
Electric utilities are projected to spend between $1.1 trillion and $1.4 trillion dollars by 2030 on grid infrastructure, a significant increase compared to the previous decade. How utilities decide to invest in grid infrastructure will determine the size of the opportunities for the advanced energy industry, and the financial impact on consumers. Right now, traditional poles and wires investments are the most profitable for investor-owned utilities, but state decision-makers have the ability to modernize utility business models by better aligning utility profit-making incentives with public policy goals, such as affordability, deployment of advanced energy, and a smarter, optimized, and more distributed grid. By educating policymakers and regulators about the technical possibilities as well as the public benefits of reforms to rates and ratemaking (e.g., performance-based regulation and advanced rate design), Advanced Energy United positions advanced energy solutions at the forefront of energy affordability regulatory reform.
By rewarding utilities for achieving well-defined performance outcomes such as grid utilization and cost savings (as opposed to simply incentivizing capital investments) utilities are motivated to pursue technology solutions that are more cost-effective, efficient, modern, intelligent, and distributed.
Performance-based incentives can motivate utilities to procure advanced technologies that make them more operationally efficient, speed up interconnection processes for both large-scale and distributed energy resources in support of improved grid reliability and consumer costs, and explore innovative solutions to modern-day energy system challenges. Advanced rate design can help distributed technologies better support ratepayers and the grid. These reforms can also be designed to match public policy objectives, such as state clean energy goals.
In addition to direct-to-consumer benefits, distributed energy resources can help utilities forgo or defer expensive, large-scale grid investments. Many offer additional financial value not yet appropriately recognized in state utility regulation. Utility regulators can ensure customers are more accurately compensated for DERs based on the value provided to the grid, leading to greater adoption and more benefits for all involved.