The February edition of State Legislatures describes how “disruptive technologies” from micro-grids to solar panels and energy storage are transforming the electric system. These technologies may fundamentally alter how policymakers, utilities, and energy businesses approach all aspects of the energy industry, from producing and delivering energy to how government regulates it. For example, the article argues that the traditional model of the centrally managed and controlled utility, whose profits are largely based on how much energy it sells, may need to be altered to address the growth of the new energy-efficient technologies.
The article describes recent advances in these technologies, which include photovoltaics, combined heat and power (cogeneration) systems, energy storage, and micro-grids. It also describes the impact of plentiful natural gas supplies, including how they are reducing the competitiveness of coal, nuclear power, and renewable energy, and other generating sources.
The article notes that the utility regulatory structure in most states gives utilities little or no incentive to embrace energy efficiency and technologies, such as combined heat and power systems that reduce their sales. This outcome puts the utilities’ goals at odds with those of many policy makers, businesses and consumers. At the same time, declines in utility sales impair their ability to recover their substantial infrastructure costs. The article describes initiatives in several states to decouple the fiscal health of utilities from their sales. It also describes the debate taking place in several states on the appropriate policy response to distributed energy technologies such as solar photovoltaics.
