The electric power sector is in the midst of a major transformation. Renewables now account for the majority of new generating capacity and cost reductions in wind and solar energy as well as battery storage continue to outpace expectations. (EIA, 2020). Encouraged by these trends, a growing number of states, including Virginia, have passed legislation intended to accelerate the transition to clean energy sources. The Virginia Clean Economy Act (VCEA) requires the state’s investor-owned utilities to rapidly increase the percentage of electricity sales derived from wind and solar, with the ultimate goal of achieving a 100% carbon neutral power supply by 2050.
Advances in communication and information technologies are also affecting the structure and operation of the electric grid, allowing utilities to efficiently integrate a much more diverse mix of electricity generating, storage and demand management technologies. The smart grid is the umbrella term for the intelligent, communication-enabled devices and associated information systems that enable this integration. A U.S. Department of Energy (DOE) assessment of the state of the country’s electric system infrastructure summarized the impetus and objectives for smart grid development as follows.
“A revolution in information and communication technology is changing the nature of the power system. The smart grid is designed to monitor, protect, and automatically
optimize the operation of its interconnected elements, including central and distributed generation; transmission and distribution systems; commercial and industrial users; buildings; energy storage; electric vehicles; and thermostats, appliances, and consumer devices (USDOE, 2015).”
The Virginia General Assembly recognized the importance of modernizing the state’s electric grid when it passed the Grid Transformation and Security Act (GTSA) in 2018. Despite that legislative authorization, a comprehensive plan for smart electric grid development in Virginia has yet to emerge. This report is intended as a resource for policymakers and other stakeholders involved in Virginia’s transition to a smarter, cleaner electric grid. It explores how smart grid capabilities can enable integration of clean energy resources, energy storage, and demand management technologies and summarizes the literature on the costs and benefits of smart grid applications. The report also reviews Virginia’s recent efforts to develop a smarter grid, including grid modernization plans and petitions submitted by Dominion Energy’s subsidiary, Virginia Electric and Power Company, and decisions of the Virginia State Corporations Commission (SCC) related to those filings. The final section outlines initiatives and guidelines to promote development of a smart grid that will provide net benefits for ratepayers and support achievement of Virginia’s clean energy goals.
- Develop a shared vision of the services and benefits a smart grid should deliver
- Initiate a process of broad stakeholder engagement that is coordinated by a neutral party and engages Virginia’s investor-owned and cooperative utilities as well as representatives from ratepayer, environmental, and business interests as well as representation from relevant state government agencies.
- Consider amending the GTSA to require stakeholder engagement in smart grid planning and implementation and set a deadline for delivery of a grid transformation plan to the Governor and General Assembly,
- Implement a phased, adaptive strategy for smart grid development
- Initiate the first phase of a statewide smart metering implementation program
- Conduct an integrated set of pilot projects designed to evaluate costs and benefits of smart metering implementation, including evaluation of time-of-use rates and other dynamic, grid responsive rate structures implemented in combination with behind-the-meter smart technologies for different customer classes.
- Expand smart charging pilot programs for electric vehicles to include residential, commercial and public charging stations as well as a range of applications of vehicle to grid charging technologies.
- Implement demonstration projects for virtual power plants (VPP’s), distributed energy resource management systems (DERMS) and smart micro-grids.
- Utilize smart metering, dynamic pricing, smart charging, and VPP/DERMS pilot program results to refine plans for broader implementation of smart grid technologies and systems.
- Align utility compensation for smart grid investments with measurable outcomes
- Develop and implement performance incentive mechanisms for utility smart grid investments that link compensation to ratepayer and broader public benefits.
- Ensure broad stakeholder engagement in developing performance metrics, incentives and processes for measuring and evaluating outcomes.
- Condition smart grid investments on transparent program evaluation including public access to the underlying program evaluation data.
- Ensure public access to smart grid data and encourage innovation
- Ensure rigorous, transparent evaluation of pilot program results with full access to anonymized program data by independent researchers and other stakeholders
- Require Virginia’s utilities to provide customers with online access to detailed smart meter data for their accounts and public access to anonymized smart meter data, subject to data aggregation guidelines that protect customer privacy.
- Design and implement rate structures, information and communication systems, and grid management strategies to encourage third-party innovation and aggregation of energy services from smart, behind the meter systems.
As the transformation of Virginia’s electric power system accelerates, smart grid technologies will be needed to maintain grid reliability, efficiently integrate new technologies, and cost-effectively balance supply and demand. Uncertainty regarding smart grid costs and benefits can be managed by implementing a phased development process guided by stakeholder involvement and outcomes-based performance incentives. That process should proceed with a sense of urgency to ensure Virginia is prepared to efficiently manage a more complex and decentralized electric power system.