unavailable.



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