The U.S. electric grid is not prepared yet either to receive an influx of distributed energy, such as wind and solar power or to meet soaring power demands at user endpoints for electric and hybrid vehicle charging. Those are the findings of a new an MIT study released this week.

However, the authors suggest that the grid can be “future-proofed” if:

• Washington, D.C., assumes decision-making authority over the routing of new interstate transmission lines;
• distributed energy pricing systems are revised; and
• a higher level of security is implemented, to reduce the threat of cyber attacks.

The study, “The Future of the Electric Grid,” was launched, “because a number of us were hearing two sorts of rhetoric about the U.S. power grid: (1) that it’s on the brink of widespread failure, or  (2) that simply installing some new technology could open up wonderful new opportunities,” according to research Co-Director Richard Schmalensee, the Howard W. Johnson Professor of Economics and Management at the Cambridge-based Massachusetts Institute of Technology  Sloan School of Management.

“The most important broad finding was that both of these are false,” Schmalensee says. While infrastructure is not in any imminent danger, he said, “the current regulatory framework—largely established in the 1930s—is mismatched to today’s grid.” Moreover, he adds, today’s regulations are “highly unlikely [to] give us the grid of the future — a grid that, by 2030, will support a range of new technologies and consumer services that will be essential for a strong and competitive U.S. economy.” While the grid’s performance is adequate today, decisions made now will affect energy transmission over the next 20 years, the authors said.

The report was commissioned by the MIT Energy Initiative (MITEI) and carried out by a panel of 13 faculty members from MIT (News - Alert) and one from Harvard University, along with 10 graduate students and an advisory panel of 19 leaders from academia, industry and government.

 The MIT report recommends a series of changes in the regulatory environment to facilitate and exploit technological innovation. First and foremost, the grid of the future — one capable of handling intermittent renewable energy sources—will require “effective and enhanced federal authority” over the routing of new interstate transmission lines. This will be critically important, the report says, in cases where power is produced by solar or wind farms located far from the site where that power is to be used—requiring the construction of long-distance transmission lines across multiple regulatory jurisdictions.

“It is a real issue—a chicken-and-egg problem,” commented John Kassakian, a professor of Electrical Engineering at MIT and the study’s other co-chair. “Nobody’s going to build these new renewable energy plants unless they know there will be transmission lines to get the power to load centers. And nobody’s going to build transmission lines unless the difficulty of siting lines across multiple jurisdictions is eased.”

Currently, when new transmission lines cross state boundaries, each state involved — and federal agencies as well, if federal lands are crossed — makes its own decisions about permission for the siting of these lines, with no centralized authority.

“There are many people who can say no, and nobody who can say yes,” Schmalensee explains. “That’s strategically untenable, especially since some of these authorities would have little incentive ever to say yes.”

The MITEI report recommends that the Federal Energy Regulatory Commission (FERC) either be given the authority to make decisions in such cases, or be designated as the “backstop” authority in cases where there are disputes.

Secondly, the grid would benefit from a restructuring of the way customers pay for its costs, the study found. Payment for electric distribution, like payment for generation, is currently calculated based on usage. However, most of the costs involved are fixed; they don’t depend on usage. This gives utilities incentives to resist distributed generation (for example, homeowners installing rooftop solar panels) and gives consumers excessive incentives to install such systems — and, thereby, to shift their share of fixed network costs to their neighbors.

Finally, cybersecurity is all-important: The more thoroughly the grid is interconnected, and the more smart meters are added to gather data about usage patterns, the greater the risk of security breaches or cyber attacks on the system.

At the moment, no agency has authority for the entire grid. The report strongly suggests that some agency — perhaps the U.S. Department of Homeland Security — be given such responsibility, but thorny issues related to authority over local distribution systems would need to be resolved. In addition, the report notes, it will be important to develop rules and systems to maintain the privacy of data on customers’ electricity usage.

Requiring the sharing of data—especially data collected as a result of federal investments through the American Recovery and Reinvestment Act of 2009—should be a significant priority, the report counsels. The government “spent a lot of money on pilot programs and experiments, and installations of a lot of new equipment that can improve the efficiency and reliability of the grid and the management of demand,” Kassakian said.  But, he cautioned, there must be more cooperation and communication about the results of those programs “in order to get the benefits.”

In fact, widespread sharing of data from real-time monitoring of the grid could help prevent some failures before they happen, Kassakian suggested:  “If you’re aware of what’s happening at the same time everywhere, you can observe trends, and see what might be an incipient failure. That’s very useful to know, and allows better control of the system.”

The MITEI study found that growth in the number of electric vehicles (EVs) on the road is likely to be slow enough, and widely distributed enough, that it shouldn’t create significant strain on the grid — although there may be a few locations where a particularly high penetration of such vehicles could require extra generating capacity. Some other effects could be subtle: For example, in some hot regions of the Southwest, grid components such as transformers are designed to cool off overnight when demand is ordinarily low. But a sudden influx of EVs charging at night could necessitate bigger transformers or cooling systems—while charging them at the end of the work day could significantly increase peak demand and, thus, the need for new capacity.

Utilities now spend very little on research, the study found, because regulators provide little incentive for them to do so. The report recommends that utilities put more money into research and development — both to make effective use of new technologies for monitoring and controlling the grid, and to determine customer response to pricing policies or incentives.

For more information on the report, visit the MITei website.