Factors Driving The Grid Modernization

Technological innovations, economics, and public policy are driving the rapid grid modernization of the electric power system in the United States. In this blog, we’ll be taking a closer look at these driving factors.

Re-Regulation Of Electric Power Industries


Wholesale electric markets were introduced as a result of the regulation of electric power industries in the US. This competition supported rapid innovation, reduced costs for consumers, and shifted the risk from ratepayers to investors. The advent of environmental policies and markets ignited significant changes in the fuel choices for generating stations that shifted from nuclear and coal generation to more efficient combined-cycle units powered by natural gases. There is a tension between the public policies that promote the use of energy-efficient renewable sources and wholesale electric markets, but these technologies have become more economically favorable and have led to increased environmental sustainability and lower costs for consumers. Recent developments include the arrival of distribution markets and retail access, which offers more business opportunities and consumer choices.

Innovations In Renewable Energy

Innovations in energy storage and wind and solar generation have led to both cost reductions and performance improvements. Technological advances and increased sales have reduced the price of solar panels significantly and several states in the US, such as New York and California, have ambitions to achieve high penetration levels of distributed and renewable energy resources in the next few years.

Regulatory policies can be utilized to stimulate PV installation growth. Net-zero metering gives consumers the opportunity to sell excess power to the grid and pay the owners to install PV panels. However, even energy consumers that have a footprint of below zero will use grid power at night and during days with overcast weather, therefore continuing to rely on the distribution grid. The policy for net-zero metering causes consumers without solar panels to subsidize consumers that do because the costs for maintenance and expansion are included in the base rate. These disparate approaches to solar energy highlight a need for regulators to figure out how to effectively monetize the grid while addressing the costs for distribution system infrastructures and energy use.

The Abundance Of Natural Gas

One of the primary drivers for grid modernization in the US is the abundance of natural gas, as a huge portion of the new power plant capacity from the past twenty years relies solely on natural gas to generate electricity. This trend was shortly followed by a reduction in the use of less economical nuclear and coal power plants. As the economics of wind and solar improve, it is predicted that extracting subsidies will not have a significant impact on their competitiveness against natural gas. In any electrical system across the globe, however, it is important that care is taken to prevent the shift in fuel sources and the adoption of renewable energy to undermine the resilience and reliability of the electric grid. The global energy industry needs to generate its electricity dependably while taking into account the various economic considerations and environmental policies.

For more information about the modernization of the grid, get in touch with our team today at 877-324-0909.